Why turning to accountants to shore up rental applications could be problematic
Accountants are increasingly being pressured to provide capacity to repay statements, as real estate agents and landlord...
Julian Lancey rejoins host Phil Tarrant to discuss the restrictions banks placed on investors that have made it “basically impossible” for Julian to grow his portfolio.
The investor unveils challenges he endured when renting out his investment to drug addicts, explains the importance of landlord insurance and shares his insights on how you won’t make the same mistake.
In this episode, you’ll also find out the challenges of the market dynamics Julian faced, how he tried to overcome the restrictions placed on him by renovations and refinancing and why he thinks “property is the best”.
All of this and much, much more!
If you like this episode, show your support by rating us or leaving a review on iTunes (The Smart Property Investment Show) and by following Smart Property Investment on social media: Facebook, Twitter and LinkedIn. If you have any questions about what you heard today, any topics of interest you have in mind, or if you’d like to lend your voice to the show, email [email protected] for more insights!
Suburbs mentioned in this episode:
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Speaker 1: Welcome to the Smart Property Investment Show with your host Phil Tarrant.
Phil: Hello everyone, it's Phil Tarrant here, host of the Smart Property Investment Show. Thanks for joining us today. Bit of a back to future, by the way one of my favourite trilogy movies, I think it's actually brilliant. And going back in time, we're going forward in time, it's an anecdote I want to use today. I've asked someone to come back in the studio who Smart Property Investment has known for a number of years, pretty much from when we were really early days. And his most recent connectivity with us was back in early 2016, so we're talking about 18 months or so ago. And I feel like I'm doing a couple of these back to the future type episodes recently just catching up with the investors who we've spoken with in the past who are passionate, driven investors. And just really getting a stock take on where they are and whether life's been good or bad subsequent to chatting with us. And we hope they're good, but the guy in the studio today, Julian Lancey, I hope will regale us with some interesting stories.
He was first on the podcast, as I mentioned, 17th of Feb, 2016. Go and check it, go and find it, go and listen to it. And even stop this now and go and listen to it before we go back in. But Julian, good to have you back.
Julian: Good day Phil. Thanks for inviting me back.
Phil: Oh no, it's good. We liked your story and we spoke to you way back when we were a print magazine many years ago. And if you Google or go into the search field on smartpropertyinvestment.com today, you just type in Julian Lancey, you'll probably see some of the stuff we wrote way back then. But what I'm going to do Julian, before we get into it, I'm going to read out the description back when we first spoke on 17th of Feb, 2016.
Julian: Okay, so 18 months ago.
Phil: 18 months ago. We said, "Julian Lancey's living his life on the edge. His ability to service his portfolios under threat with each rate rise. In this episode of the Smart Property Investment Show, he revealed to Phil Tarrant the strategies he uses to keep costs down and what he'll do if he goes belly up."
Julian: Yeah, I like it.
Phil: Julian is an everyday investor who chooses to self-manage and furnish his five property portfolio. You'll hear why he's chosen to take this path and the handyman skills he's picked up along the way. Julian also reveals why he's investing in a tiny 17 square metre studio and killing it as a result.
Phil: But it's not all smooth sailing. He's pushing his servicing capacity to the max, and there's the looming issues of land tax, future rate increases, increasing talk of changes negative gearing. How does Julian plan to cope with any future shocks of his portfolio.
Julian: Thanks. I actually enjoyed listening to that. It's interesting how much has changed and how much hasn't as well. They're still talking about negative gearing and nothing's changed and I said nothing would change a couple of years ago and I till think that nothing will change there as well.
Phil: So, 18 months and that's what we said. I think a fair description and capitulates the conversation that we had. How is it all going?
Julian: Well, 18 months ago I came in here happy to tell you I'd bought two more properties, so I had six. Now I wish I could say I've bought a couple more, but I haven't. I haven't been able to buy anymore and that hasn't been a lack of my effort, so to speak. I've gone to banks, I've gone to brokers, and the restrictions that they've placed on investor in those past couple of years or year and a half, have basically made it impossible for me.
Phil: So you haven't bought anything in…
Julian: I haven't bought anything, I've wanted to. I've actually had one loan approved, but it was the only one I could get approved was with a Mickey Mouse bank that nobody knows and nobody's heard of and just on the internet, and really high rates, and it wasn't worth it. I've refinanced, which is good, so I pulled a bit of equity out. But yeah, I guess, is that bad news that I haven't been able to buy a place? I guess it’s frustrating because there's been plenty of people buy them.
Phil: But let's have a look at ... So you haven't done anything for 18 months, and I've gone through cycles in my portfolio where I haven't done anything for a whittle while. Well, if you bought the right properties, they go up in value. So 18 months in the market, and by memory a lot of your stuff's in city?
Julian: Yeah, it's all in city.
Phil: In a sort of suburbs? It's the suburbs, I thin, by memory?
Julian: No, no, no. Well, Potts Point.
Phil: Potts Point.
Julian: Is that eastern Suburbs? Kind of more city. And Darlinghurst, that's city, on the way. And Northern Beaches and Western City.
Phil: Okay. So in the 18 months that you've held those properties without buying anything more, I imagine you've had a considerable increase in value.
Julian: Yeah, definitely. It's gone crazy.
Phil: So what sort of equity gains do you think you've had over that 18 month period?
Julian: Well, I can honestly say, I'm not very good with statistics and I listen to your podcast regularly and you've got guys that come in and they just know statistics and everything. I'm not very good about that, I'll just self-admit. But, I just turned 40 a couple of weeks ago and if I sold all my properties, I'd be a millionaire. And that's a wonderful feeling to know that in my life I've never been given anything when it comes to handouts when it comes to family or government or stuff like that. To turn 40 and think, oh wow, I've hit a million bucks, that's a big-
Phil: So what you're talking about there is you've got more than a million dollars in equity property. So if you sold the lot, paid down the debt, you'd be left with more than a million bucks.
Julian: Yeah. And I'd probably move to Thailand and I don't know, but an island or something.
Phil: Sounds alright.
Julian: But I'm still here working.
Phil: So when you first came in 18 months or so ago, you had a little baby girl with you.
Julian: Yes, I've got a daughter. She's clocked two now and it's much more difficult than anything else I've done. So I've got a new respect for both my parents and any other parents out there. Lack of sleep and oh my God, even just leaving the house, it's impossible. But anyway, that's part of life I guess.
Phil: So do you see yourself as a property investor?
Phil: When you first came in here, you were hungry and passionate and loved the game. Have you lost some of that passion for it do you think or you've just sort of matured a little bit?
Julian: Well, no, because I love listening to these shows and reading about it and I'm on every email list I can be. I'm just, I guess, I've hit a wall. I can't get another one.
Phil: So you would buy if you could buy.
Julian: I would buy if I could buy. And I can't, so what can I do? I've done different things, I've renovated, I've fixed this, I've fixed that, I've refinanced and yeah, I just can't get another one.
Phil: Is this just a moment in time for property investors? And you're not alone; a lot of people talk about how difficult is now to secure financing. And for our listeners who aren't really up to breast on some of the challenges facing investors right now, banks have really elevated their serviceability requirements to secure finance, so they're looking at people's ability to repay debt at 7 plus precent, PNI. Banks have been more reluctant to give money to investors because they have caps on how quickly they can grow their investor loan books. So these are all mechanisms that have been put in place, recommendations put in place, by APRA, the Prudential Regulation Authority, to try and slow down investor lending and I think by doing that, they're going to slow down the property market and make property more attainable for all Australians. And, you know-
Julian: That's what they've done. It's actually easier for, well, relatively easier for first home buyers now to get a place because they get lower rates and they don't hit the walls like an investor would, like I have. And hopefully these walls aren't going to be there forever, maybe they'll be gone in six months.
Phil: Everything moves in cycles.
Julian: Exactly, yeah.
Phil: Everything is cycles. And what has happened, the dynamics in the marketplace, is in response to perceived and some would say actual rampant increases in, unsustainable rampant increases in property values. And you know what? Yeah, they're probably right. There's been a lot of people in the market buying property who perhaps shouldn't be buy property, who are redlining it. You might be-
Julian: That'xs me.
Phil: -one of those guys.
Julian: No, I definitely am one. I think I am the reason why APRA has introduced these restrictions is because I'm just buying whatever I can, getting as much as I can, and buying whatever I can
Phil: You invest in property, why? What's the idea?
Julian: Well, there's no better investment, you know? There's property, there's shares, there's buying your own business or starting your own business, sorry. That's it. And property is the best.
Phil: So you want to be part of the game? You want to create those opportunities to create wealth through property? And as you said, you've got a million bucks in equity in your portfolio, which is a great accomplishment.
Julian: And I've got a, where I live now, if I was renting it, I would be paying more money and I wouldn't be as secure. I've got a daughter, I want to know that this place is for me for umpteen years or even a year or as long as ... I want to dictate how long I want to live there, and that's a huge thing for a family.
Phil: Yeah, confidence, control-
Julian: Yeah, stability.
Phil: Stability. All those important stuff. So this market dynamics, which is restricting people like yourself and many, many investors from investing, has created the effect that they wanted to originate and that is-
Julian: It's worked.
Phil: To slow things down.
Julian: It's worked.
Phil: Things move in cycles as well. So they'll be a point in time when the banks are able to take the handbrake off some of the way in which they lend. And let's be honest, banks want to lend money. That's how they make money.
Julian: Yeah, I've got the equity. That's not the problem. The problem is them saying, "Yes, we'll give you the serviceability." Is that word I'm looking for?
Phil: Yeah, serviceability.
Julian: Yeah, yeah, that's a problem.
Phil: What's the problem though? So by memory you're a teacher?
Julian: I'm a teacher, English teacher, yup.
Phil: Okay, so you make pretty good money?
Julian: Great money.
Phil: You're not sort of the top end of the earning scale, but you're comfortable in the middle, representative of middlish road. That's a great, commendable profession. I believe teachers should get paid more than what they do.
Julian: Well, I agree. You should tell my boss. Send him a letter.
Phil: Who’s your boss? The premiere in East of Wales now? Pay our teachers more, they deserve it. And it'd be constant income, it's not seasonal. It's here's a pay check every month, happy days?
Julian: Every couple of weeks it goes straight into my bank account. So that's frustrating. They're the-
Phil: So you're generating income. How long you've been a teacher for? How long have you been employed for?
Julian: Seven years now.
Phil: So you're not a flight risk.
Phil: You're there and as long as you want to work-
Julian: Solid as a rock.
Phil: -I imagine there's going to be jobs there for teachers, right?
Julian: There's plenty of jobs.
Phil: So you can show the bank that you earn income and that you also hae a property portfolio that you derive income from, which adds to your ability to service debt. So banks are involved in the way in which, and it depends which bank you deal with or lender, how they choose to recognise the income that you generate from the investment properties. Some might only recognise half of it for example. So there's this gap. Banks are looking to look at serviceability two, sometimes 3% higher than the actual cash rate. That's going to slow guys like you down.
Phil: It's going to be really hard to do it.
Julian: Yeah, very frustrating. I hope if I can come in here again in a couple of years, I can say to you I've got a couple more places, because I don't want to lose that desire. Buying property has been one of the best things in my life. I love it.
Phil: The worst thing thought that can happen is that you're out of the market for three, four years, you know?
Julian: No, the worse thing that can happen is you rent your property out to Ice junkies, which I did.
Phil: Oh did you?
Phil: Is that a recent thing or?
Julian: That's a recent thing and that happened in the past year and a half. It's a very long story, but I'll give you-
Phil: Let's have a quick chat about it. Who did you end up renting you place out to Ice junkies? I say that with a smirk on my face but it’s horrible.
Julian: Oh no, believe me, I wouldn't wish it on anybody. Can you imagine having a baby screaming all night, having to wake up and teach, work the next day, and having the stress of knowing that you've got, I've got to choose my words carefully here because I guess the people weren't the problem, the drug was the problem, that turned beautiful people into people that I don't come across in my life. I don't know how you, Phil.
Phil: I don't hang around with a lot of Ice addicts.
Julian: Neither do I. And it's a social problem, it's an education problem, it's an addiction problem. And I was in that world. I didn't know what a junkie really kind of looked like and I rented out my properties myself, I was kind of desperate to get someone in, I didn't want the vacancy factor, had a couple people come through, sure you can have it. "Oh, we'll give the bond to you on Monday." The bond never game. The rent never came in. They knew all the legal side. They were like, right, legally we can stay here for this and that and we want to go to the tribunal. And suddenly before I knew it, I was speaking to solicitors and booking in tribunals and it ended with the sheriffs. And when I say sheriffs, I know you're looking at me funny, they're not the sheriffs in the states with the big cowboy hats and the-
Phil: Duke of Hazard guys.
Julian: Not those sheriffs. They look like cops and they have badges that instead of saying constable or police officer, they say sheriff. And so we turned up to my place in Pot's Point, which is really King's Cross, and they evicted the ice junkies that were living there. And as I was waiting outside, very nervous, one of the ... Am I allowed to refer to people as ice junkies? Is that a bit rude?
Phil: Fine, no.
Julian: It's okay?
Phil: If they're an ice junkie, they're an ice junkie.
Julian: Person with an addiction, there you go. Brought in a couple of jerry cans of petrol.
Julian: And so I was like, hang on, what's happening. So I'm thinking my God he's going to bomb the apartment block. And they contacted the police or the King's Cross bomb squad. Show's we're in a good country. A couple of minutes later, there were at least eight coppers there, all in black with the bullet proof-
Phil: Like tactical response guys.
Julian: Yeah, oh my God. They burst in. It turns out in the jerry can there was petrol, but I think if you're addicted to ice, I guess I've realised this, you don't think rationally and you think, Oh, I've got to put this in the car or take it upstairs to my apartment that I've got to leave. I don't know. But it was a horrible experience. But fortunately I was insured so financially I'm no worse off.
Phil: But emotionally, took it's toll.
Julian: Oh yeah. I couldn't sleep. I was a mess. But I can look you in the eyes right now and say I'm a better person for it. And I tell agents this, you know? Because I'm friends with agents, I speak to agents all the time, and they say, "Julian, you know, like what are you doing? Let me look after your properties." And now, I know if I can get through that, then I can get through anything.
Phil: So you still self-manage?
Julian: I still self-manage after all that.
Phil: But Julian, I'd like to thank you for giving me a headline, because obviously this is a way we're going to probably talk about this particular podcast, how ice addicts potentially ruined someone's investment. But these things happen, right?
Phil: So what would you do differently? How would you make sure that you refrain from making this mistake again?
Julian: I was in such a rush not to have a vacancy factor, you know, because I thought of it as in if I don't have someone in there for one week, its $400. So I just took the first person that walked in. And I did check, so to speak, but there were fake checks. I guess you, me, or an agent wouldn't know that. But you've just got to trust your kind of gut feeling. So how I would do it differently is not be in a rush and find the right person. And the place was looking like shit. I can say shit on this podcast?
Phil: That's okay.
Julian: The place was looking like shit.
Phil: If anyone's offended by that, I apologise for Julian.
Julian: I've got a lot worse, but the place was a dive.
Phil: So it didn't look good.
Julian: It looked horrible
Phil: So you attracted the type of tenant it probably presented itself as.
Julian: Exactly. Oh, it was perfect for a couple of ice junkies. But now, since then, I have spent not even a lot of money. It's actually quite cheap to make a shit box beautiful. It didn't cost me much. A few grand. And straight away, I've gone from 360 a week rent or a bit more than that to 440, 450, 60, something like that.
Phil: Just by doing cosmetic reno.
Phil: So what did you do? So you spent a couple of grand, but where did you concentrate your dollars?
Julian: I actually got someone to do it because the truth is, I know I just said I don't use agents, but I had an AirBNB bookings.com agent. I tried the short term letting. The reason is because I was renovating where I was living and I needed to stay somewhere too, so I thought, okay, I'll stay there. So yeah, I didn't do it. I got an agent kind of to do it. And it cost me about five grand or so. But as I said, you know, it will quickly pay for itself.
Phil: So it's coat of paint, anything else?
Julian: Paint, a few tiles, ripped the kitchen out, a bit of fancy furniture.
Phil: By memory, you actually lease your properties with furniture in them?
Julian: All furniture, yeah.
Phil: Okay, why do you do that?
Julian: Well, those-
Phil: Short term rental… obviously.
Julian: Well those properties, yeah, short term. So that's the answer. A couple studios in the city that I've got, it's short term, so people want furniture.
Phil: So is this that really small studio you have?
Julian: Well no, actually, Darlinghurst is the 17 metre square tiny one. This one's a bit bigger. It's one of the oldest blocks in Sydney, actually. Beautiful old block in the heart of the Cross. And the Cross has changed a lot too.
Phil: All the lock out laws have really changed the dynamics, would you say for the better? Is it gentrified or is it-
Julian: Well, Phil, the junkies are still there. I'm proof.
Phil: Well, you got rid of two of them, right? You kicked them out.
Julian: Well, who knows? I guess the drugs are still in King's Cross, but there's less jobs there because there's less people drinking and partying there. But it's just moved somewhere else, hasn't it? It's just moved to Newtown.
Phil: That's what they're saying. It's part of capital city.
Julian: So yeah, now the drugs and the yuppies and the bucks parties are all in Newtown. So maybe you're going to see the kind of, I don't know, property wise, are they going to do a lock out law there eventually or something? And then all the bucks parties are going to go somewhere else, maybe Parramatta or something, I don't know.
Phil: Maybe. I've seen bucks parties in Parra before. So the property's gone up in value though, despite these headaches.
Julian: It's gone mental. It's gone ape-shit. Sorry.
Phil: So how big ... So it's a studio? How big?
Julian: 23 metres squared or so?
Phil: So not huge by any means.
Julian: No, it's tiny.
Phil: So what did you buy it for?
Julian: I bought that one for 220 and it's got to be over 400 now. And I know that because one sold exactly the same downstairs for a fraction under 400. And this is, as I've told you, for five grand, it's beautiful. You walk in there, it's really nice. And the block allows holiday letting, which is a whole different side of thinking.
Phil: So is that what you're doing now? You're doing short term lease on it?
Julian: I was, but I put a tenant in for the winter months. But anyway, we'll see what happens. I'm just doing whatever I can to get as much as I can.
Phil: So is your portfolio positively geared?
Phil: Before the consequence of tax? So at a gross level? Would it cost you to hold these properties? And that includes mortgage repayments, rates and maintenance, strata fees, accounting costs, anything associated with holding these properties. Does the income it generates outweigh that
Julian: Yeah, well most of them, yes. But I live in one, remember, as well. So the one that I don't live in.
Phil: Your principal place of residence.
Julian: They all do except for one, pretty much, which is my one in Western Sydney.
Phil: So where in Western Sydney?
Julian: It's in Baulkham Hills. Now I don't know if I'm allowed to call Baulkham Hills Western Sydney, that's the hills.
Phil: More the hills district.
Julian: Yeah, I've said that to a few people and they've bit my head off; "That's not Western Sydney."
Phil: Well I think you find that Western Sydney's probably ending by Windsor Road and Baulkham Hills on the right hand side of it, Seven Hill on the right hand side of that. So Seven Hills' firmly in Western Sydney. I think Baulkham Hills falls into the Hill shire, which stretches all the way up to like … and areas like that, by memory, so it's in the hills area.
Julian: In the hills area, yeah.
Phil: But I imagine you've done well in Baulkham Hills though, because that's been a very attractive place to live.
Julian: It's gone crazy. And what a beautiful area.
Phil: It's very leafy. You've got the M2, M7, there's a new rail line going through.
Julian: Yeah, oh I am so excited about that new rail line. I go to bed with brochure under my pillow every night thinking about it. I love infrastructure, but most of all, I love the Northwest rail link. I am so excited.
Phil: So there's a station at Bella Vista and there's also a station in ... Is there a station towards Castle Hill or is that-
Julian: Yeah, there's Castle Hill. It's not in Baulkham Hills.
Phil: Then it goes all the way through Rouse hill.
Julian: It goes all the way up the top. And then it's going to come down to Chatswood. And then there's going to be a new tunnel, so to speak, that's going to go through the Sydney. Barangaroo, is that right?
Phil: Well, actually, it's going to go through North Sydney. There's going to be a new station in North Sydney called Victoria Cross, I believe. And it's going to then go to Barangaroo and then I think it's going to go straight out to the Eastern suburbs so people can go direct.
Julian: Is it? I thought it went to Bankstown.
Phil: There's another line going down there.
Julian: Oh, geez, wow. What a great time to be in Sydney.
Phil: So why did you buy in Baulkham Hills?
Julian: And to invest in Sydney. Well, that's why, the Northwest rail link.
Phil: You invested for that reason.
Julian: For that reason. The one and only reason I thought this is going to be awesome.
Phil: It's an easy commute for people in Baulkham Hills. It's a nice family area, it's a satellite town, everything's there.
Julian: And you know what, I live in Manly now, or Manly Veil, and the drive from Manly Veil to, for example, Mosman or the city, takes longer then Baulkham Hills to the city.
Phil: On the new rail.
Julian: You're luckier if you live there. It's faster because there's these roads there, they're huge, they've got bus lanes that go 100K and hour.
Phil: The M2 is now, they're pretty much finished the final bit where it's going to be three lanes each way and a bus lane or a transit lane.
Julian: You come from Manly, like Mosman, there's about 60 traffic lights and everybody's merging and it's a disaster.
Phil: So you're going to move out to Baulkham Hills?
Julian: I would love to. I really would. I probably would have never thought I would say that when I was born and bred in Manly, but it's the best life. It's the best life out there.
Phil: Everything's there. So what's the property you have in Baulkham Hills? Is it a house or a unit?
Julian: No, no, it's a unit. It's a really big one; three bed. And I've renovate that, too. I put floorboards in and painted it. Yeah, so it's-
Phil: Is that recently? Did you do that subsequent to us first chatting?
Phil: And why did you do that? Was it a capital growth play or was it a rental yield play or both?
Julian: Well, the truth is, my mother-in-law lives there and so I've got-
Phil: So you're the landlord for your mother-in-law?
Julian: Yes, I am.
Phil: I bet you move quickly when she goes, "Julian, a tap's leaking."
Julian: Yup, so you can imagine what that's like. But anyway, it's fantastic, it really is.
Phil: So has it gone up in value? What did you pay for it?
Julian: That was 550.
Phil: And when did you purchase it?
Julian: Good question. Four years or so ago?
Phil: Four years ago.
Julian: Yeah, about four years.
Phil: And now? What do you think the renovation will be-
Julian: It's gone apeshit again. Eight something?
Phil: Wow, pretty good.
Julian: I don't know if anywhere in Sydney has gone down. Has anywhere in Sydney gone down?
Phil: Certain pockets. I think if you're buying mansions around Rose Bay, I think some of them have sort of come off a little bit, and maybe some Palm Beach residents. But you're talking the top end of the market where if someone goes down a million dollars, it's like a percent or two. It's all relative. But I think most people who have invested in Sydney over the last five years, or have held property in Sydney for at least five years, have at least done pretty well. But then that's just really a product of why you're invested in property, right? You invest in property in areas which have got the basic fundamentals to drive positive price increases.
Julian: Infrastructure, close to cities or a hub.
Phil: Well, look at Baulkham Hills, for example. And where in Baulkham Hills is your property?
Julian: It's near Stockland there?
Phil: So near the shops.
Julian: Near the shops, yeah.
Phil: So the shops there, so it's probably right at the top of the M2, Signals Road, the Bull and Bush Hotel.
Julian: That's right, that's right. What a great place. I think the locals call it the Bull and Bushy.
Phil: The bull and bushy. So you've got everything there. You've got shops, restaurants-
Phil: You've got-
Julian: Chinese food.
Phil: Chinese food. There's a good pizza joint there, by memory.
Julian: Yeah, pizza joint.
Phil: Yeah, I remember it well. But you've got access to Windsor Road, you've got access to the M2, access to the M7.
Julian: There's a lots of apartments going up there as well.
Phil: A lot of big apartments, a lot of change, a lot of zoning there over the years too, to get greater density because what a good place to live as a transport hub.
Julian: It's fantastic.
Phil: And the rail line going through, which is a massive investment for Sydney and East of Wales, but if comes back down to when you're buying property, you're buying places which are going to show ... There's going to be a rational for price increases. So you've done well there, Julian.
Julian: Thank you.
Phil: So to reflect back, let's bookend this chat. I read out initially the sort of synopsis of our last chat and I said how's it all going and it sounds like you're going, you've done well. So time has been good for your portfolio.
Julian: Yeah, it's been fantastic. I've had probably the worst thing that can happen, which is renting your place out and it being trashed by people that don't care and having to go down insurance
Phil: Just on that basis, so the insurance paid for you to fix it? Or parts of it?
Julian: Well, this was new to me. I didn't know about this as well. So I had landlord insurance, which I recommend everybody getting. And if you don't have it, it's not even much, it's a couple hundred bucks, you know?
Phil: I know in the properties we had which were units in strata; it was about 300 odd bucks a year.
Julian: I think it's less. I think it was less. So there was landlord insurance which covered ... well, actually, let me explain it how the insurance guys explained it to me. If you get your apartment, you turn it upside down and you shake it, everything that falls that is not attached is covered by your landlord insurance. But everything that is attached, so to speak, so the floorboards even, even floating floorboards and the ovens and the this and the that, and the kitchen, that is strata insurance, so strata pays for insurance which protects you as well.
Phil: Yeah, it's not a bad analogy, but to get your strata to fix your oven, you'd be pushing it pretty hard. But if a pipe burst and it wrecked your oven, then you'd be knocking on strata's door to say, "Hey, this dodgy pipe here as just wrecked my oven and my floorboards."
Julian: That's it, yeah. Actually, I think you're right. The oven is landlord. The analogy wasn't that good.
Phil: It's a good point, though. As a landlord, you need to work out exactly what your policy entails.
Julian: Well, as a landlord, you need landlord insurance.
Phil: So do they cover you for the loss of rent during that period of time?
Julian: You know what, they should have, however, I jumped on and got the insurance just after they'd moved in and because there was evidence that they were a little bit behind when I got it, they didn't cover-
Phil: So another good point.
Julian: So there's another good point for people. Get insurance before people move in.
Phil: So get it now then.
Julian: Get it now.
Phil: If you don't have landlord insurance, go and get it.
Julian: It's not much. It really isn't much.
Phil: It's nice peace of mind. And I've been in situations where I've had to call on my landlord's insurance where I haven't received rental repayments and I've been able to call back some of that and also where they've created damage to the property, that gets covered. And they're pretty good, to be honest with you, most insurance firms. They'll challenge it. That's what insurance companies do, but stay firm. So things have been okay. Times been growing your portfolio, there's been a couple of headaches. You've learned a lot.
Julian: I've learned a hell of a lot. And that's what's good about your shows and the Smart Property is I'm kind of coming in here not as oh yeah, I've got all the answers because I'm so far from having all the answers. I've just go experiences.
Phil: Experiences are critical with equipping you with skills in the future.
Julian: Yeah, definitely.
Phil: Julian, I appreciate your honesty and your frankness.
Julian: Thank you.
Phil: And sharing your story, warts and all. And learn in terms of people having greater challenges to secure more mortgage debt right now.
Julian: I'm sure there's others listening in-
Phil: There's lots of people. It's getting hard. And for good reason as well. But markets change and today's market isn't tomorrow's market, so we're fortunate that as a nation we have a strong property market, we have strong banks.
Julian: A great economy.
Phil: A strong economy. And a strong sort of prudential oversight who are looking at these issues and making sure that as investors in a nation, we're not sort of building anything that's going to burst too much. But that's said…
Julian: The bubble didn't exist.
Phil: Well, a lot of people say this, and it's an ongoing debate, when's it all going to come undone. And if you go back to the fundamentals and if you're investing in the right places, you're probably going to do okay in property.
Julian: Supply and demand, it'll just keep going up. I don't think it's going to skyrocket, but we're just going to see it-
Phil: We'll see what happens.
Julian: Little bit, little bit.
Phil: Julian, thanks mate.
Julian: Thank you.
Phil: We'll talk again soon.
Julian: Please, a couple of years, I would love to come back.
Phil: All right, we'll definitely do that.
Julian: And tell you some more crazy stories.
Phil: Nice one. Thank you. And remember to check out smartpropertyinvestment.com.au. Go back and listen to our original chat with Julian, 17th of February, 2016. You enjoy it. Julian's life's obviously changing and it's cool. Embrace change, it's a great thing. Remember to go to smartpropertyinvestment.com.au for all latest news and market intelligence. If you're not yet a subscriber to our daily newsletter, please jump on board and you'll be the first to hear about what's going on in property, smartpropertyinvestment.com.au/subscribe. For all our social stuff, just search Smart Property Investment. And if you've got any questions for Julian, me, or anyone else on the show, contact the team. Or if you'd like to come on, [email protected] We'll be back in soon, bye.
Speaker 3: The information featured in this podcast is general in nature and does not take into consideration your financial situation or individual needs and should not be relied upon. Before making any investment, insurance, tax, property, or financial planning decision, you should consult a licenced professional who can advise whether your decision is appropriate for you. Guests appearing on this podcast may have a commercial relationship with the companies mentioned.