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Talking Property with Chris Bates

Episode 01: Show Notes.

On Today’s show I'm joined by leading property expert & mortgage broker Chris Bates (founder of Wealthful and co-host of The Elephant In The Room Podcast). Not only is Chris a gun, he is a good friend and what I like most about Chris, he has an opinion and is not afraid to share this with you.

In today’s episode Chris talks about the current property and lending landscape and shares with you some of his expert advice when it comes to not only getting finance, but finding the right property and not just following the trends in the media.

Key Points From This Episode:

    • 0:00 - Intro
    • 3:03 - Chris's background/bio
    • 4:08 - Buyers advocates - why are they so popular?
    • 7:34 - Common challenges Chris is seeing
    • 10:24 - Why Chris focuses on OUTCOMES not just loans
    • 13:15 - Modern method for choosing the right professional advisers
    • 16:58 - Buying new property DON'T - here's why!
    • 20:00 - Easy to buy, hard to sell vs hard to buy, easy to sell
    • 21:30 - Volume vs quantity
    • 25:07 - Responsible lending changes
    • 30:34 - Withdrawn money from super, listen to this
    • 39:42 - How to pick a mortgage broker
    • 45:25 - Why property clocks are lazy
    • 48:55 - Wrap up
    • And much more!

Links Mentioned in Today’s Episode:


People Mentioned in Today’s Episode:

Full Transcription (excuse typos as this is computer generated):

Craig:

Welcome everyone to this week's Facebook and YouTube live session and trying out something new, as you might say, you've got the nice little box around the videos. But also probably more importantly is we're doing an interview style thing. As opposed to just me sitting here talking to you, which I believe will be a whole lot more interesting and also talking about something that's outside of insurance. Property is a huge part of, of your life, our life. I know that. And so what I wanted to do today was bring on not only someone who I have huge respect for when it comes to the property market and but also a friend and, and Chris is probably one of the best people I've seen at articulating the concepts around property. All those different things that are available to you and what's going on. And what also like about Kristi, he has an opinion. So I'll bring him on now. And he can do a bit more of an intro to me. Chris is the better intro than I can, I should say. Chris is the founder of wealth full a mortgage broker ex financial advisor as well. So uniquely positioned the cohost of the elephant in the room podcast. But like I said, someone who has an opinion tells it like it is and a friend. So welcome, Chris,

Chris:

Thank you, Craig. I put opinion, hopefully that doesn't offend too many people, but that would have never been the ideal outcome. It's always about trying to help people better understand whatever they're doing. So yeah, let's do it.

Craig:

I think I think that's the thing, you know, like whenever you have an opinion, you're going to polarise some people, but you're also going to have some people that come to you and I think that's what you found. And I'll pop everything up here for you like links to your website, links to you on LinkedIn, which you probably the most active and have been for a long time. And you not only have you, have you helped people in terms of, yeah, I'm sure you get some people that say, Hey, we don't like what you're saying, but there's a huge amount of people that follow your stuff religiously. And the interaction that you get on this stuff is super, super large. I even saw you commented on one of Trump's photos during the week about someone who posted thing you had like 42 likes on your comment.

Chris:

Oh, I'm pretty bad. Actually. I was, I really thought just on rent and things, but yeah, I just read trumpet, ethics and children. And I was like, how is that even possible when your son goes out and does trophy hunting. And I'm a massive animal love that's, that's what it just hit me, hit me. I'm hot. So I had to come. Right.

Craig:

I saw that I was just cracking because I'm like, if anyone knows you and I mean, you put out another post this morning at nine meetings, two podcasts, you've got a catch over the mate and you're giving your daughter Vegemite toast. So it's not like you're sitting around twiddling your thumbs for the whole time, but I love it. You've got time to troll the Trump post and have an opinion on, sorry. So it's great. But I do want to just, if there's something I might've missed, I mean, I talked to you a lot obviously, but fill in the blanks for the people that might be watching about you, your background, where are you up to?

Chris:

Yeah, so I've been a financial advisor for 13 years, just till this year finally made the call that, you know, we don't really want to do it in half and we work with lots of different financial advisors and what drove that decision in the last eight years, all we've really done is help people. There'd be probably decisions. We don't work with any other client that all that stuff do with them, but it's more who we want to help and where we can have the nice values, all that constant face, forties couples, families God, the month. So everything can just think it through. So you know what they should do next and then offer them what's the good property and then how to structure lines, et cetera. So it's kind of like an end to end sort of property sort of, we don't do the buying in houses, very click, but we've been working with buyers agents for the last eight years. So I'm pretty much [inaudible] and w we refer at clonic home for them, if that's what they choose to do, but not all clients use.

Craig:

Yeah. Okay. So might come back to that one because I think I've spoken to a lot of people that have spoken to you come from you gone to you. And also my clients from other places buyer's advocates of one of the things of Oregon explode. I mean, maybe I just didn't know about it beforehand, but it seems to be more prevalent now. They're, they're more common they're being used for both own occupied and investment. So I might come back to it because it's sort of down the track for that one too, but I'd be interested to hear a bit more about it. Cause it is something that I'm seeing a bit more of. Is it, is it more prevalent now? Is it just me?

Chris:

It's become a cool thing to do a low barrier to entry coping, to do people who've bought one or two properties or maybe bought five a job. And all of a sudden they go into become a volunteer agent. And because of that sort of cool, then I think there's lots of money in it. It's just had a proliferation of people in the industry. And fortunately they just haven't had the learnings, nothing to do with every professional. It takes years to get new knowledge up. And I do cried. You've been involved for a long time as well. The advice you get today, while it might be very similar to what you go through then is going to be it's much better. I had an advisor. And so I just think that's the problem with a lot of new buyer's agent is they just, haven't got the learnings and property is so complex. So many things that you can make mistakes on. And if you haven't seen those mistakes or make mistakes, unfortunately you'll make those any clots. And so that's one of the big risks of using these new advisors.

Craig:

I saw a I saw a post by another sort of advice. I don't know what Baz Gardner actually does. He's more like a trainer of, of advisors and a coach. I like a lot of things. He said that you mentioned something the other day about there's people who have been doing things for a long time and there's people who've been doing it for a long time and doing lots of it as well. So I'm actually starting to hear that echo is as well. It's not about the headphones here.

Chris:

Yeah, not a hundred percent exactly. Like yeah, it's it's what have you actually been to, and is it the type of work that you're wanting help on? Like, so lucky you want to go to someone who's been doing, seeing lots of people who are like your situation or where you may be in the coming years, but not that far away. Like you don't want to go see a financial advisor that does lots of work with people retiring if you're in your twenties, cause like how are they going to connect to the problems you're going to have in five years time? And unfortunately that con, sorry, they're not dealing with that day in day out. That's every professional, you know, like you, you really want to make sure lots of experience in the thing that you want to be solving.

Craig:

Yeah. And I think that's such an interesting, and considering now that you've niched down to just to the property and not to say that you weren't doing it well on the other ones, but I just think that, would you rather say someone like I had a client who was diagnosed with prostate cancer last week and he went and saw the prostate. He does, I think he does 15 operations a week or something like that. And he has been for 20 years, you know? So would you rather see that guy, or would you rather say the one who's done probably two in the last month, not to say that he couldn't do it, but I think there's going to be that freshness of, you know, the skill being there.

Chris:

A hundred percent that's one of the raises we got out of advice is that we were doing less and less every year on all the other elements of advice like insurance. And I just started feeling my knowledge was getting worse because I wasn't focusing on it and we're doing a lot of this stuff and I just had to call a spade, a spade. We weren't helping our clients in the best way yet. And so that's hence why one of the other reasons is I, you can't be do everything. You know, you just got to nail down one area and that's we were doing that, but we just had to make that final call that, you know, other people can do this better.

Craig:

And my just, just on that with, with everything at the moment with property I get a lot of questions about it. We're talking about it a lot. And I guess it's just, I'm trying to work through and say, I guess the major ones that you're seeing at the moment, so rates are at an all time low. We're seeing pressure from COVID all those sorts of things. What are the common, what are the common things that are coming across your desk at the moment? Most of all now?

Chris:

So there's always the major articles, right? And they're always gonna talk a doomsday or Marcus and then were talking about one property market. And so the first thing that any listener has to think about is this, just get rid of that in your brain. There's not one property market, there's hundreds and thousands of sub markets. You've got capital cities, rural apartments houses, good streets, bad straights, North facing, South facing. So there's so many elements to it. So I think that the night and I was like shouting at the screen because I was like, that's not true. That's not true. And so I just, that's the problem. Really. I think people get all these media thrown at them. So all the media was like, market's going to full 20, 30%, but now the lot market's going to boom and not everything will boom and not everything would have fallen. And so I think the problem is that we're always looking for a solution. Then we go to mass media and thinking that that's going to provide the solution. And unfortunately what that says could be completely different to what you want to do and what you want to buy and what you want to do. So I think that's the biggest thing I'm saying at the moment is that everyone's confused because they don't know what it all means. And it all made different things to different properties.

Craig:

It's, it's interesting though. I think the media wants such an interesting, interesting journey and it's a rabbit hole as well. Right? You can go down and you can watch what's going on. And like you said, from one day to the next, you could be buying property, selling property in the same market from the same thing, and there's just no responsibility on it. So I do think it's not, and that's where I think having that, opinion's really important. And I love the world that we live in at the moment. You're able to tell your opinion quickly and your audience is huge now, right? Like I don't know what it would be on LinkedIn. You've got the podcast as well that you can get stuff out to it. And I think that's the whole power of, of right now. You don't just have to rely on the one writer for the Sydney morning Herald or the age, writing something about property from domain.

Craig:

And they've all got an agenda. And look, I'm not saying that we don't have an agenda, right. I help people with their insurance. Ultimately, I believe that people should be protecting yourself. You help people with their mortgages. Ultimately you want to help them get into a property, but there's nothing there's no, you know, sought in the fight sort of thing when it comes to which property they buy or which asset they buy or when they buy it or do it. And how do you help people with that in terms of when they come to you with these things that they've heard, what's the sort of, what's your message to them?

Chris:

Well, that sort of blow your trumpet back. Gum Craig, it's the same thing for you. Like if a client comes to you and they say, I've got this level premium policy, I set it up, I ease a guy it's a great value. It's whatever. Right. And you can compare that to the Mark. And you're like, that's the best thing that they could do or they're got, they don't actually need that amount of cup. Like you kind of doll their cover down or the Sammy things, you know, great insurance advisers will do that. It's not in there for example, financial best interests. It is actually in our interest. And that's a big misnomer that what's in the advisor's interest is getting their clients great results, ultimately that will grow their business that will grow their client's lives. Everything's positive. So you know the same thing for you, Craig, for me, crazy, this clients come to me and they're thinking about doing something that's not the right thing or it's the wrong property.

Chris:

We just tell it like it is like we explained to them without any worry that you know, that we might lose them as clients or they might go somewhere else. We just kind of knew, we know, just from experience that that just doesn't happen. People digest it, they think about it. They make a better decision. They stay with us for life. So, you know, I think that's, it's just really, probably an abundant sort of ethics sort of high barrier where you don't go for the easy sort of quick wins and you just really focus on what's the right outcome here for the client and you disconnect from what you're going to get out of it personally, because that's just, that's not even of the conversation. It doesn't matter. So if you, if you get your brain like that in the right order, it becomes really easy.

Chris:

So, you know, we've got a busy afternoon with lots of clients. I got every call with zero, worry about what's going to come out of the, out of it because it doesn't matter, which is going to help that client. And so I think that's the thing. But unfortunately I think when you starting off or you need to, you've got a target or, you know, you've got something that, or you're in an environment like a sales culture. That's when things start to get a bit murky because you start focusing on those outcomes rather than what the client is. And unfortunately, a lot of that comes from the top. You know, a lot of it comes from the bosses or the institution or something behind what that advisor works within and they have to fall in line. So bit of a rant, but that's kind of how you do it, I guess.

Craig:

Yeah. I think it's tough because there's always that challenge and we've both been in that position where we're starting business and there was a time when, from a business perspective, it was very different to what it is for both of us from now. And sitting there, looking at it. I know. And one of the reasons I've always respected you is that I know you did exactly the same thing then as you do now, whether you had nine calls booked in or one call booked in I know that you would have acted in exactly the same way. You just, you just wired that way. And I think that's the other thing that I mean, you've got long form content that's out there, the podcast. So people can hear talk for an hour at a time, every single week about certain things so that you form an opinion.

Craig:

That's why I like the long form stuff. So much more than curated videos. And I've been guilty of doing edited videos and made, it takes me 400 times to record a two minute video, but people say, Oh, you speak so well on camera. It's like, no, like you should see what's on the cutting floor. You know, I literally said I'm an R and swore 50 times, but when you hear someone speak for an extended period of time, you really get to formulate a proper opinion about someone. And I think that's the thing now, you know, when people say, go and speak to someone, go and speak to Chris, it used to be, you go and check out the wealth full thing. You'd find some shitty social proof from Google reviews that were done by your mum. You might your ex staff members, 45 people that had done stuff before you can even buy them Google reviews. And nowadays it's like, go and listen to Chris's podcast, listen to five episodes, read his stuff for awhile and work out whether or not what his opinion is and his, the way he operates, resonates with you. And if it does use him, if it doesn't, don't like, cause there's yeah.

Chris:

And that's not just the may, it's about anyone you want to work with in any capacity, thinking valuing valuing your knowledge in whatever you do and know that you're better than most people at whatever that is. And then knowing that there's other people that are really good at what they do. And it's just, it's about the extra professionals is I guess, in a whole, but then doing your and rating and et cetera. So yeah, I mean, I can talk about that for years.

Craig:

There's a, I dunno if you're saying it, but if you're saying Mike, when it on YouTube at all, have I told you about him before? You know, so he's got a, he's got a channel and he called it basically calls himself. He exposes the Contra preneurs. And one of the things he did was he published a blank book, literally out a front cover. All the pages in the book were blank and then published it and showed how you can become a Amazon bestseller. So, you know, everyone comes up with Amazon bestseller, Amazon bestseller, it's literally a book with no writing and he became an Amazon bestseller to show you that the game can be manipulated. And I hate it. And there's nothing that bothers me more that when I see people that are thinking they're in the right place for a certain thing and they're actually, they're being sold. Like it's all marketing. It is, but there's marketing with substance and there's marketing that, that is just marketing and gets you into a system that's not the right one to do. So I reckon that's probably the biggest trap of our current world that people get in their own place,

Chris:

Especially in property. And this is the support thing has this got to do with property. But the reality is when you select in property, unless you're going to do it yourself, you guys speak to someone in the property market, right. And it's unregulated, which people haven't understand what that means. It means that anyone working in the property market, no one's watching what anyone's doing. You can do things or say things, no one's going to come back in five years time and said, say, Oh, you told them a lie. He told them it's going to be a shopping centre and there's no shopping centre. And now they've lost money on a property. Like you're not going to get your money back. He's unregulated. And so if you go into that, as Bobby were lucky, people understand if you go buy a used car, if you drive it away and it breaks down, you can't call a person up and said, Hey mate, you didn't tell me that it was a big Lake.

Chris:

People get that. So they go and get a check sometimes, but all they've been guilty of by Alaina. But anyway yeah, in property, you don't want to be doing that with a hundreds and hundreds of thousands of dollars decision, right? And the problem is in new property. And the biggest thing for your listeners to take away is, do not buy a new property. And I can go on for days about that as well. But if that just sits in your mind, not one market and don't buy new property, you're going to do already much better than the average investor who doesn't understand those two things. But the problem with new property is there's massive money in selling it like huge money, like blow everyone's mind away. You're talking maybe 10 to 15% of the sell price is potentially in marketing costs. And that can go to the person selling the property.

Chris:

So if someone's referring you to someone who is selling new property, they're probably getting clipping the ticket, quite a lot of money. And the person who's actually helping you sign that contract on the, off the plan, new townhouses house and land packages is probably making a mater. And so that's the first thing is you've got to be careful in property. And if it's anything that's new, to be honest, I can, I can have that blanket sort of view on it is just looking by something else, because I can guarantee you there'll be a better established property to buy the same purchase price, then what you're going to pay for that property. And I've done all the tests and people have, I always challenged people, send me a new property and I'll find something better. And I have no, I know a hundred percent that I'll always find something. And so yeah, new property run,

Craig:

I think I mean, I, I look at this and it sort of comes down to that challenge that we're in at the moment. And particularly in capital cities, you know, where we've got, you know, Sydney, Melbourne, Brisbane, certain probably not as big of extent, but the buy in for your first time. So big. And most of the people that I deal with and you deal with have really good incomes, right? Income's not a problem, but it's just that first deposit. And I think part of the appeal, correct me if I'm wrong of the off the plan sort of stuff is that it's low barrier to entry and you can get in for relatively, not a lot of money, which is appealing. If you're sitting there paying a thousand dollars rent in Richmond or Sydney or Melbourne, and you're like, well, I could be buying something. I think I'm doing the right thing. I don't have to do this, but what's your theory on like easy in it's a little bit like the direct insurance. Yes. If it's easy and everyone's doing it, if it's hard in not everyone's doing it, which is probably where you want to be going.

Chris:

Yeah. So yeah, exactly. I mean, I've got a client moment of buying in Melbourne actually. And you know, good incomes you know, a good savings, you know, can afford something in the low one millions, right? And they want to buy in the Eastern suburbs. They're at the family stage of life. They want to buy their house. And, you know, you sent me a list the other day and it's five different new developments in the suburb. Like I said, a couple of surrounding suburbs and I literally quickly went online and for the same pride complaint and I don't ever buy it just because he's got a big house on a big block of land rather than this new townhouse for the same price. And so that kind of gives you a bit of an example. I think that the buying easy to buy is, is I guess the warning light or the thing that should say to you, if it's easy to buy, that means it's hard to sell.

Chris:

And so good property is actually really hard to find. It's also really hard to buy it because if you want to buy it at auction, you're not the only one who wants it, probably 10 people. Do you want to buy it pre auction? You gotta have to pay a decent price because they know they've got a hot property. I'm not going to give away my good asset. I'm going to get a good price for it. And I'm going to, and so hard to buy good quality properties or cheap prices because everyone I've not, I grew up, a lot of people understand it's a good property. That's why it's hot. And so it's hard to buy it. Now, fast forward, five, 10, 15, ideally 30, 40 years time. Do you need, it's gonna be hard to sell that property. No, because fundamentally it's exactly the same as what made it hot when you try to buy it.

Chris:

And so when you sell, it sells for a hot price. So what you do is you do the pain upfront, the time, the effort, the research, the frustration, the disappointment at auction. You go through all these hard yards and then when you get that signed contract, you take a deep sigh of relief. Cause you're like, right, I've done all my jobs and thought all the hard work. Now, if I ever decide to sell this at any point in the future, it's going to be easy. And that's a really good sign. If it happens the other way, the amount of times we've seen clients who have got poor properties and that the effort to sell them is so stressful. They ended up just holding onto it for years and years and years, because they don't want to deal with the pain. And that just keeps losing opportunity, cost and time. So yeah, easy to buy is a sure sign to keep on walking.

Craig:

It's really interesting. I think you, you commented again on an article about a kid. It looked young, I'll say kid, I don't mean it rudely, but what I, what I mean is someone that was young who'd bought, I think it was four or five properties during covert. And, and, and this is the thing that the media that they put up, this volume thing is some medal of honour. And I think your comment and pick me, it felt like I'm paraphrasing a bit, but you're basically saying that it doesn't matter about the number of matters about the quality and it, it sort of speaks back to your point and this isn't a game of accumulate. We're not playing monopoly, right. We're not trying to build like houses on Paul mall. We're trying to buy Mayfair and park lane and hold is what you're kind of saying. Is that right? As much as you can afford.

Chris:

Yeah. Well, that's right. I mean, if you want to put them and hopefully strategy on that start out of sport, a national geographic version of monopoly. So it's a little bit of it, but anyway, exactly. But you're right. It's not about you have to acknowledge that the media encourage that. So what about the number? Cause the, maybe a cot display, like it's about quality because like that's mass market media. They're not really there to educate you on what's a quality asset. So these articles, they know they're click bait, right? Whether it's knife and Birch on there, I've got a hundred properties or there's other people as well. I'm not going to do with Nathan, but there's lots of demos push this quantity strategy. And whether it's someone, you know, that sort of thing, it's also the ego for the person falling for that strategy.

Chris:

Because fortunately you have to acknowledge this. We've all got it. You have to acknowledge the reason you go down this strategy is you like to tell people that you've got six properties. And that, that thing is I'd rush out the side of him. Whenever a client says to me, I've got a lot of properties. I actually think, Oh, well, what am I going to see? It's for me, it could be most white. It's going to be a lot of problems. They just, and what happens is, is they borrowing is much tighter than it used to be. So building big portfolios is much tougher in 2020 than it was in 2014. You could borrow a lot less multiples of your income. And it's a lot harder to game the system to keep on buying than it was in 2014. So that's 2014. We're in 2020 now.

Chris:

So that's not, you can't go back in time. The second thing is, is when you see these sort big portfolios, what they've done is they've got a little bit more capacity and because they can and because they've gone and bought lots of properties in a short space of time, so none of them are proven whether they're good properties or not yet. So they're just buying and buying by and they've got no evidence to show that that strategy even works yet. And then when I get a little bit extra cap capacity, say 300 grand and a lot, well, we can buy another one, let's go do it. And so what they do is they just keep on buying more and more cheaper properties. And then they get five years, 10 years down the line they can't buy anymore. And then that comes down to whether those properties are good.

Chris:

And generally speaking, they're all poor properties. Nothing's happening. They've got a lot of debt, a lot of risk and no growth. And one growth that's probably happened. There's always one that does well. And it's usually the home they live in. And they've just lived in that property. They've done nothing to it and that's growing for them. Cause they've got a good house in say, Sydney, Melbourne, and that's got all their growth or their investment properties have aligned ball. Some have lost money. Some have made a tiny little bit of money and nothing's really happened.

Craig:

It's really interesting. You say that because there definitely is a badge of honour that comes with volume. Isn't there. That's, that's there with being able to save things and it's, it's, it's a hard one to disconnect from, but you mentioned a couple of things in there. The, the way that things are now being different, the way it was before, there's the stuff about responsible lending that was announced recently. And I know it's not, it hasn't been passed yet. Has it? It's not until sort of next year that that would be passed through, but do you want to maybe give us some context around how that works and what people are up for, what it means and because it's designed to help people get into properties easier, is that right? I'll put the onus back on.

Chris:

It's the biggest thing that drives the property market is demand. And what you want to do is demand is not enough of how much people can borrow and how much people want to borrow and then how much and a lot of what they can, how much people can borrow. It comes down to the lending standards. So that's, what's changing how much people want to borrow. Usually it's that optimism and where they think prices are gonna go, but also the cost of credit. So interest rates at a huge part. So with low interest rates, you want to borrow more because you start to speculate, but also it's easier and cheaper. And so interest that's that a huge problem. So demand. And what they're trying to do is just allow more demand for housing. And unfortunately, lot encouraging demand at low interest rates gets a lot of steam in the market.

Chris:

And so the rules are around responsible then, and they're trying to unwind a lot of you know, regulation and you know, different standards that we're putting together over a decade ago, after the JFC and saying, look, let's just shift the responsibility. We put too much on the banks. Let's shift this back, let's do that. The banks off, cause the banks want to lend money. We need the banks to lend money for the economy. Let's push it back to the consumer. And if the consumer tells us they can borrow the money and they want to borrow the money, then let the consumer borrow the money and let them face the problems. And if that's not in their best interest or they default on that loan, it is what it is. It's the consumer, the consumer loses the money, but it's not the bank's fault.

Chris:

And if this gets through what you'll see is the banks ask a lot less questions with applications and they work cause they won't, they won't be legally, legally obliged. You'll have brokers who will have to ask these questions. And this is where we could get to tier. We could, if you go to direct to the bank, the bank could just say, you want a home loan here. It is. You go to a broker, the broker standards could be higher which is probably safer for the consumer. And so it's, it's hard to know what's going to happen, but the reality is there was a massive case for the last couple of years. I've watched it super closely. I've always tracked it because I know it's going to have a huge impact on supply of credit. And that was a fight between ASIC and Westpac and ASIC.

Chris:

We're going hard at Westpac. And the reason they're going hard at Westpac is if they beat Westpac, they could change the whole way, responsible lending words, and they lost and they lost on their appeal, et cetera. And the reason they lost is everyone understands that if they won that case, it would have cut the supply of credit. And we would have had another situation like 2018. So it's, it's always a big picture, apply that even though it makes logical sense for the consumer to give them more protection, that doesn't make sense for the Australian economy. The same thing with new property, the government just announced another 10,000 feet paper to find new property reason they do that is they make, let's just call it 30 to 50% of every bill they make in taxes. So if a building costs $500,000, the government just made $250,000 in tax in some way, council rights, land tax, et cetera, et cetera, et cetera. And they make so much money off new builds more than they do off your salary. So the government always want to keep encouraging people to buy new builds.

Craig:

It's there's so much in there, you know what I mean? Like you can unpack that for, but it reminds you of the long short doesn't it? You remember the movie where they basically go and buy, you throw the key sack and unfortunately we've got recourse borrowing here. So it is secured against the property and they've got mortgage insurance. So that protects the catastrophic sort of thing from happening. But the only people though, cause that meant that the financial institutions lost in the U S when that crashed. But in this scenario, the only person that's going to lose is you as the consumer, isn't it? Because if you can't pay for it, the banks have the mortgage insurance, you're going to lose your house. You're going to go bankrupt. And you're the loser in that way.

Chris:

Exactly. And people forget about the transaction costs in property. Like I bought a property for 300. I sold it for 500,000. I made 200 grand. No, you didn't make 200 grand. You might go to Monticello, you know, say 50 grand in transaction costs and maintenance and all these sorts of things that you're not factoring in. You've got to pay capital gains tax. How much did you actually make in that situation was nowhere near 200 grand. Right? So that's the problem. The thing is with, with responsible lending, if you buy property, a new apartment in Brisbane or Melbourne, right. And check out the the core logic pending yeah. My, that, that report shows how many people lose on property. And you'll see, you never hear these people at the barbecue or the do barbecues anymore. The zoom party where they stayed, I lost money on a property.

Chris:

Everyone talks about how much money they're making on property. And so that not everyone's making money. A lot of people that are losing money or basically breaking even which is losing money cause you're losing time. So the problem is in that situation, you buy a property for 500,005 years later, you go, I have to sell it for 50. You got a loan on it at 90%. So your loans for 50, you pay some, you pay out your loan, you lose your 50 grand plus transaction costs plus plus plus plus plus. And so you always lose your money first. Then the bank may lose money, but all the time that bank doesn't lose any money anyway, cause they've made you take out insurance or whatever it is.

Craig:

It's interesting. Now the other thing I wanted to ask about at the moment that I was really surprised by the people that are doing this, but accessing super through covert LA, I honestly thought that it was going to be legitimately just people who really needed it. You know what I mean? Like, like it was intense and like with any loophole I've even seen advisors saying poured out, get a tax arbitrage and put it back in and I'm like dangerous, right? Like in terms of those comments. But for me, I've been really surprised that some of the people that have access to it for various reasons being a, they needed it B they were trying to buy a house and it helped them to deposit. There's a whole raft of different things that people have done it from a, from a lending perspective. How's that affecting people's applications when they go and do it. And are they looking at that differently?

Chris:

A hundred percent. It's yeah, my my sister texted me that I'm just taking 10 grand out of super. I was like, really? Oh, okay. And my housemate told me that if, and I was like, well, I know you guys are still working and et cetera, as I said, don't do that anyways. So she didn't do it for example. But like, you know, that's what people are doing. Like people are going well, I can do it. And that was proliferating out. My, you can probably send something a little bit of conspiracy theories, but I'm not. But my view is that the government knew that was going to happen. The reality is, you know, if you allow people to access money, they will. And they knew that people were going to game the system, the people game, the tax system. And so they knew they were going to game the super system.

Chris:

The reality is the government didn't care. The reason they didn't care is because they knew how much money it was going to pump into the economy when they needed it. And they knew that people were going to blow up their super funds to support the economy. And that's what happened was that a $30 billion that got taken out of super, that has a multiplier effect in our economy. And so it was huge. The reality is the ATO are potentially going to look at it, but how are they going to look at hundreds of thousands of applications? I don't know. And there might just be a slap on the wrist problem that people are finding is with my home loans. Because three months later, what they've done is they're paid it to their personal bank account. And so it's on their record and banks are asking for bank statements.

Chris:

Most of them, not all of them, that's something that could change the responsible lending. And as soon as the bank sees it on a, on an application, legally, they cannot lend you money because it's cause you are in hardship. That's why you took that money out of super. And so banks are very in a very sticky situation and it's not a good sign if they see you've taken it out of super, and then they go and lend you a million dollars and that's kind of where it all comes down. So if you have done that there may be ways around you might've paid it to a different bank account or something like that. And the bank doesn't know about it. So that's fine. They're not going to ask you a question on it, but the reality is if they do ask your bank statements on your bank statement, you're going to find you have a lot of problems borrowing money, but that things are moving on now. Cause we're talking it's October. Yeah, probably a lot of real didn't do it. The second round they did it the first round. They might've done it in April or may or March or whatever it was. So in a lot of it's off their bank account anyway. Now, so it's not such a problem, but it was a couple of months ago,

Craig:

Just so that I'm clear, is it, is it normally three months or six months they go back and ask for

Chris:

It's interesting. So in the 2018 sort of banking commission or banking commission, the banks freaked out and they were having to go through forensically through your lines because they knew if they didn't do that. And then three years later, you wanted to Sue them. You could under the old legislation and that's what the banks were freaking out. Right? So they went right. Well, let's go. And that's what caused it the other way. So what's happening now is banks are less every year, every year, every day, we're starting to see sort of banks relax their lending policy and say, actually, I don't want to say that bank stipends. Because if they say the bank statements and I've got to ask, start asking questions, et cetera. So for borrowers now it's going the other way. Listen, less bank statements.

Craig:

Okay. Interesting. So I think that's, I mean, that's a positive, right? If people have been through that and again, another reason I think for my aura, I honestly believe that mortgage broking is the best gig because if you go to the right one, there's absolutely zero consequence that is bad, right. In terms of getting help, you don't pay directly. It's paid from the banks. It's exactly the same as if you go direct, but you get some help and you can actually provide a bit of a buffer between the applicant and the bank. So it's like, you don't want to see a application for credit, then get declined and then have to go and do it again later. So if it's like, Hey, this is on your statements from three months ago, let's just wait. You know what I mean? And it provides a much better outcome. And the certainty that you could know of, of going to apply for that, I think is super powerful as well. So,

Chris:

Oh, it's so true. We it's surprising like how people were Ben and I, my business partner talk about this a bit actually at the moment. Cause you're seeing it a lot where people are getting a bit lax on their day to day, sort of, you know, I guess financial management you've caught and they're not paying the credit card on time. They pay two days late every month or they pay their other their lines on time. It's a little bit, or they're keeping up in our credit card that didn't even know they got, they got an annual fee and they're just not paid it for six months. So yeah, we're seeing that a lot. And if we do see that we can potentially a fix that with the, before the application. Cause we do a credit check, but also if we have to lodge an application, we position it to the bank and say, look, Clapp, client's surrendering here. They know they've made a mistake. These are the issues. This is what happened. This is the story. And then they can potentially get a loan that would automatically be a straight decline. The bank. Hasn't got time to ask you those questions and you can potentially overturn it without having to be overturned.

Craig:

It's that context, isn't it? You know, like the there's no, there's no room on an application for context. It's like it's it's black or white. And I think the more volume that's going through the quicker that's going to be, and the more that you can add context to a loan, the better it helps because it leads to better outcomes. There's some people that look really good on paper that you should never lend money to. Right? Like and there's some people look bad on paper that should, you should lend money to every day of the week, I'd imagine. But

Chris:

Lending's getting more and more algorithm based. And so, you know, like, say for example, Macquarie, they automatically sometimes pre you. Not that we always, we don't rely on that. We always go for a few minutes setter and that's a big mistake. People make is they go to, they get an automated preapproval through it, online lender. But no humans looked at that and that means that way. The human does look at it. That will say things that the computer didn't say can, they can decline your application. And so you've got to be really careful. You need a human assessed preapproval. But what's the one thing McQuarry is doing is doing lots of checks on you. And they know that it's like, I don't like to use the word artificial intelligence on machine learning. I think it's overdone. But what they do is they know what creates a higher risk customer acumen behaviour, whether it's applying for lots of credit, whether it's the industry or whatever it is.

Chris:

And then they say, actually, this is a high risk case. We don't want you as a customer. We do want you as a customer insight lending is going to go more and more, I think down the American lawn where your credit writing and who you are and what you do and all that sort of, stuff's going to matter a lot more because technology is going to allow banks to be able to price that efficiently and then actually offer you a different rate. So if you're a great customer, you're going to get a better right than someone who's potentially higher risk and really risk based pricing. Hasn't been around for home loans, but it probably will come.

Craig:

And I think it's, I ultimately think it's a good thing for us all because it leads to it's like health insurance, right? Like we all pay a premium so that the ones who have a premium can't afford to still have cover so that we're not left to rely on the government welfare system and all these sorts of things. So the same thing with, with pricing of interest rates, it's not a forever thing. And if you're given the goalpost and you know what you need to do to meet it, I think that's going to be the challenge. It's Hey Craig, you're not a very good lender, not a good borrow at the moment. But that doesn't mean you won't always be this way. So

Chris:

I think probably a little bit more on the social side, I think credit, you can, you can manage your own risk a little bit. Correct. But with health, I think you just it's sometimes you're unlucky, right? And if you didn't just deal with your health or whatever, and you can't control it and what the insurers are do, which is what they do is step premiums, which is what you talk to your clients about every year. If they take advantage, as people get older and the same thing would happen with insurance, if people can, the insurance company will take advantage of the people that are sick and that's not a great society, but what the idea of insurance is, is actually about to help people. Correct. And that's why I'm a little bit, I think insurance has got a state sort of group sort of not to looking at your blood pressure. Like your, for example, if it's a I've got high blood pressure and now all of a sudden I can't get insurance cause I'm harder in school. It's like, well, yeah. Anyway.

Craig:

Yeah. We've got we've got 10 minutes I've made. I know you've got a massive day. Florence just asked about what do you recommend when you're looking for a good mortgage broker what's any tips you have other than going straight to for Googling Chris Bateson, jumping on, jumping on the waggon.

Chris:

Oh, now when a good break is Dan, I have thing. Like I said about a warning sign. When you say really any professionals, like you guys say a financial advisor and they start talking to you straight about insurance or they stop pushing you into a super fund. That's paying too much high fees. What they're doing is they're looking for a product to sell. You're not trying to get to know you and where you want to go in life, et cetera. I think a good broker cares about those things because what they want to do is make sure that you're doing what you're doing today. Even if it's just a home line they're doing for you is going to be a good stepping stone to the next thing. So if they're not asking you real deep questions about your life for me or the opposite, they're just pitching you, right.

Chris:

I can save you money. You're paying too much on your home loan. For me, that's a good litmus test to keep looking for a broker. Now, if a broker is asking you lots of questions, then I would just make sure, I think they do need to care about the property purchase. And this is a funny one. I forgot lots of friends who were gun brokers, who were, you know, doing like seeing a lot of people and running a lot of loans. And this is the funny one. I've asked them the question, and a lot of them don't want to talk too much about the type of property you purchase. And so I think you just got to be a little bit careful that the broker you speak to doesn't either a start to referring you to developers and all that sort of stuff. So I think that they're trying to make more money off you.

Chris:

And the other thing is, is they're not going to ask you questions and really kind of challenge you on what you're doing a little bit. I think, I think brokers can get to that level. I think so you want a broker that's really going to try to be there as a bit more of a mentor. They see lots of clients. So they're to be like asking you questions and guide you through what you're buying is a property. So they want to be guiding you through the property transaction. And a lot of the best brokers will do that because they help. That's what they're trying to help you do. A lot of brokers do refinances or do purchases as a business. We don't really find refinances that interesting. So our percentage is actually really low compared to the industry. Like we do 80, 90% purchases. And it'll be harder for brokers cause you know, it takes time. Like you could take six to 12 months so that client buys, but as for us, as a business is much more interesting. And secondly, we know that we can add a lot of value there and it's actually the getting the case is like a huge, like amazing moment saving, moving at home from a and Z on G to save two grand a year, et cetera.

Chris:

If you want to Bach purchases as well, or if you want to finances.

Craig:

Yeah. You just broke up a little bit at the end there. Just regarding, I think you said that you want someone who's doing a lot of purchases rather than the finances. Is that what you said?

Chris:

Yeah. Sorry man. I'll throw my net was internet was good, but obviously not.

Craig:

It's a, it's the black hole of internet. But my, I think we touched on before and I hope that answered the question for flora and I'm sure it did, but we've got I think we've got about 10 minutes left, but just with regards to buyer's advocates, you mentioned they're referring people, you know, referring to developers and referring out that sort of thing. And where does it get to a point where you help them with a property, but then you'd suggest engaging in advocate is to actually find that their specific property or when you mentioned before a good broker will talk you through the actual asset itself. What do you mean by that? And where does that delineate? The two?

Chris:

I think they just need to understand the market, not what market and what a broker is helping facilitate that transaction because they allow you to borrow that money, et cetera. I think they should care about what you do with that money. And I think that's so they don't want to go and say, you need to buy this property industry. That's going too far. Right. But what they need to then say is, look, you know, have you thought about these sort of things? You know, is it a good asset? And this like that, that to me is enough. And then I refer it onto a buyer's agent, et cetera. Or if they don't have the buyers, as you said, that's fine. But at least they just at least care what you're doing there and ask you a few questions. It's not like they say, Oh, what do you want to buy? Okay. That, okay, cool. I can get you this much money. I think that's just not enough clients doing this, not working a good broker should have the confidence to say to you. It's really good for these reasons or it's not good because of these reasons. But that's something I'm trying to change in broken world is to kind of lift the bar a bit, but it would be interesting to see how I go.

Craig:

Yeah. Well, I think there's just going to a bit like what you were saying. There's, there's just going to be two, like people go to the banks, people go to brokers, there's going to be people that go to brokers that do the roofies and chase the $3,000 cash back stuff and do that constantly fine. If you, if that's what you're, if your motivation is to do that, then that's going to be a certain type of the market. But there's that other type that want to partner with someone to get to a position that they wouldn't have been able to get on their own. And I think they're probably more of the people you, from what you're saying is that you want to be talking to not the, you know, the ones that just want to make sure that they've got the sharpest ride every single year, which is important. Not that there's, there's more to it than just that alone.

Chris:

Yeah. I think as a business, we just like helping people make that big emotional decision and make it good. Right. Because you know, you fast forward three or four years time, we know when the next conversation's going to be a really enjoyable one and we're going to be moving on to their next decision together and they want to life. And yeah, you kind of know what that's all about.

Craig:

I made, I I've got a couple of quick, cause I get sent, I get sent property clocks from buyer's advocates and I get them from multiple people and each clock I look at it's different. So is it like picking shares that nobody really knows what they're doing? And it's just an educated guess based on some data or is it worth relying on,

Chris:

I did a post on this last year, I think of the year before something property clocks because they get their bugbear of mine. But how does, does everything's work on a perfect clock? Yeah,

Craig:

I love it. It looks awesome.

Chris:

It's research, marketing material. If I see a property club a lot, you're selling something and I know great buyers, agents that are quite price that's used property clocks. And I think you guys can do better than that. The problem is you can't fit every not everyone's on the same clock, not every thing. So, you know, someone's going around at three seconds per second and one's going around at half a second per second, much faster. Right. And so anyway, property clocks are a little bit of a funny thing. They also think that you can time investment markets and time property markets. No one thought that everyone's been saying Brisbane's at the boom stage for the last 10 years and you know, it's still at the boob stage. So in, in, in, in internally at each city, there's also property clocks, right? So you're trying to simplify a market to one thing and it's just not how it works.

Chris:

So I think they're a bit of a waste of time. The problem is as well, even if you go through this, it's called a hotspotting strategy. I'm going to put my money here and I'm going to put it here and sell them, buy properties, not a tradable assets, too expensive. And it's too expensive if you get it wrong. If you go down to try to buy an Adelaide and Adelaide doesn't boom, well then you've missed the area that did burn. And then if it does boom, then you've got to sell it and then you got to buy something else. And then it's not really that doesn't really work like shares where you can sort of easily trade and move. But even sort of doing that in shares, we know that's extremely difficult to do to outperform markets. And most people should have just bought a Vanguard diversified index and kept that for 30 years.

Chris:

So it's the same thing with property. You don't want to be trading property, buy and hold quality assets and hold them for a long period of time by fewer number of properties. And that's it nothing more complicated really. But just buy really well. And then if you bought really well, why do you want to sell it? Cause five years down the line, he said, well, should we sell that? No, I don't think we should sell us. Let's in front of the father. He is 10 years down the line. You're like, Oh God, it's paying for itself. Now let's just keep it. And then 20 years down the line, I'm like, wow, that's done really well. So it's all about buying fewer quality.

Craig:

I think I think Mark Boris has a quote, his best bit of advice never sell anything and I like it, but I think it implies that you bought the right thing in the first place.

Chris:

Oh, a hundred percent. I've done. And I buy and hold if they've got that strategy. So yeah, tick got it. But what you're holding is the wrong thing and everyone's got limited resources. And that limited resources, how much money you borrow and how much money you got. And so what you need to do is put that you need to make the maximise that. So you need to optimise that. And so you want to hold the right things. And so, yeah, it's a, it's a good point.

Craig:

My tub. I've gotta let you go. But anything final, I'll put up the links for where people can find a bit more about you. I put well full elephant in the room and also LinkedIn, LinkedIn, where you're probably most active. Is there anything else? I mean, we'll probably have to do another one mate. I could talk to you for hours as we always do, but I appreciate it.

Chris:

No, no pleasure. Thanks, sir. I'll hate that you bought and yeah, I mean, I guess the big takeaway which hopefully has come through, it's people just need to take the decision massively serious. It's the biggest financial decisions you're going to make with property. That's no disrespect to you that going forward, but they take the least time to think it through light buying might spend more time by a surf board or, you know, lounge than the actual property itself. So I hope that was valuable. If anyone wants to chat, just reach out mobile.

Craig:

Appreciate it, man. Thanks. I'll let you go and I'll

Chris:

Thanks. Bye. Cheers.

Craig:

Hopefully you took something away from that today. I, every time I talked to Chris, I feel really buoyant on, on every, I guess, in, in, in property, in the, in the general sense. And also just like I said, with, with him having that opinion piece, I think it's really strong. I, I do find that, you know, compared to property is something that we want to buy. But it's certainly something that's not a big grudge purchase a bit like the insurances. So all I'd say is that take care of these things. We make massive outlays when it comes to property, make sure you're getting the right advice when it comes to it. And I thanks for joining in. I hope you enjoyed the more interview style. Let me know what you thought a bit longer. I know. But this is something that I'd like to lean towards. I really enjoy it and I hope it, I hope it brought massive value to you guys as well. Thanks for tuning in. If you, if you're watching this on the repeat make sure you send her any questions you have and I'll make sure they get to Chris as well.

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