Property vs Shares

Jason · 00:00Welcome to episode 248 of The Numbers Game. I'm Jace, I'm here with Nick and Marty. Nick, uh, you've got some interesting things. Uh, you're telling me that I shouldn't buy a property. Is that, is that what's happening today?

Nick · 00:10No, incorrect. And I would like to say before this episode that I'm very pro property.

Nick · 00:17I love property. I love Australian property. It's a fantastic investment. Um, however, there, there's, there's some buoyancy in the air. Whether it's, um, you know, Marty's podcast last week going global, reaching all areas of the, uh, of the universe on Victorian property. So I just thought it would be a good time to talk about.

Nick · 00:43Property versus shares and just educating people more than anything. 'cause I think the biggest problem in this country is just access to education on shares, uh, historically has been an issue. And I think what we're seeing now. With the rise of, um, social media and influencers and, you know, property, um, property advice, people having access to platforms such as social media, it's just everywhere, right?

Nick · 01:09Buy property, you can do this, 20 properties in five years, whatever it might be. So that information is in our face. Um, cryptos in our face. Um, so I just thought it'd be good to look at property versus shares. Shares are something that people don't usually think about just because it hasn't been as accessible in the past.

Nick · 01:27It's very accessible now, so I think people are getting more educated. We're definitely seeing that in our business. People are coming to us wanting to start. Share portfolios. So I thought we'd look at property versus shares, the pros and cons of both. Um, and you know, just hopefully give some people, um, at least something to think about and, you know, maybe go and access some more information before they do make a decision on where to invest.

Nick · 01:50How's that?

Marty · 01:51Marty, I, I'm, I'm just dribbling with anticipation here because, um, but you know, obviously I, you know, last episode I was talking about the Melbourne market going really well, but I'm really interested in this discussion because I feel. Not only younger people coming through are looking to invest in different ways and be a bit more dynamic around their investment rather than another big purchase on a property, let's say.

Marty · 02:18And I also think there's a changing of the guard in the way people need to think about, um, using equity in their homes as well, which I'm hoping you're sort of gonna tap into today, Nick. Yeah.

Nick · 02:29The first thing I'll say is the numbers that I'm using are, are averages. So the first thing people need to understand is, um, you know, there are some in, in regards to property, there are suburbs that are gonna outperform others.

Nick · 02:41There are types of dwelling things that are gonna outperform others. Same with shares, there are shares that are gonna outperform others. Um, so I just wanna, I, I wanna say that first, this isn't a, a one size fits all, but we can only look at averages. But I think before we talk the about the numbers. I reckon it's worth unpacking just the pros and cons of each outside of numbers, so.

Nick · 03:04The problem with property is the, the challenge, uh, that most people have getting into their first property is deposit. Um, so generally, you know, there's a few variables, but let's say you need 10, 10% deposit to get into property. If it's a $700,000 house, you need $70,000. It's very difficult for people to save that amount of money.

Nick · 03:26That's why it's difficult for people to get into their first home. And then the only way that you can get into property post that, um, without saving is if you've managed to buy a owner occupied house and you have some equity, then you can create, um, capital growth, and then you can take equity to fund a deposit.

Nick · 03:42So people can sit on the sidelines a long time before getting into property purely because of the deposit that you need. Con number one. Con number two, it's a big investment. You can't put in a thousand bucks a week. Uh, you can't put in initial investment of $5,000 depending on where you buy. It's a big decision to get into property.

Nick · 04:02If you wanna buy something decent in Victoria or any state, you're probably looking at $600,000 upwards, give or take. Obviously there's regional areas that are cheaper, but it's talking about what we see mostly in our business that scares a lot of people. That's a big investment. Third con, you generally need to borrow to do it.

Nick · 04:19So most people don't have 600, $700,000 sitting around. They need to go to a bank and they need to get a loan. They need to be able to, um, uh, be approved for a loan. So all the, all the conditions that you need in your life to get a loan approved. If you can't get that, you can't invest in property. Fourth con.

Nick · 04:40It's illiquid or you can liquidate, but it takes a long time. And when you go in and you pay things like stamp duty, if you liquidate really quickly, quite often you'll come out behind because you paid stamp duty to go in. You paid agents' fees to go in, so you're generally in for more than what the property's worth at the start.

Nick · 04:59Everyone knows that because of the cost to transact, if you do then decide to sell it, and you do have those agents fees, um, you pay them on the way out and on the way in, within the first 12 months, in a lot of cases you're behind. So it's a liquid investment. If things go wrong, you can't fall back on it quickly.

Nick · 05:14You have to sell it settlements. All these things. Obviously the pros of property are what they are. Exponential capital growth in the right areas in this country. Uh, immigration coming in, and that's expected to continue. It's a tangible asset. It's touch and feel people like that. People think that it's safe.

Nick · 05:32We're always gonna need a roof over our head. These are all the kind the pros, and this is why people get into property. You can improve property, so you can buy something that. Three bedroom at a bedroom up the value. You can buy something that's run down, put a little renovation on it at a bedroom up the value heaps of pros that we all know about, um, if, if it all goes well.

Nick · 05:53So quick, um, quick recap of that illiquid big investment to get into as your first, um. You generally have to create debt, which means you've got a monthly repayment that you can't choose to make. You have to make that repayment every week, whether the tenant pays or not. These are the things to be wary of if we move over to shares.

Nick · 06:16And there's a lot of cons with shares as well. And the, and, and the main con being is limited control. Um. Over, well, no control over how companies perform. You're kind of just hoping that people are doing the right thing. Um, lack of awareness and education. Um, previously it was difficult to transact on shares.

Nick · 06:37That's not a con anymore with all of the trading platforms out there. Things like ETFs that give you really good diversification. Sorry, another con with property. No diversification. You're in one asset for six, 700 k these days. With an ETF, you can be in upwards of two to 300 companies. Um, so you get really good diversification.

Nick · 06:56I think the positives, and this is what I really wanna harp on with shares, is you don't need to borrow to go into shares. You can start start a share portfolio. With $5,000, that would make sense. And then you could put in 50 bucks a week to that share portfolio, so you can get in a lot quicker than what you can with property generally.

Nick · 07:18The other thing with shares is it's liquid. So if you need the money back, ideally you don't sell 'em at the wrong time, as in when the share market's down. But if you need the money back, whatever your shares are worth, you can sell them and generally have the money back in your, your account within, under a week.

Nick · 07:33Big positive. It also provides a bit of a safety net mentally for people knowing they can access that money. And if your share portfolio is set up right, whether or not, um, the, uh, the market is up or down, shouldn't be an impact because your portfolio should be set up right with your risk profile. Two real positives.

Nick · 07:52Um, and other than that, there's the, Marty, there's the, the number side that I, that I wanna talk about. Any questions or is that all making sense to you? Jace Marty.

Jason · 08:03Marty, you seem like, Hey, you wanted to jump in there, mate.

Marty · 08:05When you, when you're thinking about investment, what do you want to do? You wanna make money right?

Marty · 08:10Over, over the longer term, sometimes over the shorter term. So I think we have to change our thinking around prop. Like lastly, I talked about, you know, buying the home and maybe leveraging a little bit more on the home to get into the market in, into that growing asset. But the cost to hold property is become so expensive with insurances, land tax, interest rates being higher.

Marty · 08:33I have no problem with lower debt levels on property. Um, and your cash flows are actually. Coming in and making you money. Uh, so that asset can grow over time. But the two questions is we have to ask is, you know, what's that growth rate gonna be? Is it going to be as aggressive as it has been? Maybe not.

Marty · 08:51And the other thing is, you want a distribution on your property. You wanna be, you wanna have some money coming back into your pocket, not, uh, siphoning it outta your pocket, which makes you have to work harder in order to maintain the asset. And to me. Uh, if you're gonna subdivide the property or it's relevant where you go, I'm leasing my commercial premises and I wanna buy a commercial property rather than paying rent to someone else, then that sort of makes sense to me commercially, if there's a business linked to it.

Marty · 09:20But I'm changing my views on it because, like you said, Nick, with. A stock, you've got something that can grow. And yes, there's risk. There's risk in anything you do in life in investment, but also you can get a distribution stream as well. Um, so you've gotta weigh up your own risk tolerance. And there's more to unpack here, obviously, but to me I go, that has to be a consideration as long as you can mitigate.

Marty · 09:47The risk you want to take in that growth as well. So that, that's my thoughts, mate. Very, very good. Grasshopper.

Nick · 09:54Yeah, very, very good.

Jason · 09:55My, my initial thing as well, just, um, I know we're gonna unpack the numbers, but it's always the, the lack of thinking long term on, if you know the six or $700,000 home loan.

Jason · 10:04If you take 30 years to pay that back, you're generally paying back. You know, the bank needs to get paid, right? So what a 600, 700 grand, it becomes a 1.3 million when it's paid back. Maybe 1.4. Depends on what the interest rates are doing. Of course, you know, you've gotta make sure that you got that investment right.

Jason · 10:19So again, the lack of diversification you've bought in a particular area. And unless properties have doubled, unless the prices have doubled every 10 years, like historically it has, you've gotta rely on historical, which isn't always an indicator of future performance. So there's a lot to get right. Lot of pressure.

Jason · 10:34One investment, one location. Um, and you know, for 79% of property investors own one property outside of their main residence. So again, um, it's putting a lot of, a lot of ducks into this basket. Um, so yeah, interested in unpacking the numbers. The

Marty · 10:51last thing I'll say there, Nick, too, that I'm interested in, obviously in your thoughts on this, is, you know, people leveraging the property because they can borrow against it.

Marty · 10:59So they can get a. A, a higher sort of capital investment, but um, with shares, I think you could do margin lending at 50%. Uh, like sometimes, but it's very hard to, to get it, it's hard to leverage against it. And should we be looking to do that and how should we be looking to do that sort of stuff?

Nick · 11:18Very good.

Nick · 11:18Grasshop. It might be a new name for me. Nice hopper. Um, probably a lot of our younger audience will have no idea what I'm talking about, but that's okay. Um, I'm, I'm with you mate. But yeah, you brought up some, some amazing questions and. F and I, again, I just wanna be really clear on this. This isn't for every circumstance, these numbers about what I'm about to present.

Nick · 11:43First thing is, I'll say is when people buy investment properties in this country, all the stuff you just mentioned, Marty, about subdivision and commercial, forget about that because 90% of the investors are mom and dad's. Um, they pay a big chunk off their mortgage and they get to a level where they're comfortable, um, to leverage up and buying an investment property, which could be in their forties.

Nick · 12:04And they borrow a hundred percent of the value of that property because they've still got debt on their mortgage and they wanna focus on getting that down 'cause it's not tax deductible. So all those other circumstances about people that are buying and selling and improving and doing that, forget about that because.

Nick · 12:18Most people don't do it, even if they say you should do it, which is a lot of people online that are saying that most people don't have the time to worry about that or the skillset. So we're talking about mom and dad, investors who are buying an investment property, buying a, borrowing a hundred percent of it so they can get the negative gearing impact.

Nick · 12:33That's what we're focusing on. 'cause that's really what most of the population is doing. So. And this all started, and I'm, I'll be transparent here. This is, this is a property of mine. I've got a property which we are selling for other reasons, but it's in Cranburn North in Victoria. Um, we've probably had this property now for, I'm gonna say 10 years.

Nick · 12:56And, uh, it has doubled. Absolutely no doubt about that. Cranburn is a growth corridor out in the Southeast. Um. There's lots going on out there. Property from a capital value point of view has done really well. Um, but that property at the moment for if, if, if I sell that property at what I think it's worth, which is probably $800,000, and investor buy buys that property, they're gonna have $45,000 in cost to come in.

Nick · 13:23So that's stamp duty, legal fees, whatnot. Give or take, 45 to 50. That property at the moment produces $32,000 a year in rent. Now if I come into that property and I buy that property off myself and I borrow a hundred percent of the value, which mom and dad's are all doing, 'cause they've still got mortgage debt, um, at 5% a year I've gone in, I've looked at what the landlord's insurance and building insurance cost our, our land tax, which is not excessive, but it's, it's, it's enough.

Nick · 13:57Um. I've looked at land tax for just someone owning one property, as in, I did say our land tax, but you come in, you own one property, this is what you would pay. Agents fees, compliance, smoke alarms. You are down on that property $24,585 a year. That's interest. Interest only. Interest. Yeah. This is just the interest.

Nick · 14:20So you work out 5% at 8 45, you've got 40 odd grand in interest, so you're only, you're eight grand down just on the interest, and then all the other costs come up. Mm-hmm. And this is assuming it's rented a hundred percent of the time? Mm-hmm. This isn't taking into consideration, it's untended, so you're actually down $472 a week.

Nick · 14:39Now, of course, we have a thing in this country called negative gearing. You might get some of that back. But when you go into an investment or an asset, you do not go in thinking about the tax deduction because that can change any day of the week. Um, there's a lot of talk about negative gearing, whether it's from a government policy change or whether it's from your own personal situation changing.

Nick · 15:00But you do not go in expecting that I can, I can fund this property because the negative gearing impact 'cause that can be taken away from you really quickly. So who is going to go into a property? At the moment in Victoria, and not because it's a bad investment, but just even be okay with funneling out $470 a week.

Nick · 15:24That's a big ask for a lot of people, particularly in the current environment. So to your point before Marty, you really are relying on the capital growth if that property doesn't have capital growth, which. As we know it should then it should have good capital growth, which is great, but you're actually backwards.

Nick · 15:41So you are purely relying on capital growth and you're relying on a fair chunk of capital growth when it's going, when it's costing you sort of four 50 to $500 a week just to hold it.

Marty · 15:53That's not even thinking about repairs, is it? Maintenance is that's long and this property's old there. Yeah.

Nick · 15:59So what, what may, one of the reasons we're selling it is the maintenance.

Nick · 16:02Um, I, I, I will say, I think I put in, um, a thousand dollars a year for maintenance, which is just cleanup stuff, but we're at, we're at the point now where plumbing, air conditioning, these things, you know, we're talking thousands to replace this stuff. Let's park that for a minute and let's just go back to high level average numbers.

Nick · 16:23So in this country, in Australia. Over the last 30 years, our average annual year on year property growth across all properties has been 6.4%. Most people will know that number. Again, some suburbs have completely outstripped that. There'll be people out there listening saying, oh look, I'll use a buyer's agent or an investment expert and they're gonna put me in the right era.

Nick · 16:46Get all that. I'm just looking at averages. You could make the same argument with shares. I was a stockbroker. Who gets me more than that? Let's compare that. Um, actually the first thing I'll say about that property return is that excluding rent. That's just, that's just growth. I've excluded rent because I'm talking about Victoria at the moment.

Nick · 17:04And the fact that your rent's wiped out, you're actually 24 grand a year down. So let's ignore the rent 'cause it's not doing anything for you. If you've borrowed, which is most people in comparison to that growth rate. Um, and this is total return growth and dividends. And I'm including the dividends for shares because, um.

Nick · 17:25If you put cash into shares, which is the example I've done, no debt first, uh, you get those dividends and you can reinvest them. So the as X 200 over the last 30 years, so same time period, um, has done an average of 9.2% per year return. Um, capital growth and dividends and the s and p 500, which is a us um.

Nick · 17:49Index has done 10% over the last 30 years. So even if you added rent, like I think Victoria's rent at the moment is around 3.5%, give or take. Maybe it's creeping up a little bit higher and you add that to your 6.4, you're at your 10% anyway, so it's kind of six to one, half a dozen. The other, as far as total returns, if we're comparing to the s and p 500, but this is where people.

Nick · 18:14This next part is what people need to understand and get hold of when they're making these decisions or the, the education they need to get hold of. Um, if you, let's talk about this same property, um, in Cranburn. Um, if we held that property for 20 years, um, the value of that property at 6.4% in 20 years time would grow to $2.7 million.

Nick · 18:40Pretty good return, Marty.

Marty · 18:41Yep. Sounds good.

Nick · 18:43Yep. If you deduct from that what you borrowed to get into that property, which was the 845,000, and you also deduct from that the fact that you've been paying 24 grand a year just to hold it. I haven't indexed it. I've just stayed at 24. So this is pretty, um, this is pretty generous 'cause everything goes up, but the rent should go up as well, so it should balance out your net gain on that property before tax or excluding tax is 1.365 million.

Nick · 19:12If you started a share portfolio the same day, instead of buying that property, all you did was you took your $24,000 a year that you are now funding into that property to hold it, and you put that in on a monthly basis, and that continued to compound on a monthly basis. At 9% per annum. So we're taking the lower the As X 200.

Nick · 19:34After 20 years, your investment would be one. Your investment would be worth $1.335 million, no debt to pay out. So the property's got you 1.365. The shares have got you 1.335. So the property is actually won by 30 grand. This is. Assuming there was a tenant in that place nonstop for 20 years. The dishwasher,

Jason · 20:02no major, no.

Jason · 20:02No major repairs or maintenance, correct.

Nick · 20:04Yeah, correct. No headaches. Jace. One of the big reasons I'm, we're selling some of our properties, I just can't be bothered. The amount of work it's now starting to take up just to maintain these things is crazy. Marty, I'm not done. This really gonna blow your mind.

Nick · 20:19As I said, most people that do these, uh, property investments, uh, um, mom and dad's, they've got equity in their house. So to your point before margin loans, yes, you can get them. They're expensive, they're difficult. An easy way to leverage into shares if your, um, equity position in your owner occupied home permits is you can actually borrow money against your owner occupied home, just as you would to fund a deposit into an investment property and use that into a share port, uh, to put into a share portfolio.

Nick · 20:50So scenario two, you borrow $400,000 against your owner occupied home, and you put that into the share market. So 400 K in from day one. Um, 20 years invested, 9.2%. Jace, gimme an end number. Skywards of two mill, I reckon. 2.2,

Jason · 21:17no reinvestment. That's just the 400 k. Starting from the 400.

Nick · 21:20No, no. Dividends.

Nick · 21:21Dividends reinvested. Sorry. Yeah. But, but you are not putting in extra cash every year? Uh, no. Because you have a, um, a loan to pay on the 400, put the loan to pay off. Yeah. Um, so cash is probably gonna be, give or take. Yeah. I reckon Sky was a two, sky was a two mill with that starting

Jason · 21:38balance over 20 years.

Nick · 21:39Yeah. 2.2, give or take. So if you look at 400 K in. You're at 1.8 after 20 years, no headaches. Now again, a few variables. So I, I don't wanna argue. I don't, I don't want people to be listening to this going, oh, you haven't thought about this and you haven't thought about that. Of course, there's things that this doesn't include.

Nick · 22:02That's not what I'm trying to get. I'm not trying to say, which is ultimately the number one, um, decision to make. I'm just saying that the, the difference is not that big. Um, the big difference is shares in this day and age are far easier because of the access to ETFs that can grab a whole market. The guessing game is almost gone.

Nick · 22:25There's index funds out there. So,

Jason · 22:27and I think, I think Nick, this is a really, really good example to highlight to, to people. 'cause I think as a. As a general public and as a generalization in Australia, we are obsessed with property. We're property obsessed. We think the be all and end all is buying the property.

Jason · 22:41And then, you know, you hear everyone talk about getting that investment property. You don't hear a lot of people about talking about starting their share portfolio. You, I just, it's just not a common conversation. Even at the, you know, the family barbecue, no one's going has ha you know. How's your share portfolio going?

Jason · 22:56They're going Have you, how have you looked at that investment property yet? When are you guys gonna get buy, buy a property?

Marty · 23:01I think, I think it's starting to change though, Jace, particularly with the younger generations coming through. I was having a discussion at a network event yesterday. A young guy.

Marty · 23:10And was asking some really interesting questions to the 0.1 I couldn't answer. So I've gotta ask Nick today, um, in regards to that same strategy with the, the shares, you know, across, over that period of time to get your return, is there any benefit in paying the distributions, uh, down off the home loan?

Marty · 23:31Or is it better? To actually keep the, um, keep the investment growing. I, I, we'd probably have to model it out, but it was a bloody good question.

Nick · 23:40It's a bloody good question. I just wanna go back, just park that for one minute. Yeah. I haven't got the exact numbers, but of course I did plug into the calculator.

Nick · 23:50What have you had the ability to leverage 800 grand against your house or 845 grand against your house and put all that into shares just like you put all into one property. You don't have to be a rocket scientist to work it out. It was above 4 million. And if you take away the 845 invested, you're at a, you're at somewhere in low threes as a net.

Nick · 24:10So we're talking property 1.3, 1.4 shares low threes. Now again. Not many people have access to 800 K in their unoccupied homes, so that's not feasible for a lot of people. But I'm just looking at the raw numbers. Right. Marty, it's a great question you add, but there's so many things like what would impact the, the answer to that question tax?

Nick · 24:38Yeah. If you were paying down, you know, you're paying down interest, um, so you're losing a tax deduction. The thing you need to remember about shares is you will pay tax on dividends. So if those dividends are coming out and you're reinvesting them, you will pay tax on them. But the tax you pay will depend.

Nick · 24:55Is it in a company or a bucket company? Is it individual? Yeah. There's so many things. Lot of moving parts. Yep. Yep. So, so people could be re listening to me here and going. Well, you can negative gear on property, but on shares you're actually gonna be paying tax. I understand that. I'm not saying these numbers are perfect.

Nick · 25:12I'm just trying to explain if you ignore all that stuff, um. The numbers, you know, are what they are to, to a degree. Yeah. It, it also

Jason · 25:21gives people an opportunity to, you know, model out what you've said Nick, and just go, you know, maybe they have an investment property and they're considering selling it for maybe the same reasons you are, that they're sick of cash flowing the out of pocket.

Jason · 25:33They're looking at repairs and maintenance and other rules and regulations. But then I think beyond just selling it and then going, what do we do? You could pay down the main residents and then look at debt recycling, redraw, then off the, off the main residence to start this, start this beautiful portfolio, which as you said, Nick, you know, 400 grand over 20 years, you look.

Jason · 25:531.3, 1.4 million, whatever the numbers are, like this, this stuff is powerful. And I think, yeah, as I said, is under considered because not, not everybody realizes they can work with a financial advisor at a relatively low cost to get this advice.

Nick · 26:05Yeah. And, and Jace, I just wanna say you, you should get advice, but where this is all coming from now and we're, like Marty said, the young people that are, 'cause we are seeing more people do the shares now.

Nick · 26:17They pe people get it. You can do it without an advisor these days. If through the use of things like ETFs and, you know, uh, ASX 200, uh, index fund, that's all you need to do. And that's why this is becoming more of a thing, like this is not rocket science. What I'm saying,

Marty · 26:35I, I like what? You both say, I, I like what he said Jay regards to when, when Dick said the 800, he was just giving an example of that.

Marty · 26:44But I go, I, I could just imagine all the 50 year olds out there going, oh my god, yeah. Share market's gonna crash 50%, we're gonna sell our house. I could just picture it. Right. But I really like what you said of having a strategic plan. Like you might start saying, oh, I'm gonna leverage 25 grand of that equity and then I'm gonna.

Marty · 27:04Pay down some owner occupied debt 25, and then I'm gonna reinvest another 25. So you're stagnating it over a period of time to, you know, to, to get comfortable with the process. Is that either way, that's where the advice comes in and, yeah, and just to get the strategy around it.

Nick · 27:20No, you're so right. Like most of the advice we do now, nearly all the advice we do now on share funds, super funds, it's not about the investment.

Nick · 27:29The investment. Now, there's so many products out there where you can capture a whole market. It's all about strategy. What do you want outta this? What's your investment timeframe? What's your risk profile? How much do we have invested? How much do we have protected so that if shares do go down, you're not in a position where you gotta sell them.

Nick · 27:45The advice capsulates, um, all of that. So it's making sure that the strategy you're on, no matter what shares you hold, is going to be not completely risk free because nothing is, but you're gonna de-risk that as much as possible based on your personal situation.

Marty · 28:02Yeah, and, and you've gotta, you've gotta have the appetite and be emotionally strong given the volatility as well.

Marty · 28:10That can happen to the upside and downside, right? Because we all wanna buy ball when the share market's going berserk. But then you've gotta be able to swallow. You know, a 20% pullback occasionally, you know, 'cause history suggests that that can happen too. And not so many people. As soon as something slightly goes amiss, will sell and offload the whole strategy.

Marty · 28:31So you've really gotta, if, if you're gonna go down the path, you've gotta be really in it for the long term. And be comfortable with that. Um, because it'll, it'll sort itself out in time, you know, as long as you're in the right strategy. But again, that's the one good thing with investment property, it is harder to sell, you know, so people do hang onto it and they get the benefits of that.

Nick · 28:52And, and I just wanna reiterate what I said at the start. We are, I'm very pro property. I love property. I'm just saying. Um, make sure that it fits your strategy and your personal goals is the main thing. And understand what else is out there. Because I think for a lot of people, they sit on the sidelines so you know, don't sit on the sidelines if you think you need a 50 to a hundred K to positive to get in.

Nick · 29:14There's other things to do. Of course, there's properties out there that are cashflow positive at the same time. So if you need a cashflow positive, um, investment. Even you wanna do property, find somewhere that's cashflow positive, but that's probably gonna have other, uh, trade offs such as maybe less capital growth because it might be in a regional, regional area.

Nick · 29:34If you need to buy something that you need to improve, understand if you've got the ability and the skillset to do that, if not aligned with someone, whether it's a group or whatnot that can do that. Um, I'm just talking about what we see most mom and dads do you know I've been doing this for, since 2007.

Nick · 29:50And they buy a house in growth corridors or in the suburbs, um, and they borrow a hundred percent, um, of the value.

Marty · 29:57What, what, what excites me about this strategy, Nick? 'cause I go, you know, they'd spent a lot of years while the property market was doing well, helping people to educate them into their first investment property because the numbers.

Marty · 30:09Made sense, right when rates were lower and, you know, you're getting decent revenues and the cost weren't as high, uh, to hold, but I'm much more comfortable in this day and age to get people's toe in the water in regards to exploring that, that repurposing the investment funds into a share portfolio with a strategy behind it.

Marty · 30:30Because again, like you said, less headaches, you know, no one's putting a hole in the wall. The other roof's not collapsing over time, you know, it's, it's just. It, it could just become a nightmare to the point where you go, uh, yeah, it's just a, just, you don't enjoy it anymore. So I, I feel like, yes, it'll always have a purpose and we know what that purpose is, but I really, I really like the idea of people getting into the market and getting an investment earlier, working for them with a plan behind it.

Marty · 31:01I think that's, um, yeah, it's sage advice. And

Nick · 31:05I, I heard on the radio the other day from a, um. He's the CEO of one of the big real estate, uh, franchises in this country. And the stat he rattled off, which I, I believe is probably right, um, was since COVID in Victoria, we've lost 24,000 property investment properties.

Nick · 31:24That were on the market. So that just demonstrates that's not all about, well, it is about cashflow, but it's not all about cashflow. It's about cashflow, but it's also about all the rules and regs that have come in, and people just can't be bothered with it anymore.

Marty · 31:38So, well, I, I was reading a stat. Uh, Nick in regards to people in the US who held individual stocks and, uh, ETFs outside of their retirement funds.

Marty · 31:49And it was something like, you know, 42% and in Australia it's around about 27%, which is, which is interesting. So there're obviously much more risk adverse. Crazy. I don't know which one, but, but probably somewhere in the middle. But they're, they're certainly much more comfortable, um, with looking at, uh, developing share portfolios outside of, you know, outside of their retirement.

Marty · 32:10And I think with Australians, it's, uh, yeah, it, it's something we are still developing, you know, it's still developing.

Nick · 32:17Another fun fact, talking about laws, do you know it's no longer a landlord and tenant in, in Victoria? No. It's, it's a renter and rent provider as of July

Marty · 32:26as of

Nick · 32:27really. Why? Well, mate, I think landlords tar with a brush.

Nick · 32:33It means you are better than me. Oh, maybe this is, this is a rule. I think it's rent and rental provider, but it's no longer landlord and tenant. That just calculates everything that's going on. Right. It's like a shift

Marty · 32:45in the property pronouns. There you go.

Jason · 32:48Before we get into that, I'm gonna jump in and say thank you for joining us for another episode of the Numbers Game.

Jason · 32:54Really, really great discussion around property versus shares. Uh, thank you Nick for sharing that. If you've enjoyed the episode, like share, subscribe, send it to a friend, and until next time,

Marty · 33:04protect the downside. Make some money. Invest. Well, game over.

Jason · 33:09This podcast is for educational and informational purposes only.

Jason · 33:13The conversations are of a general nature and do not qualify as financial or tax advice. We recommend before you make any financial decisions, you consult a licensed professional. Individuals on the podcast may hold positions in the companies discussed. ---