Back by popular demand, this week’s podcast guest Stephanie Brennan reveals if she’s on track to acquire a massive portfolio before she hits the big 3-0, and the team sort through the noise to work out whether Generation Y can really have it all.
Stephanie talks to the team about how her investment strategy has developed and evolved since she last appeared on the show and what she’s doing to reach her goals more quickly.
In this episode we also cover everything from DIY renovations versus employing the professionals, to the challenges Millennials are facing getting onto the property ladder. Are they a bunch of whingers, or do they have it tough?
All this and much much more on this episode of The Smart Property Investment Show. Tune in now!
Catch up on part one of Stephanie's chat with The Smart Property Investment Show: 7 properties by 25: how this young investor did it.
The Smart Property Investment Show gives you insight, strategies and tactics that every property investor can use.
In each episode, the Smart Property Investment team and its special guests will break down what’s happening in the world of property investment, how it affects everyday property investors and how they can take advantage of it.
Listen to other instalments of The Smart Property Investment Show:
Episode 42: SPECIAL EPISODE: All your burning property investment questions answered
Episode 41: 14 properties and $13,000 cash flow positive: how this investor did it
Episode 40: How I achieved financial freedom in the face of divorce
Episode 39: $2 million in just five years: SPI porfolio update
Episode 38: Identifying an under market value property: buyer's agent reveals all
Episode 37: How to find - and keep - the perfect tenant
Episode 36: How to get the best properties for the best price
Episode 35: Top investors reveal how to reduce your interest rates and borrow more money
Episode 34: 4 properties in 4 months: The SPI Show gives the inside scoop on its portfolio
Episode 33: How we’re creating wealth for our young family: Investor reveals how real-life mum and dads invest
Episode 32: From family tragedy to successful young investor: 'How I did it'
Episode 31: How to beat other investors
Episode 30: How you can be millions in debt and loving it
Episode 29: How to succeed where other investors fail: real estate mogul reveals all
Episode 28: How a poker night led to a terrible property investment
Episode 27: Australian test cricketer reveals all about his property portfolio
Episode 26: 'How we bought 11 properties in less than 5 years': The SPI Show reveals all
Episode 25: 'How I bought six properties even though the banks don't want to lend to me and I'm self-employed'
Episode 24: 'How property helped me quit the rat race'
Episode 23: 'The worst property investment decision we made'
Episode 22: 7 properties by 25. How this young investor did it
Episode 21: The magic formula for negotiating on properties
Episode 20: 'How we recovered from our auction nightmare and bought a property goldmine'
Episode 19: ‘How I built a multimillion-dollar portfolio even though I bought the wrong properties’
Episode 18: ‘What’s the worst that can happen?’ The ups and downs of DIY property management
Episode 17: The secrets to my success – how I built a massive portfolio on a modest income
Episode 16: How I'll retire on $200,000 a year
Episode 15: 10 properties in 6 years – how this elite sportsman will create a passive income
Episode 14: How I turned $4,500 into a multimillion-dollar portfolio
Episode 13: Are we about to see real estate Armageddon?
Episode 12: My sink-or-swim investment strategy
Episode 11: How your living expenses will affect your borrowing ability and is it time to chat with your lender?
Episode 10: Is it boom or doom in 2016... and is ready access to finance assured in the year ahead?
Episode 9: How a tradie bought 12 properties in under 4 years
Episode 8: 'How I bought 9 properties on a modest income - all before 30'
Episode 7: How to pick a hotspot; Here comes the squeeze!
Episode 6: How to start investing without a plan
Episode 5: 'How I built a portfolio from scratch'
Episode 4: Christmas special! We look back on 2015 and forecast what's in store for investors in 2016
Episode 3: Are we in a property bubble? Does aircraft noise depress property prices? And where's the next boom?
Episode 2: Where are prices on the way back? What's the future for mining towns? Are we all in a ponzi scheme?
Episode 1: What do you do when rates rise? How APRA is affecting investors. And have we found new hotspots?
Introduction: Welcome to The Smart Property Investment Show, with your host Phil Tarrant.
Phil Tarrant: Good day, everyone. Welcome to the show. Phil Tarrant here, editor of Smart Property Investment. Thanks for tuning in. I’m joined by my regular co-host, Vivienne Kelly. Viv, how’s it going?
Vivienne Kelly: I'm good. Thanks, Phil. How are you?
Phil Tarrant: Good. So, today, what we decided to do is, bring back, by popular demand, one of our guest from earlier on in the year. You might remember, to our listeners, Stephanie Brennan, joined us back in April. I think around the 27th or so, episode number 22. If you want to familiarise yourself with Steph's story. Sort of five months on, we thought she was a pretty hungry property investor who had quite sort of ambitious plans to grow and evolve her portfolio in terms of overall wealth creation. I wanted Steph to come back in to just really us a bit of an update on where she's been, what she's up to, and some of the stuff that might have changed within her strategy over the last five months or so. Obviously, property changes all the time. The strategy that you start with often isn't the strategy that you have today. I think all good property investors understand that as your knowledge of property, your aptitude towards property investment and just your confidence and capabilities in that space, often your strategy will evolve overtime.
My personal strategy hasn't changed much since we started. Well, not really. We look for under-market-value properties in sort of affordable types of areas where we can then manufacture equity through renovation and then hold those. We're still doing that, Viv, working really well.
Where we started buying, where we identified those opportunities, aren’t there anymore. We bought really well in those areas, in the western suburbs in Sydney, but we were able to identify similar opportunities that are in line with our strategy, up in the Queensland market and in other areas of Australia. We're still doing the same thing, by and large. We're still staying true to our strategy, but we're getting a little bit more sophisticated in the type of stuff that we're buying as well.
Steph, thanks for joining us on the show.
Stephanie Brennan: Thanks for having me.
Phil Tarrant: Everyone really liked your story last time around. It was a really popular episode. What do you think you're so popular?
Vivienne Kelly: That's a lofty question.
Phil Tarrant: It is. What do you think it is? Obviously, our podcast, we keep these pretty raw, fly-on-the-wall. Steph, we haven't really said, "Oh, this is exactly what we're going to talk about," but I guess the question is, obviously, what you said resonated with people and you’re young and ... I'll talk about your age because you are young and I guess women are okay with talking about age if you're young. You’re 25 years old and you've done really well, but something about your story really resonated with our listeners. Do you think it's the fact that you're just out there doing something or you're being good at it? What do you think it is?
Stephanie Brennan: I think you've pinpointed the fact that I am young. Given that there's a lot of millennials in the demographic that we see, I think that enables people to resonate because, as you said, I'm out there, I'm doing it, and showing them that it is possible. Also, because I'm young and I'm still on my journey, we can actually journey together and learn and benefit from each other. A lot of the people that do come and seek my advice are people between 25 and 45, but the main bulk are 25 to 35 and I think that's because we're the same age and there's mistakes and things that I've done well, things that I've done not so well, and anybody that comes to me can learn from those mistakes. I think that's why.
Vivienne Kelly: It's a good story as well because, personally, as a Gen Y /the much slated Millennial generation, I am a bit sick of reading blogs about irritating we are and how much we complain about property prices.
Phil Tarrant: It's all true, though.
Vivienne Kelly: It's not true, Phil. We are hard done by - but I think it's interesting that Steph has sort of just pushed that aside and gone out and invested. I do read a lot of blogs ‘Gen Y, stop whinging, go and do something. It's not that hard’. Then you get the Gen Y push back, ‘It is that hard’. Blah, blah, blah. I think Steph is just a good real-life example of putting all that crap aside and just getting out and investing and being honest about what she's doing.
Phil Tarrant: It's not hard then. It's not hard.
Stephanie Brennan: It is hard if you don't know what you're doing. There is a lack of knowledge and guidance in the market, so I think that's true, but it's not hard to do well in property, particularly in the Sydney market. If you find the right professionals to engage with, then you will do well out of it. I think if you surround yourself with the right people, then it's not hard, but that's like anything. The expert in anything was once a beginner and that's important to remember as well.
Vivienne Kelly: When you were in last time, Steph, back in April on episode 22, the aim was 22 properties by the time you're 30 which is in about five years’ time. Is that still the aim?
Stephanie Brennan: Definitely still the aim, but as Phil said, the strategy along the way does change. When I was last in here, my strategy was to buy and hold and I still want to buy and hold some properties, but in order to be able to reach that goal by 30, I turn 26 in two weeks’ time, so I'm pressed for time now. I've got four more years to do that, so I wanted to change my strategy to enable me to get to that goal certainly on time, but if not, sooner.
Vivienne Kelly: Talk us through that strategy change then, what's changed and what are you doing now?
Stephanie Brennan: What I'm doing now is looking at renovating and flipping and then also looking at international markets as well.
There's two reasons that I want to do that. One that I've touched on which is to reach my goal faster, but also because I've got a lot of clients that are coming to me, wanting to buy internationally.
Phil Tarrant: Sorry, just on that basis, and I think we talked about in episode 22, you actually turned this into a business now, haven't you, where you're helping other people down this path of world creation?
Stephanie Brennan: Yes.
Phil Tarrant: So, you talk about clients being, other people that you are professionally helping out now.
Stephanie Brennan: Yes.
Phil Tarrant: Okay, cool.
Stephanie Brennan: Other clients are coming to me and asking about international property, particularly renovating and flipping and I sort of thought I want to have first-hand experience in both of those things because then I can really understand the challenges that they go through and then also, I guess, work out what's the best strategy and way for people to implement going into different strategies and different markets.
Vivienne Kelly: You didn't want to be giving people advice on something that you had no experience on?
Stephanie Brennan: Exactly.
Vivienne Kelly: So, what's the renovating and flipping thing like? How is that working in practical terms? What are you out there doing?
Stephanie Brennan: For me, I started with one of the properties that I own in Manly because I already had a lot of equity in that property, so it minimises my risk because it’s the one that I'm trialing first. I renovated that. It's now in the market. We've got a couple of offers, but we're waiting to take it to auction.
I'm also going and looking at a place in Bondi on the weekend, which hopefully I'll be successful to auction and that will be one that'll be a high-level renovation, taking out walls and things like that.
I did another renovation on a place that I've just moved into which was the first property I've ever bought down in Manly Vale and that was really good as well because it was something that I could sort of dip my toe in without doing a full-scale renovation, taking out walls. Now, I think I'm ready. I've done the two. Done them pretty well, so now, looking to get to that next level and start doing bigger-scale things.
Vivienne Kelly: Do you renovate it yourself? Do you have a team of professionals? How do you crunch the numbers? Do you just sort of knocking down walls and hoping for the best? Are you doing a bit of a Phil Tarrant and getting all your mates involved and paying them with beer? How is it working when it actually comes to the renovation?
Stephanie Brennan: I found a really good builder that's really cost-effective, but does a really good job. We structured the fact that if there's more capacity for him, then I can get a better deal because there's simply more work. A lot of the finding different vanities and pictures and things like that, I'm doing myself. In terms of crunching the numbers, there's a lot to actually consider even down to the little things which are new taps, new handles, new light fittings. It's the big things that you never miss. It's just those little things, so working out exactly what is actually in the property and then doing all the costs.
Vivienne Kelly: So, Phil, you've done a bit of renovating yourself. Your Mount Druitt property, I think you renovated in a weekend, isn't it?
Phil Tarrant: Yeah, full reno on a weekend.
Vivienne Kelly: So what do you think about all those little bits and bobs in terms of finding the right tap and knocking down the right wall? How do you find your knowledge about that? You did it with a bunch of mates and a bunch of people from here. How did you find that process?
Phil Tarrant: I really enjoyed it. I like renovating. I think it's cool. I get a lot of satisfaction out of it, but there's two types of renovations. There's a renovation you do on the house that you want to live in and potentially raise kids in, all this sort of stuff. Then there's a renovation you do on an investment property. They're two very different renovations. The actual process of doing it might be quite similar in terms of knocking down walls and sticking kitchens in or floors or painting and stuff, but the outcome that you're looking for in renovating an investment property is very different than what you would be renovating for a house that you live in.
My advice when you're renovating an investment property is forget absolutely everything you've ever seen on The Block or any of those other shows and start with a spreadsheet.
You need to understand when you're renovating an investment property why you're renovating an investment property. Are you trying to increase the livability of the property? Absolutely, but why are you doing that? The reason why is that you're spending money on it because you want to try and manufacture some equity. So if the property’s worth$200,000 today and you can spend $20,000 on it and it becomes a $250,000 property, that's a good reason to be renovating. Capital growth, but also an increasing yield. You need to make sure that any money that you spend on an investment property actually has a tangible return in immediate cash flow increases, but also a long-term capital value.
One of the biggest mistakes that people make renovating investment properties is that they renovate it like it’s a property they want to move into and they overspend - over capitalize, is the right term for it - whether that's, they do the wrong type of renovation like knocking down walls to make open spaces and losing bedrooms, which changes the market feasibility of a property, all the way through to spending way too much on different stuff. If you can put a $20 tap in or a $50 tap in, that's going to work and not break in the next five years, why would you spend that versus spending something which is $400 or $4,000 on a tap which might look really nice, but it does the same thing and that is to make sure water comes out so people can wash their hands or whatever.
Vivienne Kelly: Speaking of budgeting and crunching the numbers, you did pretty well on keeping the budget on your Mount Druitt renovation, didn't you
Phil Tarrant: Yeah.
Vivienne Kelly: I think you're I read an article about it years ago and you only went over by a minuscule amount from memory.
Phil Tarrant: I think it was a couple of hundred bucks.
I think we budgeted $15,000, I think, I haven't looked at it for quite some time, but I think it was $15,000 and we said we’d renovate it over a three-day period or a long weekend.
So we gutted it, put a new kitchen, new bathroom, new floors, like carpets and stuff, we painted, new light switches and stuff. That was a really focused, strategic plan that we had. We said that we wanted to lift the rent from X to Y and we knew that if we created that product, that similar properties in that block and along that stretch, in Mount Druitt which is right near the Westfields, had a market pricing of X. We went in there knowing exactly what we're going to achieve. A lot of it was done on the basis of a spreadsheet and making sure we kept costs down, kept labour costs down, did it as cheaply as possible.
Vivienne Kelly: I think one of the really important things when investors are renovating is making sure that your new property or renovated property fits with the area. There's no point in making a Mount Druitt apartment that's then going to be out of the price range of people who live there.
Steph, do you research the areas that you are now renovating to make sure that you're renovations fit with the demographic who's going to want to live there or buy it when you go sell it?
Stephanie Brennan: Definitely. I think Phil touched on a really important point as when you're renovating to move in, it's a completely different renovation than if you're renovating to resell or just keep it as an investment. I think that is really the mistake that people make, but when you're looking at buying property at all, whether you're renovating and flipping or you're buying to hold, it's really important to look at what's the demographic of where you're buying because something that's - for example, in Bondi near the beach, that'll be fine for a one bedroom, but something upper-north shore, it's going to be better suited to a two-bedroom or more, because the demographic is simply older. It's really important to look at that whether you're investing in any form.
Phil Tarrant: Are you doing any of the work yourself on your properties? Like you said, you're sort of sorting stuff like that and this and that, but are you actually getting your hands dirty, sort of rubbing back walls, or getting paint on yourself and that sort of thing?
Stephanie Brennan: I haven't with these two, only because having a business, it's hard to, I guess, replace yourself out of that and spend the time, sort of spending your week on renovating. It's something that I would like to do, but I wanted to get familiar and watch what other people do and look at replicating it first. Fortunately, I found a builder that's really cost-effective, so it's: what's my time worth and what's his time worth and where is it best spent?
Phil Tarrant: Yeah. It's a really important point. I like renovating, but I shouldn't be doing a $25 an hour job on a property, number one. I should be doing, sort of spending my time where it's going to create a lot more value. You need to be really specific about the value you're going to get by doing any of the work yourself. Also, I don't want to renovate on weekends. I've got a young family that I want to spend time with. I would prefer to pay someone to do it and, number one, they’ll probably do a much better job than I can because they do it every single day and therefore, they are faster and they could probably get better access to materials. On the flip side of that, if you are doing a lot of renovations and it sounds like you're doing it, you actually get a bit of scale as well. If you can provide regular work for a builder, you're going to be a preferential client for them, so when you need stuff done, they're going to do it, they're going to prioritise your stuff as well.
Stephanie Brennan: Yeah, definitely.
Phil Tarrant: The timing of renovation is just as important as what the renovation is itself. I could have spent $15,000 on a renovation that took me three months to do versus $15,000 in three days. If I didn't have anyone in that property for a period of time, that's not rent that I'm receiving, and therefore, I've got the holding costs associated with that renovation. Do you factor that into your renos as well? Are you really tight on your timing and actually understand what the full cost is?
Stephanie Brennan: Definitely.
Phil Tarrant: The reno, plus the time, plus the coffees, and bacon and egg rolls that you had to pay guys to get them there.
Stephanie Brennan: I work it even down to whether I'm going to be paying on stamp duty on the next purchase because if I sell on a short period of time, then I've got to look at - I’ve got the stamp duty cost, I've got agent fees, I've got legal fees, and then also the holding costs. I look at all of that and if there's not going to be enough of a profit margin, then I wouldn't look at it, but if there is, it's sort of like how can I replace my income faster and consolidate the debt on the other properties that I have faster? And if it works out, then it's certainly a viable option.
Phil Tarrant: Interesting.
I want to get back - we touched on it really briefly about you Gen Ys, and I'm a Gen Xer, and I’ve probably opened a can of worms here, but I think you both make a really good point.
So, you just pick up anything these days and people are complaining about that it’s impossible to get into property as a young person. And it’'s a lot harder. It hasn't changed much since I was young, I’m probably a decade or so older than you guys, but it's always been difficult for people to buy their first property. I think there's a level of sophistication coming out of Millennials who are a lot more open to the idea of their first property being an investment property. They actually want to live in a particular area and they know that to live in that area, you probably can't buy in that area, particularly when you're sort of got a new career and you're not making a lot of money, all this sort of stuff.
Buying a property as an investment property first and foremost. I think that's a really good idea for a lot Gen Yers, but were saying, Viv, that there's a lot of push back. People say, "It's absolutely impossible. I can't get in. The world is against me. I hate everything. What am I going to do?" Then you've got Stephanie here who are just getting it done. What is it do you think that there’s such a polar difference between all the noise you get from Gen Yers and then you've got the people who actually out there doing it? And you can invest in property for a couple of 100 grand, right?
Vivienne Kelly: I love debating this question because I just feel like I'm in such a great position for it because I work for a publishing house media company that is so invested in real estate and property investment, but then I also have a lot of friends who have really valid points about how difficult it is. I was at a BIS Shrapnel Conference the other day where they were forecasting what's going to happen next. And one of their main points was Gen Y just aren't willing to live out on the fringes. They want the inner-city lifestyle. And they were sort of framing it that way, but I think that the point that perhaps they missed is that a few generations ago, we could discover those suburbs. Kellyville was quite rural and they were these pockets that weren't discovered yet. I'm not sure that there's anywhere left for Generation Y in Sydney to discover. We're not going to suddenly "Oh, no one's heard of Glebe. Oh, Glebe is being gentrified. That's new and different." I think that's why a lot of us have turned to rentvesting, I guess, renting where we want to live and buying where we can afford.
Another interesting point is I talked about this with parents, they bought their first property in the really early '90s in Chiswick, the sort of inner-west on the water there. Look, it would boggle the mind to talk about how little they paid for that property, but they were paying interest of 17.5, 18.5%. Whenever I go off at Mum about how they are really lucky and they've since moved to Abbotsford which is the suburb next door and I think they got into that for $300,000 and it would now be worth in excess of $2 million and they've done some renovations on it. It's obviously appreciated in time, but yes, the money they paid was comparatively smaller, but the interest rates they were paying, they were raising two young kids, it was the early '90s, Mum was working part time, dad wasn't very old, so he wouldn't have been on great money. And they were paying 18%. She has a really valid point as well that, yes, it's different, but I don't know that it would have been easy back then either.
Phil Tarrant: I don't think it's easy. I think it's a contextual thing. Similar story, my Mum says that when they moved into their house, which she still lives, that for the first couple of years of their life, they had two lawn chairs and a card table as their dining table that they went without. That was a product of that generation and it was a different times and all that.
So, Stephanie, so two questions, have you gone without in order to do what you've done today? Then the second part of the question is that working with people who are Millennials or Generation Ys that want to create wealth, how many of them are actually willing not to have that overseas experience? How many of them are willing not to go out, get pissed every night? How many of them are willing not to go and have all the fanciest iPhones and whatever else? It's a perception thing. Can you have both? Can you have all this great stuff which is the modern way and can you also be a property investor as a Gen Y?
Stephanie Brennan: I think, eventually, you can have it all, but you can't have it all at the start and you really need to work your way up and build up. There's plenty of things that I went without. I've learned to cut my hair ever since I was 15. I don't spend money on that. I still, even though I have the money, don't spend money on that because I want to look at paying down and investing more. There's a lot of things that I have gone without, but I think the main problem with Millennials and Gen Ys is they're not willing to sacrifice. I mean there's a lot of people in fine dining restaurants that you see that are under 30 and it's sort of like, yes, maybe if you do that not every night of the week or less, then maybe you could afford a property. I think that the shift towards rentvesting is I guess a reflection on society.
Back in my Mum’s era, she bought her first property when she was 21 in Manly Vale actually, virtually across the road from where I bought my first. It was interesting because back when she bought it, that was expensive at that time and as Viv said, she was paying, I think at one point, 21% interest. She didn't go out. She had steak and slices of pineapple. That's all she could afford, and tuna cans. My sister, who bought her first place when she was 19 in Alexandria, which back then you wouldn't touch it, but she was eating tuna cans and things like that because she couldn't afford anything else.
When I lived in my first place, I got my groceries down to $50 a week because I simply couldn't afford anything else. When I rented it out, then that was a lot less pressure on myself because you're not paying all the mortgage yourself.
It's still easy enough to get into the market if you're willing to put in the effort. I mean, I looked at a property just before coming here that was in Freshwater, $350,000. Now, the square meterage is quite small, but there's still properties that you can find that aren't ridiculously priced in Sydney on the northern beaches or on the north shore or even in Bondi, but it's whether you're willing enough to put the work in and actually go for it.
Phil Tarrant: To be fair for Millennials, if you look at the stats and we sort of got them on SmartPropertyInvestment.com.au, the wage-earning capacity of people today versus the value of property, it's a lot wider than what it used to be.
Vivienne Kelly: Wage growth has sort of stagnated. I mean we've been really lucky in Australia, I think, what is it? 21, 22 years now without a recession.
Phil Tarrant: Yeah.
Vivienne Kelly: It's pretty unheard of. We are pretty lucky, but wage growth is slowing down. People do have valid concerns.
Phil Tarrant: Yeah. It's a big gap now between comparative of what people used to earn compared to how much it cost of our house. Your parents’ generation and my parents’ generation. There is that point to take into consideration. I don't want beat up Gen Ys about this because it is tougher in some circumstances. You've got all-time low interest rates on the other hand, so it sort of balances out.
Vivienne Kelly: Phil, I think you're interesting because you often talk about how when you were in your 20s, you were gallivanting around Europe and going out and having a good time and drinking beer and all that. You, obviously, did ... You didn't go without to my understanding?
Phil Tarrant: No.
Vivienne Kelly: Now, you got to your 30s and moving into your 40s, investing, but you also always said that you wish you'd started sooner.
Phil Tarrant: Yeah, sure.
Vivienne Kelly: Does that mean that you regret the time in your 20s having fun? Would you really take that back?
Phil Tarrant: No way. Not in the slightest. Yeah, I would have loved to have got it earlier. I guess that's a point I'm making with Gen Ys and Millennials, whatever you're going to call them. If you get it, you can do something about it. If you don't get it, that's fine.
Vivienne Kelly: Yup.
Phil Tarrant: Go and spend your 20s doing whatever. Go and get some experiences. Get your stories and stuff. That's cool, but the longer you leave it, the harder it's going to be, point number one. How long are we going to have this interest rate environment? Probably for a little while, but interest rates will go up at some point in time. I think also where we are today versus where we were 20 years ago or 40 years ago as a country and the way in which the world has evolved over that period of time, yeah, Sydney now is a major, it's a major global city. It's a major Asian city, so is Melbourne.
It's not going to be cheap to live here. You've got more people that want to live in Sydney than what we have houses to accommodate them, so what happens as a result of that? Property becomes a premium and therefore goes up in value. That's the reality that we live in right now. For Gen Ys and stuff, I think what you're doing, Steph, is really smart. You're trying to help educate them about the opportunities.
I absolutely agree with you, to do anything in life, you need to go without. You got to go without for something, so you got to make that choice: what you want? And how do you want it? But this whole idea of living of where you want to live and rent there and invest where it's the right place to invest, I think that's a great option for a lot of people. If you want to be a homeowner or invest in a property in Australia, you can do it. Even on a salary where you've just started out in your career. You just need to know where to buy and how to buy and the process for doing that. That's sort of my take on it.
Vivienne Kelly: We've had people contact us who really don't earn a lot - $40,000 or $50,000 a year before tax and before expenses and they have found a way to invest. I guess the anecdotal evidence is there. It is possible, but I, obviously, as a Generation Y also really understand the struggles and I think that both sides of the argument have a valid point, but I would like the Gen Y bashing to stop.
Phil Tarrant: Well, I want to bash you guys. I'm going to give you a hard time. I think it's cool. It's good, but you can do it if you want do it. If you want to do it, you can do it. If you don't want to do it, don't worry about it. Do something else. Fine, you can sort it out later on in life. That's what I did. Whether you’re buying today, or you're going to buy in 10 years, there's always going to be an opportunity. It's always a good time to invest in property. That's what you need to know about this. If you can't afford to invest in property today, but you want to start thinking about it, look at what you need to do in order to achieve that now. To invest in property, you need a deposit, simple. How do you get that deposit? Do you save your money? And you do that by eating baked beans and dollar loaves of bread? And that's cool. It sounds like you did that Steph. That's a way you got going. You sacrificed, but there's other ways you can raise deposits as well.
Stephanie Brennan: Yeah, definitely.
Phil Tarrant: You can tap your parents up, speak to a mortgage broker, but you can get your parents to become guarantor on loans and all this sort of stuff. Fortunately, for Gen Ys, I guess your parents have sort of - they're either Baby Boomers, or older Gen Xers, they’ve probably got a bit of equity in their property because they've been living a high life for a little while and probably the property’s gone up in value. Tap them up and ask them for some cash so that you can start investing.
Vivienne Kelly: Linda and Paul, if you're listening, that's ...
Phil Tarrant: A message to Linda and Paul.
Vivienne Kelly: That's an official instruction from Phil Tarrant. Yes, they're sitting on ... That mortgage was paid off quite a long time ago, so they are sitting on a bit of a goldmine at the moment.
Phil Tarrant: When you think about it, you can buy up in - there's lots of places you can buy like Broken Hill for example. I was looking at this the other day. The average property, it's like $120,000 or $130,000. I wouldn't be recommending to invest in Broken Hill, by the way. It's Australia's most affordable place, but as an investment location, I probably wouldn't going there, but there's some exceptional locations and areas in south Brisbane where you can get into the property market for a couple of 100 grand. You were just saying Freshwater which is right near Manly Beach. Sort of $350,000 for ... What is it? A studio or something?
Stephanie Brennan: A one-bedder.
Phil Tarrant: A one-bedder.
Stephanie Brennan: Yup.
Phil Tarrant: It's not a lot of money. What do you need? A 10% deposit plus all your financials. If you save yourself 40, 45, 50 grand, you're in the game.
Vivienne Kelly: I think it is really easy for us to get so caught up in the Sydney side of things. I mean we live here and it's always on the news, but just to jump back, Steph, when we talked about how your strategy had evolved since we spoke to you back in April, one of the things you said was you started renovating and flipping, but you also mentioned that you've been investing in commercial spaces overseas, New York and San Fran from memory from our chat just outside. Can you talk us through that? I don't think there'd be many 25-year-old investors with commercial spaces in San Fran and New York.
Stephanie Brennan: Yeah, sure. I really wanted to understand different markets because I think Sydney is a very strong market, but there's other opportunities in other places in the world. San Fran is actually one place that their property market is very similar to Sydney. I think that was a fairly conservative bet. I was just over in San Fran actually last week and the government is considering releasing startup visas which would drive prices up and these commercial spaces are aimed at co-working spaces for young entrepreneurs. That's something that will go up in value. It's a 99-year lease, but they've got a really good return on them. I thought I want to try different things. Not just residential, but commercial, and certainly international markets, and then I can utilise that knowledge for not only my own portfolio, but other people as well.
Vivienne Kelly: I mean, I love San Fran. Phil, you've just gotten back from there yourself, haven't you?
Phil Tarrant: Yes, San Fran’s cool. Certainly there's a buzz about the place. There's lots of techie entrepreneur cool people out there. It's a good vibe. I like San Fran. It's a very livable city. Like most things, you need to look at what makes a good investment for a property. It’s about wage growth, it's about job growth, it's about diversified economies, it's about all these types of things. San Fran, pockets of San Fran have those indicators. Whether it's San Francisco or whether it's Sydney, you need to be looking for the same stuff.
Viv, we’ve run out of time.
Vivienne Kelly: We always do Phil.
Phil Tarrant: I always enjoy these podcasts because we never really know where we're going to go with them.
Vivienne Kelly: I didn't know we'd be tackling the Generation Y debate, but I'm glad that we did.
Phil Tarrant: If anyone wants to participate in that debate, come on in. Maybe we can do a special podcast, the great debate, Gen X and Baby Boomers versus Gen Y and I'll be, I'll argue on the side of Gen Y because I think there's a lot of validity to a lot of the concerns that Gen Ys have. I think most people get that. You can be quite cynical about Gen Ys and you said 21 years without a recession. They've always had a good. But you know what, I haven't had it tough either. I'm a Gen Xer. It's been pretty good.
And the points I would make that sort of summarise this podcast, it's about compromise, isn't it? You got to work out what you want. You want to invest in property? You’re going to have to make sacrifices to do it. It's just how big that sacrifices are and really understanding why you want to get in property. If you don't into property today, you can get into property tomorrow, so you'll probably be okay at the end of the day, but get educated, read SmartPropertyInvestment.com.au. Is that your recommendation for all Gen Ys, Viv?
Vivienne Kelly: That is my recommendation. My key takeaway from today is go to SmartPropertyInvestment.com.au, but also for Linda and Paul to tap into that equity.
Phil Tarrant: There we go. Let's catch up on that. Do you want to do a podcast?
Vivienne Kelly: Yeah, yeah.
Phil Tarrant: Let's do a case study, Viv, about how you can hit your parents up to become a guarantor.
Vivienne Kelly: That'd be great.
Phil Tarrant: All of Australia knows now. You're under pressure, but that'll be quite entertaining.
Stephanie, thanks for coming in again. Really cool.
Stephanie Brennan: Yeah, thanks for having me.
Phil Tarrant: I love the story. I like your drive. I like your commitment to what you're doing, both on a personal level with creating wealth through property, but also supporting your peer group to try and achieve the same. I think you've got some challenges ahead of you and I imagine, you probably get into a lot of debates with people about the realities of investing property and what you need to give up in order to do it if you're a bit younger on in life, but I think if we get more voices and advocates like yourself to actually champion these causes and better educate people, I think collectively everyone’s going to do better.
Viv, continue what you're doing in terms of leading the charge for Gen Ys and giving good balanced editorial.
Vivienne Kelly: I will.
Phil Tarrant: All we ask from you guys is make sure there are five-star ratings on iTunes even if you don't agree with my views towards Gen Ys, but I think I'm pretty impartial to be fair, but leave them there. Let us know what you think about the show. Also, any questions, you can email us at [email protected]. We’re also on all the social channels, Facebook, Twitter, LinkedIn, et cetera or you can follow me @PhillipTarrant to see what I'm up to in terms of property.
Vivienne Kelly: Just a quick shout out as well. If you want to come on the show, please also email us at [email protected]. If you've been listening to the 45-odd episodes we've done and you're enjoying it, why not come on yourself and have a chat to us?
Phil Tarrant: Yeah, particularly Gen Ys and Gen Xs, particularly if you feel a particular way. Let's do a bit of a group one and see how we go. It might be a bit messy, but I'm sure we can have some fun. Thanks for coming on, guys. Really appreciate it. Tune in next week. Until then, I'll see you later. Bye.