Alex and Michael

[00:00:00] Speaker A: Your voice, your community station. You are listening to IPL radio and. [00:00:08] Speaker B: You'Re listening to the Perth Property Bros. And we're back again with Carlos and Josh. [00:00:13] Speaker C: Can you hear me big bad Josh? [00:00:15] Speaker B: Yes I can. We're mic testing here today. [00:00:19] Speaker C: We've got two visitors coming. [00:00:21] Speaker B: We have two visitors so we're going. [00:00:22] Speaker C: To put them on the other mics and I'm on the standing mic so. [00:00:25] Speaker B: Excellent. [00:00:25] Speaker C: So how are you Josh? [00:00:27] Speaker B: I'm good man. How have you been? Always busy my friend, always busy. [00:00:33] Speaker C: If I don't have something to do I keep busy with something else. [00:00:38] Speaker B: All right. We were, we were just checking out what's happening on the weekend, wasn't it? I think the weekend has been quite busy especially for me. [00:00:46] Speaker C: You have busy weekends don't you? Because you actually go from property to property looking for your, your clients, don't you? [00:00:53] Speaker B: I do, I did, I did. So I just signed up. A client wanted to buy in Canningville this time. So I was up and about in Canningvill, I was looking at the property market and my God the line is big and you know Canningville is not cheap anymore especially for a 4 by 2 years looking at the low millions at the moment and the line is still long. You know, you thought that it would kind of cool off in that period but no, I think, you know Canningville is established, really established at the moment. There's lots of good schools, colleges and stuff in that area. A very good demographic of people at the moment, young professionals and you know, the more you drive around you see how established it has become. It's a very nice community that they've created over there. So yeah, it's very nice. No wonder why a lot of people still want to live in that area. [00:01:49] Speaker C: Well I spent the weekend working out at Darling Downs. Have you been out that way? No, I've not for anybody out that way. Just at the base of the hills probably south southwest of Armadale little suburb, Darling down, it's quite a nice little spot. They were listing a property there thanks to our illustrious settlement agent Carly Beasley from Conveyancing. It's her referral out there. We've that one's being listed in the next couple of days. It's quite a good home. Four bedroom home to maintain an excellent condition. [00:02:19] Speaker B: Excellent. [00:02:20] Speaker C: And that that area is doing sort of mid eights to like early nines. Nice being that far out of Perth. I thought that was really interesting but that seems to be what the market's doing. [00:02:31] Speaker B: It seems to be everywhere at the moment. [00:02:35] Speaker C: So yeah that's, that's what I was doing out there. Plus we, we're preparing another one for sale and over 55s in Koo. That one should be on the market probably by the middle of next week. So I've got a couple of home opens to be doing these weekends. Plus we've got that, that really big 3.5 million dollar horse property. [00:02:52] Speaker B: Oh, yes. [00:02:54] Speaker C: Yeah. It's interesting times. And did I tell you that I had a. A property sell in three minutes, man? [00:02:59] Speaker B: Oh, well, I was going to bring it up, but. Yeah, go for it. [00:03:02] Speaker C: Yeah, that was. [00:03:03] Speaker B: I think that's a new personal, a new personal record. [00:03:06] Speaker C: I press live. I think the call came in from the buyer within about a minute of the property being live on the Internet. So whether it could have been a fluke that he was just looking in the suburb of East Vic park, or he may have had the automated reminder set up for the suburb, which is something you can do on real estate.com and he called me and he said, carlos, I missed out on the last unit you had in this complex, which. Now that's the one we talked about that. I got 100,000 above asking for that one. I missed out on the last unit. I wasn't ready. I'm ready now. I've just seen this. Come on, I want to buy this place. And he made an offer, so I already had instruction about where to sell this place. We made an offer about 75,000 above what the seller's expectations were. So while I was on the phone with him, I was texting the seller saying, how about an offer for this amount? I have a buyer ready to go. And he said, explicit deleted, yes, exclamation mark. And that was probably by the end of the third minute of that whole process. [00:04:05] Speaker B: Wow. [00:04:06] Speaker C: That's a personal best, I reckon. [00:04:07] Speaker B: Amazing. Three minutes done. Excellency. Maybe you should put that up on the, on the website as well. Sold in three. [00:04:14] Speaker C: Sold in three minutes. [00:04:16] Speaker B: If you want your house sold in three minutes, give Carlos a call. [00:04:21] Speaker C: So it's just what the market's doing. Yeah, it's not me. There's nothing amazing about me. We're just. A lot of agents are selling this quickly. They've got a lot of activity in terms of buyers and it completely flips around. We talk about this often, the estimates between months and years before people say the market's going to turn. Carly Beasley from Alpha Conveyancing was saying the other day, probably within two years. Everybody's estimates are very different to when we're Going to see a major, maybe not even a downturn, but just a major hold. And that becomes a very interesting market to sell in for. Selling agents. You know, we've been in the industry a very long time, like myself and Andrew Bridgeford, which we had last week on the show. We've seen a lot of, a lot of different markets come and go. Fast market, slow markets, buyers markets, mate, they. It's imminent, it's coming and you have to really stand out as an agent then to, to sell. Oh, yeah, good for you guys as buyers, agents. [00:05:25] Speaker B: Well, I think the one that you had under three minutes, that was an amazing result, isn't it? So that also goes to show that, you know, clients should start, you know, putting all these kind of reminders and all that if you act quick in this current market itself, act quick. [00:05:42] Speaker C: And in this case, he already had a bit of a relationship with me from the last property that he missed out on. So he knew the agent and he was ready this time and he knew to make an offer that was not going to muck anybody around that was, I think, critical. There was a trifecta there. [00:05:59] Speaker B: Yeah. [00:06:00] Speaker C: So he made an offer well above, but well within my, my expected price range, you know, quickly approaching the unicorn zone, in fact, because was about where I was hoping to push buyers to. And the offer came very quickly. So when we go back to the seller and we sort of, we debrief where the price points are, what's expected. I think this one's sitting on the very high end of that, especially with what, what the property was. So no very good result. [00:06:32] Speaker B: No. That's amazing. That's amazing. I still looking for apartments in that unit then. Looking for units in those apartments. [00:06:41] Speaker C: Well, look, I'm always, I'm always ready to sell. I try to, I work hard on the listings that come my way in terms of getting them ready and then showing them and going to contract and monitoring the stages. But I tried to be in a standby position because I don't know when, where the next sale is coming from, from which person, which referral, which network, which previous seller. They could come from anywhere in Perth. So I need to be ready to deploy quickly, you know, so don't try. I try not to stall on these properties because I have to get them moving, you know. So am I looking for units? Look, I'm, I'll tell you that I'm ready to sell in terms of a unit, a house, you know, a rural property, whether it's north of Perth, south of Perth, out regional, like Andrew. We'll get it done. [00:07:24] Speaker B: So tell us about this horse property that you have. You still looking to find more connections to the horsing people? [00:07:31] Speaker C: It's a very special property. That address for any listeners interested is 67 Honey Myrtle Loop in Forest Dale. And it's just a very special property. It's probably the jewel in the crown when it comes to horse properties. I mean it's a five acre property with. With stables. It's an Olympic arena. And the house itself is bigger than most house blocks. It is. The house itself is about 480 square meters. Just the house before you get to the pool. [00:08:01] Speaker A: The. [00:08:01] Speaker C: The sauna, the. Sorry, the. The spa, the stables, the arena. Then the rest of the property. The house is massive. You can fit two houses inside the house. [00:08:13] Speaker B: I think they had a granny flat attached to it. Isn't it? [00:08:16] Speaker C: Yeah. That's the fifth bedroom. So it's a very special property. It's priced at its value which is 3.5. Whichever way we look at it, whichever way we reverse engineer its value, we come back to that 3.5 mark. And other agents have looked at it because you know there's always agents that compete against me for listings even though I'm not the one trying. They're the ones trying. Their calculations come in the same. So I'm very sure we're right on point with that. But not many people have three and a half million dollars lying around or. Or have the, you know mortgage repayment capacity for a 3.5 million dollar loan. [00:08:51] Speaker B: Yes. [00:08:52] Speaker C: I mean you're looking at about 16, 17 thousand dollars a month in repayments. That's at 80%. Josh. [00:08:58] Speaker B: Yes. [00:08:59] Speaker D: Yeah. [00:09:00] Speaker C: Absolutely. [00:09:01] Speaker B: Yeah. That is crazy isn't it? 18 000amonth. [00:09:04] Speaker C: 000 bucks a month repayment or thereabouts depending on you. And that's at the current interest rates. So it is. [00:09:11] Speaker B: It's. [00:09:11] Speaker C: It's a case of like we did with that property. Get everything right. The photos, the video, the copy, all the process. Right. And then just wait for the buy to come along. So I've actually got some. Got a stack viewing on Friday. I've got a doctor and a couple of other people that want to see it. [00:09:26] Speaker B: Nice. [00:09:27] Speaker C: And we'll see how we go. [00:09:28] Speaker B: Yeah. I've seen the property as well and it was really nice. Especially when we went to have a look at it. I think it was very windy and they had this white. The trees with white flowers on it. It was all blowing. It looked like it was snowing. It was really nice. Yeah. [00:09:41] Speaker C: The property has flowering pears and flowering plums. [00:09:44] Speaker B: Is that what it's called? [00:09:45] Speaker C: Yeah, down the driveway. And it was. [00:09:47] Speaker B: Yeah, yeah, it wasn't. [00:09:49] Speaker C: It. [00:09:49] Speaker B: It was very nice. Very beautiful. [00:09:51] Speaker C: Yeah. Very special property, that one. And it's ready to go. [00:09:55] Speaker B: We're ready. [00:09:56] Speaker C: Like I said, I'm always on standby. We've done everything right with that property ready for the buyer. The second I have it, we've gone to contract. We'll be under contract, you know, within an hour and a half. Yeah, I'm ready to mobilize. Just like in the case of listing a new property or doing an appraisal. I find that's probably a good way to be in your business. [00:10:14] Speaker B: So for anyone listening, if they want to know more about these properties, obviously reach out to you. Or it's on realestate.com as well. Realestate.com. it's also in the US. [00:10:31] Speaker C: They have another platform. Realtor. Realtor or something.com in America. Yeah. Which is enormous. I mean, they've got an enormous market over there. [00:10:40] Speaker B: Yeah. [00:10:41] Speaker C: And property sales work very differently. I think buyer's agents are much more valuable because they've. It's just a different market, isn't it? [00:10:49] Speaker B: Maybe you should put it on the US market and see who would come. [00:10:52] Speaker C: Sorry. [00:10:52] Speaker B: We should put it on the US market and see whether there's any interest. [00:10:57] Speaker C: We did do a. An ad on horse deals. Horse deals. That is just a horsey website that has a magazine that comes out. [00:11:07] Speaker B: Oh, nice. [00:11:08] Speaker C: It's a very. It's very Nichy when you're dealing with horse people. And they'll admit it themselves. Every horse person I've ever dealt with, they'll tell you themselves that horse people either have a lot of money or have no money at all. Yeah, it's a very expensive hobby. [00:11:22] Speaker B: It is. It is very expensive. So, anyway, let's go into a bit of break and then we'll come back and talk a little bit about the market, shall we? Do it. [00:11:31] Speaker A: Your voice, your community station. You are listening to IPL radio. [00:11:38] Speaker B: Two weeks in a row, man. Or was it three? [00:11:40] Speaker C: No, this is the third week. [00:11:41] Speaker B: This is the third week in a row. There you go. [00:11:43] Speaker C: Yeah, well, it's. I'm. I think I've got Carly from for conveyancing coming in again to sub for me at some point. [00:11:50] Speaker B: Yes, you are. [00:11:51] Speaker C: I might be sneaking away. [00:11:55] Speaker B: Well, at least this time you said it, not me. All right. [00:11:59] Speaker C: Yeah. I'm not gonna be sick this time. All right, before we go any further, I know you're dying to talk property. We're going to talk about Mind the Walk which is actually coming up so quickly. Where are we? The 27th. And we've been working on this committee for the last 12 months with the Rotary Club of Rockingham and I can't believe it, but it is this Sunday. [00:12:21] Speaker B: This Sunday. [00:12:22] Speaker A: It's come around. [00:12:23] Speaker B: Oh wow. [00:12:24] Speaker C: So, so, so quickly. So Mind the walk. It's a community event. It's run by the Road Trip Club of Rockingham, Palm beach and Bell Diverse. It's going to be at the Rotary Reserve park in Rockingham just on the foreshore there this Sunday 2nd of November. It's going to kick off at about 8:30. So good time to get there's gonna be between about 7:30 and 8. Get a coffee, have a, have a breakfast snag and then we've got some guided tours around Rockingham. It's about a 5,5 kilometer walk. Guided tours, learn about history. It is a. Is an absolutely beautiful day out. There's gonna be lots of stalls there. Musicians West Oz Wildlife is back with the koalas and the snakes and the Greyhound adoption mob is going to be there. Raffles and Margaret river to you and yoga boot camp. There's all these games for the kids. It's just a really good event. As well as several other, several mental health stores that'll be this. It's supported by the city of Rockingham. They're going to be there, we're going to be there. I'm going to be there all dressed up. [00:13:26] Speaker B: So dressed up. [00:13:27] Speaker C: A great community event. And I just, I absolutely can't believe. Josh. It's come around again. [00:13:31] Speaker B: So this every year, wasn't it? [00:13:32] Speaker C: Every year? Yeah. It's around the same time. [00:13:34] Speaker B: How many people usually turn up for. [00:13:36] Speaker C: This is around the thousand mark. I believe in total it's a good one. We've got us plus the people going through in the groups, plus the people sort of just floating through. It's quite a number of people that you see there. So it's a, it's a fun day out. [00:13:50] Speaker B: Excellent. [00:13:51] Speaker C: So don't forget mind the walk this Sunday 2nd of November. [00:13:55] Speaker B: Excellent. Well, it'll be a good fun one this weekend. I think I'll bring my kids and we'll head down better. [00:14:05] Speaker C: That's why I'm telling you you can come and join us. [00:14:08] Speaker B: All right. So we wanted to talk a little bit about what's happening in the market, isn't it Carlos? So you know you've got all the. [00:14:15] Speaker C: Stats there and You've been doing a lot of, a lot of activity lately, going around the home opens and you've been working remotely looking for rural property. I want to hear what's going on for you, mate. [00:14:27] Speaker B: Oh man, I've been doing a lot of things actually. Based on. Based on. I was just looking back at all my previous cases. Right. Everything that I've done has been different. Like, you know, there's so many. It's not like one thing, one thing's the same across the board. It's always been different. Now I'm dealing with rural Anchorage, still dealing with DHA properties. It's crazy. [00:14:46] Speaker C: Every property you deal with, every deal, every client, there's going to be some nuggets of gold there too. [00:14:51] Speaker B: Yeah. [00:14:52] Speaker C: To mine out of it, mate. Lots of learning. [00:14:54] Speaker B: Yeah, for sure. Well, funny enough, the common theme out of it is I'll wait for the property to crash. [00:15:00] Speaker C: Wait for the property market. [00:15:01] Speaker B: Yeah. I'm still wanting to wait for the property market. It's, it's cannot still keep going up. It still it has to drop, you know. So this is what I'm getting quite common as well. I don't know what. How are you finding that? [00:15:14] Speaker C: Everybody's got an opinion, like I said. And they vary from, from months to years. I tend to look, I've been in the game a very long time and when I do, when I look at trends and I do reports, not only do I look at months and years, but I look at century, not centuries, decades. I look at data that spans decades and you're looking at long term trends. I mean overall the market is always going up over a long amount of time. But when you look at it closely in smaller increments, it's going to have its ups and its downs and that's a natural market. Yeah, it's inevitable there's going to be changes. But crash, you know, I don't know, go back to like, you know, 1980s prices. I don't know. It depends on what your belief is. You might have a specific fake thing, something that might happen. [00:16:06] Speaker B: Yeah. [00:16:07] Speaker C: You know, some massive global event or who knows man? It's inevitable there's going to be a change. [00:16:16] Speaker B: Correct. [00:16:16] Speaker C: I think that's going to happen. [00:16:17] Speaker B: I think what you have mentioned is, you know, there's always going to be property cycles. [00:16:20] Speaker C: Right. [00:16:21] Speaker B: Property goes up, property goes down and there's a few cycles in there and we always normally say it's about 10 years and you can actually see that in the data as well. [00:16:30] Speaker C: Yeah. If you look at decades, you can see the spikes, the dips, the highs, the lows. You see it there. [00:16:36] Speaker B: Yeah. So in this current moment, you know, especially I was, I was listening to a lot of podcasters as well, and you're saying not wa, Australia as a whole is performing. It's not like, you know, WA is performing, Queensland's performing, Sydney is going down, Melbourne's going down, like what we saw last year. Now every state is performing really well. [00:16:58] Speaker C: Yeah. You know, look, there's global influences that come. Come with this sort of thing. I mean, Australia is a pretty amazing place to live. [00:17:06] Speaker B: It is. [00:17:06] Speaker C: And there's all these, these talks about immigration, which, you know, I don't want to go too far into, but people want to live here. Yeah, that's what I can tell you for sure. [00:17:14] Speaker B: And look, we have, we had a good deal last week, I think, with the meeting between Trump and our, our Prime Minister as well. So. [00:17:24] Speaker A: Yeah. [00:17:24] Speaker C: And you know our federal member for Brand, the one that's just, just here in Rocking, Meline King. [00:17:30] Speaker B: Yeah. [00:17:30] Speaker C: She was standing right next to President Trump. I said, that's Meline. You know, she's our federal member here in Rockingham. And, you know, coincidentally, you know, I work at Marine Rescue in Rockingham on Wednesdays. Y. On my Wednesday crew, I have a crew that I work with every Wednesday. The guys, I send out the cavalry, so to speak. I've got Jamie King, which is her husband, and we sat in the tower and I said, jamie, your wife was standing next to President Trump. It was so amazing. [00:18:00] Speaker B: Nice. Yeah. I guess what I wanted to highlight with that is that's, that's also putting WA on the spotlight, of course, you know, WA as a whole, because the whole orcas deal, the rare earth minerals, it's all pointing at wa. [00:18:14] Speaker C: We've got so much land, so much room to grow. There's got so much opportunity in this country. Right. You know, new. We don't know new Australia yet. We see changes in our population and different nations coming to live here. But, you know, when we're old and, you know, have a little walking stick, we're probably going to look around and not even recognize, oh, yeah, what WA Perth this country looks like. [00:18:35] Speaker B: Yeah. Yeah. [00:18:37] Speaker C: So you look, why resist change? You know, just accept that markets are cyclical, prices change over time. People get used to it. When, when the market first changed around what post Covid West, Australians couldn't believe that prices were coming up because they've just been down for so long and now it's just becoming normal. You know, the, the jump in market prices and they also haven't done too badly with the equity gains. Hey Josh. [00:19:07] Speaker B: No, I think we did talk about it early on in the few episodes that we, when we first started. Our market has been down for a long time, isn't it? Especially when we saw during the pre Covid period and now it has these massive gains. But it's kind of where we were meant to be, where we should have been all along. Where we should have been all along, in fact. [00:19:29] Speaker C: What's the argument about inflation? [00:19:30] Speaker B: Yeah, and we were playing catch up all this while, you know. And with that being said, if you actually still look at the numbers, we're still one of the most affordable states in the whole of Australia. [00:19:40] Speaker C: That's right. That's what they were saying about inflation where they said we were experiencing hyperinflation. But again if you look at the long term statistics, we've just caught up to where we should have been all along. You know, it's just happened in, you know, quick increments, very fast, which is noticeable to us. Yeah, but over time it's the same, same steady incline. [00:20:05] Speaker B: Correct. So now if you're seeing, you know, to those that keep saying that, you know, we're about to crash, I've pulled up some numbers obviously. [00:20:12] Speaker C: So I think it's just wishful thinking. [00:20:16] Speaker B: It's. [00:20:16] Speaker C: Will we really crash? Like crash, crash like back to pre covered prices, to be honest. [00:20:21] Speaker B: We'll have a bit of a correction maybe, you know, but again we're not looking at something that's going to happen soon. Maybe next year. No, we're looking, you know, next two, three years still good growth. [00:20:32] Speaker C: Correction, crash or correction hold. What's your opinion there? Are we going to sort of. Well, I mean the prices that things are up to, they've got to sort of stick around where they are at the current level at least. [00:20:44] Speaker B: Yeah, it will stick and I think even if there's a correction, will be a slight correction and even then not much, you know, but we will never see pre covered prices if that's what you're asking. They're gone. This is the new price people that. [00:20:58] Speaker C: Sort of are hoping for that. I know that there are because I hear people talking about, about that sort of thing. Yeah, I think that's wishful thinking to be fair. [00:21:06] Speaker B: That is. Well, we've always talked, we talked about WA's economy being really strong at the moment compared to the rest of Australia. We talked about migration coming in. We are very strong with migration at the moment. In fact, we're leading In Australia, we're still under the National Housing Accord. You know, we're supposed to build about 130,000 houses by 2029. So at the moment, in WA alone, we are meant to be building about 26,000 houses a year. We need them. [00:21:35] Speaker C: We're still 70,000 short. [00:21:37] Speaker B: Correct. So every year. So per quarter, we're supposed to build about 6,500, but at the moment we are short about 500. So you look at about 2,000 houses a year and year on year, we are not fulfilling that. So again, we are not meeting demands. [00:21:54] Speaker C: Well, Josh, my phone won't stop ringing when it comes to reps building, reps chasing land. You know, they've caught wind that I've got some land up my sleeve in Helena Valley because I've got another 14 lots there or. Or approximately 12. 14 lots there you go to sell. And they're calling me all the time. These guys are constantly. They call me all weekend because that's when reps are calling. I show you my phone, show you my missed calls and show you my messages. These guys are just chasing land. They want to. And some of this land isn't going to be titled until July next year and they're trying to go to contract now. Yeah, well, you know, they bought everything I had in the current stage and they will buy up stage three before it's. It's nowhere near titled. In some cases, they are desperately looking for land. I said to the seller, that's how it should be. These guys should be chasing us, not them. Not them chasing them. Wouldn't you like to buy some land so that you can put a house on it and then you guys can make money? No, we've got the land. They're supposed to be chasing us and that's the way it's been lately. [00:22:56] Speaker B: That's good, man. It's really good. Now, what others has been driving the house prices up? Obviously we Talked about the 5% government guarantee scheme, so that's put another rocket booster to the skyrocketing prices. [00:23:12] Speaker C: Yeah, I think scarcity is your biggest problem. There's just too many people looking for somewhere to live. [00:23:20] Speaker B: Yeah, that is. So hopefully, you know, where is the relief inside? [00:23:26] Speaker C: Do you see where is there relief inside? [00:23:29] Speaker B: Yeah, like, where do you see, like, people can take a bit of a breather. I don't. I don't know. I've had it. I've been thinking about this for a while, but I don't see it at the moment. [00:23:43] Speaker C: Yeah, well, it just. I. I was thinking about it during the week as well. And I. I think we need to just catch up. You know, people need to move in, buy their places, move in, settle, and everybody needs to sort of settle where they are for. For. For a time. Because every property has a cycle, doesn't it? Somebody moves in, then they might be. It might be 12 months, it might be five years, where they decide to sell again. It's just that so many sales that happen so quickly, we haven't caught up again to a normal cycle, decide to sell again. And the agents are finding it very hard to find listings, that's for sure. [00:24:21] Speaker B: It's hard. Like, I was talking to a potential client down in Busselton, I think the one I referred to you as well. So they are trying to move back to Chundana. All right, Chundana. For their kids to go back to school in that area. So they are trying to let go of their 4x2, which is a big, big land that they have, 4x2, and wanting to sell that and move up to gender. So they have asked me to try and help them out. So I did some research for them. The budget was about 1.3 mil. For 1.3 mil, all they could get was a three by two and not that big a land anyway. So end of the day, after providing them all the data, they were of the conclusion, like, it doesn't make sense to sell a 4x2, which is this big house that we have with this much land, to something with hardly any land, and it's only a 3x2 at the end of the day. That's the kind of decisions people are having to face at the moment. [00:25:18] Speaker C: Yeah. I mean, I talk about this all the time. I look at the size of these mortgages, what, 1.3, 1.5. When you're talking about new builds, you're looking at the 1.3 for a decent house. Some of these, I mean, the closer you're going to get to Perth in the western suburbs, those figures are ramping right up. But I don't know how people are affording. I just don't understand, Josh, the repayments on this sort of money. You know, like I said to you before, at a $3.5 million sale, at 80%, you're paying off about 17, $18,000 a month. [00:25:54] Speaker B: Yeah. [00:25:55] Speaker C: I mean, it just scares me, mate. You know, I'm not used to seeing those prices anyway. [00:26:00] Speaker B: I think there's a problem. None of us are. None of us have seen those prices and. [00:26:04] Speaker C: But people are. Young couples. Young couples. I mean, I sell them I sell to them all the time. I see them getting these loans, you know, they've got to make the repayments, their car payments. They've got their fuel, their food, their entertainment. Somehow they're making payments. I don't understand how it's possible. Yeah, it's just nuts. [00:26:24] Speaker B: It is. I think it's good that especially for those of us that own properties, I think we all be kind of laughing it off. [00:26:31] Speaker C: Well, not. [00:26:32] Speaker B: I wouldn't say laughing it off. Like, you know, we've sat on it, we've built some decent equity on our properties. Hence why we're able to kind of use it to go on for our next one is where we talk about, isn't it? [00:26:42] Speaker C: From the people that own or owned to the people that have never owned or trying to own. Yeah, big gap there. [00:26:48] Speaker B: Yeah. [00:26:49] Speaker C: As a single professional trying to get in the market, get a loan and buy. Buy property. Man, that is nuts. You know, probably coming into your. The term that you coined, Como, you've got a compromise or miss out. You're going to live out at Pinjarra. If you want to work in Perth and get into something. [00:27:06] Speaker B: Yeah. [00:27:06] Speaker C: You know, so it's either live far away or just make do with a unit or something. Not the house that you could buy before. [00:27:13] Speaker B: Well, an agent asked me this before, was like, why are we buying up? Not like, why are you buying in? Morley? And I. And I laid it out because I live in PR water. So I was saying, look, nobody used. [00:27:23] Speaker C: To touch more than that. [00:27:24] Speaker B: Nobody. [00:27:24] Speaker C: Molly was just sitting there dead. [00:27:25] Speaker B: So for a property four by two on a 375 square meter block, that's a million dollars. That's in PR waters. Million dollars, 375 square meter block. [00:27:36] Speaker C: You couldn't give those properties away for 350, what, four years ago. [00:27:39] Speaker A: Yeah. [00:27:39] Speaker C: You couldn't give them away. Harrisdale, same sort of thing. Wally was the same. [00:27:44] Speaker B: Yeah. And now Molly's in the low millions at the moment. [00:27:48] Speaker C: And it was always subdividable. [00:27:51] Speaker B: Yeah. [00:27:52] Speaker C: It's just that nobody wasn't on the. [00:27:55] Speaker B: Radar until, you know, it became like, oh, wow, we've got all this big land for a million dollars. I can still buy this subdivided. [00:28:01] Speaker C: It's so close. [00:28:02] Speaker B: It's close to the city airport. Good transport, train trains, train stations there. [00:28:08] Speaker C: It's a great jumping point to either go to the north, work in the north or work in the south. Yeah, it makes a lot of sense now, but in retrospect, nobody went over there. [00:28:17] Speaker B: Nobody. Yeah. So, yeah, no, I think We've done well and hopefully we're going to gain some guests as well today. [00:28:26] Speaker C: We do. We've got Michael and Alex coming in. [00:28:29] Speaker B: Michael and Alex. So we've got an accountant and a bookkeeper. [00:28:32] Speaker C: Yes, they're, they're part of our networks. Of course. These guys are high level professionals that we're very privileged to have here. They've come down a long way. North Perth and Sterling. They braved the highway. [00:28:43] Speaker B: They have be interesting to see what they have to say about the highway. [00:28:47] Speaker C: Talk to these guys about how they're handling some of these property transactions because they're, you know, if they're not advising people, they, they're certainly intercepting the. All the paperwork involved in the sales and people's portfolios. Of course. [00:28:59] Speaker B: Yeah, no, most of them stay up north for a while. I don't know if they ever come down ventured south. So it'll be good to us and see how they find this area. [00:29:06] Speaker C: Let's do it. All right, let's have a quick break, mate and we'll come back. [00:29:09] Speaker B: All right. [00:29:09] Speaker C: And have a chat to our guests. Listening to Carlos and Josh on the Perth property price. [00:29:15] Speaker A: Your voice, your community station. You are listening to IPL radio and. [00:29:22] Speaker B: You'Re back with the Property Bros with Josh and Carlos. [00:29:25] Speaker C: Oh, Carlos and Josh. [00:29:26] Speaker A: Carlos and. [00:29:27] Speaker B: No, I think it's Josh. [00:29:28] Speaker C: We dropped the ball on that one. [00:29:30] Speaker B: We have a little bit. [00:29:32] Speaker C: We've got our very special guests here. Michael Bellasini and Alex Poglands. Welcome, guys. G', day, mate. [00:29:37] Speaker A: How are you? [00:29:37] Speaker C: You can hear us? [00:29:38] Speaker D: Okay, thanks for having us. [00:29:40] Speaker B: Anytime, man. [00:29:41] Speaker C: My friend. [00:29:42] Speaker B: So it's all right, let's introduce them. [00:29:45] Speaker C: So Michael Bini. So these guys have come a long way from the north. When's the last time you were rocking hammer? [00:29:51] Speaker A: A little while back. Had a soccer game to attend to. So yeah, otherwise I wouldn't come down these parts too often. [00:30:00] Speaker D: A couple of years driven past but down the freeway often, but not over. [00:30:06] Speaker C: All right, so Michael Bellasini joining us from M and M Accounting Solutions. Michael's the principal of principal of M and M Accounting Solutions. With more than two decades in tax and accounting, Michael helps property investors, developers and business owners navigate the complex world of property taxation and investment structuring. He's passionate about helping clients plan ahead, not fix mistakes later. [00:30:30] Speaker A: Yeah, that's it. [00:30:31] Speaker C: That sounds about you. [00:30:32] Speaker A: Yeah, that's the plan, absolutely. [00:30:34] Speaker C: And Alex, Paul Glaze from the Bookkeeping Network. Also joining us is the founder of the Bookkeeping Network. He's got over 41 years experience of business. He knows the numbers that make or break property deals helps keep investors keep their finances in check so that every property from first home to full development is tracked accurately. You love chasing those numbers, don't you, Alex? [00:30:58] Speaker D: Yes, very important, Very important. It's easier to get the numbers right at the, at the beginning than it is to try and track them down later on. And the thing with property investing, it's usually very long term, so you might be talking years since a transaction's occurred, but if you get it nailed down at the very beginning, then those figures can be relied on by everybody else, the accountant and other advisors, etc. [00:31:28] Speaker A: Yeah, that's a good point, Alex. Particularly even with structuring, there's no point sort of senior accountant at end of the year and saying, oh, this is what I've done, that's, oh, okay, that's great. But we can't do anything to either plan ahead or help the situation be better. It's ultimately, it's too late. So signing contracts, signing offer and acceptances, getting your structures in place all beforehand makes a lot more sense than coming after the fact saying, here's what's happened. And pretty much at that point in time, it's, you're chasing your tail. [00:31:59] Speaker C: That's right, because people could have, if they had the right structure in place, maybe they could have saved a bit of tax. [00:32:04] Speaker A: Absolutely. [00:32:06] Speaker C: Put it into their super fund or put it into a bear trust or whatever structure that you sort of can put together for them and you can create these structures. Is that right? [00:32:13] Speaker A: Yep, that's right. Yeah. As you say, every person's situation is different and you've got to, you know, treat every person and their situation on its merits. So everyone's different, of course. But yeah, you're quite right. Structures, we handle the setup of those structures, help pick the right one for the client and their family situation or their tax position. [00:32:36] Speaker D: The other thing that's important is with property investing, the difference between improvements and capital expenditure, because the capital expenditure needs to be amortised where the maintenance costs can be expensed in that year. But if you get them wrong, you lead yourself wide open to tax implications. And like I said, being long term, it might be going back years that you get a query. So if you get it right at the beginning, working with the accountant to make sure everything's in the right spot, then it's actually like building a building. Got to get the foundations right, then you can build whatever you like. On top of that, foundations aren't up to scratch. Doesn't matter what you build, it's not going to survive. [00:33:26] Speaker A: Yeah, it's funny you mentioned that, Alex. I read recently that of all the audits or soft audits, reviews that the ATO have done in clients, tax agent prepared and personally prepared. Out of 10 rental schedules that they tested, nine had an issue. And predominantly it was that repairs versus improvement misclassification. Because a lot of people tend to think, you know, retiling the bathroom is not a repair, it's a improvement. It needs to be depreciated. [00:33:55] Speaker C: Appreciate that. You do repair, is that right? And the depreciation schedule is for how long? [00:34:00] Speaker A: Well, it's written off over its useful life. So if it's a building fixture or like, if it's a structural thing, it can be over 40 years, whereas if it's something two and a half percent. Two and a half percent per year. Not, not a lot compared to writing off in full, for example. It's a big difference. [00:34:15] Speaker C: So are you guys recommending depreciation schedules for, for your clients? [00:34:18] Speaker D: Oh, we do it as you do it yourself. Oh, absolutely. It's part of the system that, that we do. And, you know, we work with the accountant like Michael. We've got a mutual client. So any queries we've got, we've have, we say, listen, this is what they've done. Improvement, capital capital improvement or expenditure. So we get it classified right at the beginning. If it's a capital improvement, we set it up, depreciate it on a month by month basis right from the start. And we know the date that it was purchased and what the depreciation rate, two and a half percent. And we keep track of it on a monthly basis. [00:34:59] Speaker C: Okay, so just so listeners understand here on this point, a repair and a capital improvement. So what have we got? So say if we go through and replace a couple of squeaky doors or doors that are falling off, we've got, we've got some labor costs, we've got some material costs. Are we, what are we. Where are we doing with this? [00:35:18] Speaker A: Yeah, well, typically a repair is something is bringing something back to where it was. So like, well, properties, you get a lot of that. [00:35:25] Speaker C: You might get a broken door, tenant accident, whatever. [00:35:28] Speaker A: Yeah, broken door. I think that's a repair. It's, it's usually relatively inexpensive. I mean, you know, it's not thousands of dollars. It's probably hundreds of dollars, I would presume. So you're buying the door and getting it hungry. So you're just replacing the door that was sort of functioning before. It's now broken. So you're making it back to a functioning door. So that's a repair or a maintenance. [00:35:51] Speaker C: So that's a new door now, though. So the old door has depreciated. Now are we going to depreciate the new door? [00:35:56] Speaker A: No, I would treat that as a repair. [00:35:59] Speaker D: It's like if you break a toilet pan. [00:36:02] Speaker C: Yeah. [00:36:02] Speaker D: You can replace the toilet pan because toilet's no longer functional. [00:36:06] Speaker C: Yeah. Right. [00:36:07] Speaker D: But if you refurbish the bathroom, tile the walls and the floor and all that, that's capital improvement. That's the difference. So if you were replacing a toilet pan, decided to do the bathroom. [00:36:18] Speaker C: Yeah, okay, I see what you mean. And then the bathroom, you're saying. So this is a capital improvement. [00:36:24] Speaker D: Capital improvement. [00:36:25] Speaker C: And then every year you can depreciate. [00:36:27] Speaker D: Two and a half percent, two and. [00:36:28] Speaker C: A half percent of the gross value. So. [00:36:32] Speaker D: So if you spend a hundred thousand dollars. [00:36:34] Speaker C: Yes. [00:36:34] Speaker D: You can only claim $2,500 a year. [00:36:38] Speaker C: Okay. [00:36:39] Speaker D: Takes 40 years before it's zero. [00:36:42] Speaker C: Right. But if the repair cost us a repair, so the toilet pan that cost us a thousand dollars, we can write. [00:36:48] Speaker A: That off straight away. [00:36:49] Speaker B: Yep. [00:36:50] Speaker C: Is there a limit? [00:36:53] Speaker D: No, no, not that I know. [00:36:55] Speaker A: If it's a repair, it's a repair. [00:36:56] Speaker D: I mean, a toilet is a. Is probably a classic example because if the pan's broken, it's not functional. So not only is it unusable, the house is probably unlivable if there's only one toilet. [00:37:08] Speaker C: Yeah. Okay. [00:37:09] Speaker D: So it has to be repaired. [00:37:12] Speaker C: Repaired, yeah. [00:37:13] Speaker D: To get the functionality back. [00:37:16] Speaker C: Yeah. [00:37:18] Speaker D: But like, like I said earlier, if you decide to retile the floor and the walls and take out the bath, put in a shower or vice versa, stick a spar in a corner. Very, very difficult to claim that. [00:37:31] Speaker C: But you are working together. So Alex, the bookkeeper, Michael the accountant, you're going there together, you're looking at these details of the invoices and we're classifying correctly. [00:37:42] Speaker D: Yeah. [00:37:43] Speaker C: So that the ATO isn't unhappy with you at any point. [00:37:46] Speaker D: No. So we'll be in the 1 in 10 that gets it right. [00:37:52] Speaker C: I know that it sounds cocky, but it's not because you guys are very good at what you do. [00:37:55] Speaker B: Yeah. [00:37:57] Speaker A: Typically an investor would probably utilise a depreciation report from like the quantity surveyors out there. So don't want to name names, but there are, there are agencies out there that will come out, do an inspection, give you a full list of what write offs you've got and the dollar amount per year. And you present that to your tax agent and they've got that on file ready to go. Each and every year, we load that. [00:38:19] Speaker D: Into the computer so it automatically calculates each month based on that report. So we can say 18 months in. This is where we're at. Compare that to the report, they match, no problem. [00:38:32] Speaker C: Okay. So, yeah, I'm really happy we're talking about these things. Hey, Josh. Because I have to have these conversations a lot with people, and when we used to manage the. The rental properties, it was a bigger conversation. Had all the time. A lot of people hadn't heard of a quantity surveyor. You know, that you could submit these reports to the ATO and they'll, you know, they'll, they'll give you tax breaks. [00:38:52] Speaker D: Yes. [00:38:54] Speaker C: And to what degree, that really depends on the age of the property, what's been improved in the past, and. [00:38:59] Speaker A: Yep. [00:39:00] Speaker C: What you guys can submit to the ATO is that. Right. Is this on a quarterly basis or an annual basis? [00:39:07] Speaker D: No, no, no. They set it up when you purchase the property, and if you engage them, they go in and do it. And you get a very comprehensive report. So it'll list the condition of the fabric of the building and the materials that it's constructed from and give a report on that. And then it'll also list the things that, that you can write off at a faster rate, like appliances and all that sort of stuff. So you get, you get a capital cost. So when you buy an existing premise, part capital cost and part are the other fittings, and that can be depreciated at different rate, and they give you the rates for the different things. [00:39:52] Speaker C: And can you get retrospective benefit in these reports, say for the last five years, 10 years, 20 years of something that hasn't been caught before? [00:40:00] Speaker A: Yeah. They would give you the status from when it first became a rental property, for example. So from that date on, it's. They give you the amounts that you could have claimed if they have gone back. But the shortfall there is that the tax office only has an amendment period in which you can go back for it's typically two to four years. So if it's beyond that, you're pretty much stuffed. But if it's within that four years, you're still within your rights to go back, amend those older years to claim the depreciation that you didn't or were you entitled to but didn't do. You can still go back. As long as you're within that amendment period, you can still claim those older claims. [00:40:37] Speaker C: Isn't that amazing? These Reports are so important. I just, I still find, like I said, a lot of people don't know about them, how they work, who you engage, you know. [00:40:47] Speaker A: Yeah. [00:40:48] Speaker D: And that's why it's important to get it right at the very beginning because you, you solve all that problem, you don't have to go back and rejig three or four years of reports. It's all there. Everybody knows that they're accurate because you've got the independent depreciation company, you've got the bookkeeper doing the recording, the accountant doing the tax returns. So everything matches. That's why you get into the 1 in 10. [00:41:18] Speaker C: And you know, you're right. Yeah, exactly right. You guys both have a very good track record with the ato. I know that for sure. I know that. You know, Alex, you've worked in very closely with the ATO for many, many years and you've even helped them beta test a lot of their systems and help help improve some of their systems as well over time. [00:41:39] Speaker D: Yeah, yeah. I've been a beta tester for their online services. I was the, the bookkeeper tester when Jobkeeper came out Covid five years ago. So my clients were the first ones to get their claims in because we'd be working on the weekend with the tax office and one particular weekend when the government made changes, it was the long weekend in June, we had to come back early and we started at midnight and worked through to about 2am before the tax office got it working properly. So we lodged that return and then they had two hours to make the repairs and make it ready for Sydney time the next morning. [00:42:20] Speaker C: So just. So you were already behind the April. No, because they're, they're ahead of us. [00:42:25] Speaker D: Yeah, yeah, but we, we finished and left the tax office two hours to make the thing so it could go live for Sydney. And our clients already had their returns in because that's how we tested it with live data. [00:42:40] Speaker C: That's incredible. And Mike, you've got a very good track record of the ato. I think if you say something the ato they don't. They never question. [00:42:51] Speaker B: I think, Mike, you've got them on speed. [00:42:54] Speaker A: Thanks for that. [00:42:56] Speaker C: That's a privilege earned over, over many years of doing, of getting the right lodgments done on time. No mistakes, no amendments. [00:43:07] Speaker A: Yeah. [00:43:08] Speaker C: Is that right? [00:43:08] Speaker A: Yeah. I mean, we're across the rules, of course, as every other sort of tax agent is as well, but we are probably risk adverse in that if something's, you know, questionable in terms of how it's Treated will probably go on the Atos not side, but on their view of things. So if something was, if it's 50, 50, is it a repair or is it a, an improvement? For example, if it's not clear cut, then we'd probably go say it's, it's an improvement and depreciate it just for, to be on the safe side. So that, that minimizes any risk of, of like an adverse review. You know, some, some clients would probably see that might say, well, let's roll the dice and you know, try and claim as much as we can. But then I sort of pull them back, you know, sort of say, look, if it was, you know, a gray area, if it comes to light, you know, you could be worse off with penalties or interest or something of that sort. So no point going hell for leather when, when it's not clear cut. [00:44:07] Speaker C: Yeah, no point. Yeah. Because you're very experienced, you know how to deal with them. You know, the legislation in and out. And based on your advice, we're playing it safe but doing it right. [00:44:17] Speaker A: Yeah. [00:44:17] Speaker C: No matter what. That's the bottom line here. [00:44:20] Speaker A: Yeah, that's right. [00:44:20] Speaker C: Yeah. And then, and then you're working in together pretty closely. Well, we've actually got a mutual client at the moment. We call them, call him our community. [00:44:31] Speaker D: He's a classic example is three investment properties. [00:44:34] Speaker C: Yes. [00:44:35] Speaker D: So as a bookkeeper, it's important to keep his expenses allocated to the correct property. And that applies to anybody who's got multiple properties because you tend to buy and sell them. So having the records assigned to each property, you know exactly what it costs, what, what, what it costs you to run what it returns so you can isolate. If a property is not performing as good as something else, you can say, well, we need to get rid of that one. We need to buy more in this area. And that makes it easier for the accountant later on because they can say, well, this is what this property's done when we sell it. This is your capital gain, et cetera, et cetera, et cetera, without trying to work out, well, you know, is it part of this property or part of that property? [00:45:25] Speaker C: Yeah, it's such an interesting case because we're dealing with this with our community client, as we call him. So when I'm writing the contracts, they care of you, Michael. Everything is care of you. And when I talk to the client back and forth, he just sounds so relaxed. He's just got so much faith in the background because Alex doing all the transactions, he's watching every single Thing we do, every receipt, he's chasing money down that shouldn't have been paid to council, for example. [00:45:49] Speaker D: Oh, we got that back. [00:45:50] Speaker C: You got that? I know, I did hear about that. But it's every time that he sees this, this action between us all, especially between you, Alex, because you're working so closely on the ground, he's just relaxing more and more. He just knows that it's completely right. And your final sign off on the lodgements, he knows it's right. He's paying the right amount of tax. Not overpaying. He's not underpaying. It just seems to work really well between us all. [00:46:14] Speaker D: That's an important point, paying the right amount of tax, because everybody has to pay tax, it's how the country runs. But you shouldn't pay any more than you have to. So by having the right records, working with a good accountant, you pay the minimum amount of tax. Now, I'm not talking about tax avoidance, that's illegal. Talking about tax minimisation, which means that you follow the rules, do everything properly, you pay the minimum amount of tax, you have to pay tax, it's fine. [00:46:47] Speaker C: What's your view on tax? [00:46:50] Speaker A: Mate, the old adage, you know, if you're paying tax, it means you're making money. That old saying, I think it rings true. Ultimately you're not paying more than you actually should, I guess, is clearly what everyone should be doing, whether that be through a structure, through superannuation, contributions or whatever. Your advisor would run the ruler over your own position. So obviously what we're saying is generic and just general advice. It's not specific to any one person or any of your listeners. But when you figure out what's what, yeah, paying just the, the, the right amount of tax or the least amount, I think is, is fair or is what you should be aiming for at the end of the day. [00:47:33] Speaker C: And Josh, what's your view on tax? [00:47:35] Speaker A: Pete? [00:47:36] Speaker B: I think what Mike. Well, what Michael said is true, isn't it? If you're paying tax, you're making money pretty much. So there you go. [00:47:43] Speaker C: Yeah, well, you know, I look at this country, especially West Australia is so beautiful, Perth, and look at the city we live in. Every time I look around it, I look at, see the roads, I see our hospitals, I see our freedom here. Everything's so beautiful in this city. And I know that that's where the money goes. It's a privilege to contribute. You don't want to overpay, like you say, but you know that that's where it's Going, yeah, yeah, that's fine. [00:48:06] Speaker D: I mean, what you should. What you have to remember is tax is a fine for doing good and fine is a tax for doing bad. [00:48:14] Speaker C: Oh, I love that. Could you repeat that, please? Tax is a fine. [00:48:17] Speaker D: Tax is a fine for doing good. [00:48:19] Speaker C: Yeah. [00:48:20] Speaker D: A fine is a tax for doing bad. [00:48:24] Speaker B: All right, let's go into a bit of a break and come back. [00:48:26] Speaker C: That's an awesome slogan. [00:48:27] Speaker B: Let's come back and we'll get to know Alex and Michael a little bit more, shall we? [00:48:31] Speaker C: Let's do it. [00:48:33] Speaker A: Your voice, your community station. The best music from the 60s to today. IPL radio. [00:48:42] Speaker C: And we're back again with the Perth Property Bros. With Carlos and Josh and our very good friends Alex Polglaze and Michael Bellasini joining us from the north of Perth. Today, we're just talking about the traffic and the travel times. Incredible. Hey. [00:48:56] Speaker B: Yeah. Yeah. [00:48:57] Speaker A: It's surprising. There's a few bottlenecks along the way and. [00:49:00] Speaker B: Yeah, well, you're finally in this neck of the neighborhood. So there you go. [00:49:03] Speaker A: That's it. [00:49:05] Speaker B: So tell us, tell us a little bit about how you guys started in your whole journey. So obviously, how about we start with Alex? Alex, so you've been in the game for a long time. Obviously you've trained pretty much bookkeepers, I. [00:49:17] Speaker D: Think over 41 years now. So what happened? When I was married, I worked for Cole, so I was a store manager there. [00:49:25] Speaker B: Yeah. [00:49:27] Speaker D: And Coles started to computerize. We're talking the late 70s through the early 80s. They bought a secondhand mainframe computer. Had no idea how it worked. So they got a guy in from South Africa to run it. He had no idea about retail. And so the reports that came out were of no use because of the way Coles operated. They had different sized stores and they had a grading system, which actually was very good because if you were in the smaller store, you could get one coffee cup. If you're in another one, a bigger store, you might have a choice of three or four. If you're in the biggest stores in the city, you might have 20. But they had it set up so that you could buy at least one of everything in every store. Problem was, in WA, they only had one small store and the computer reports were based on that store. So everybody else got false reports or reports that were in were inadequate. And because of my interest in computers at that time being new technology, the company promised me the job of computer liaison officer. So I'd be like the interpreter between retail and computer. And I also had A job at the time where they would send me into underperforming stores to fix them. So the last store that I was working at, we lifted its gross profit from somewhere around eight and a half to about 32 and a half, 33% in 12 months. [00:51:15] Speaker B: All this was in the 70s, was it? [00:51:17] Speaker D: No, that was in 83. [00:51:19] Speaker B: Yeah. [00:51:20] Speaker D: And so that was the second store that I lifted that. The first store that I was a manager in was the smallest store in the state. In fact, it's. It was about less than a third of the size of the next biggest store. And it, in the end, it was making so much money, its profit was more than the turnover of the next bigger store. So they, When I left there, they had to put an experienced manager in. So I got this reputation for fixing stores. When I said, well, what about my computer job? They said, well, no, you're too valuable doing this. I said, okay, I quit at that stage. My wife had gone back to work. We had had two little kids. So we swapped jobs. Hardest job I ever did was being a house husband. And after six months, I found an ad in the paper for a computerized bookkeeping system. So I bought it, mortgaged the house, bought that. All I wanted to do was make enough money to pay the cleaning lady and. And that's how we started. 41 plus years later, we're still going. [00:52:29] Speaker B: It's quite a story. Excellent. What is yours as dramatic as that? [00:52:34] Speaker A: I was just going to say nothing close to that. [00:52:35] Speaker B: No. [00:52:38] Speaker A: Yeah, I guess going back, my dad was a tradesman, ceiling fixer, and I would go as a teenager, go out and help him and do stuff of that sort. And I was like, yeah, I don't think this is for me. I'd much rather sit in the air con with a shirt and pants and getting busted up on a job site with dad. So I was like, yeah, I think I'm gonna. I was half decent at math, so I think I might get into accounting or tax. Went to uni and got my Bachelor of Commerce and finance degrees. Then I finally got in, in a tax role in 2001, various in paid employment from there on. And then in 2010, set up shop for myself. And then, yeah, 15, 16 years later, here we are. [00:53:26] Speaker B: You guys have. Obviously you said you have traded that for an office space, but you still managed to keep fit. Man, how do you do that? [00:53:35] Speaker A: Oh, man, Yeah, I guess just through the soccer seasons, I learned to get fit, and then the off season, you get unfit again. So now that I'm getting too Old to play and passing it on to the next generation with my son's team and daughter's team. Just basically a bit of gym and walking around and yeah, that's it. [00:53:54] Speaker B: So you do play soccer and play with your kids as well? [00:53:56] Speaker A: Yeah, well, more of a coaching role these days. But yeah, always still try and keep my toe in it, in, in and around it. Because it's funny now that some of the players and teammates that I had back in the day and now got kids of their own who are in teams and it's almost like the next generation doing the things that we used to do back in the day. [00:54:16] Speaker B: What sort of sports do you get into there, Alex? [00:54:20] Speaker D: I in a running club but I walk now with the rest of the members. But yeah, we do about 5K's every Monday night and go walking every morning before work. [00:54:33] Speaker C: You need to make an effort, don't you? To get out there and do it, you know, because my naturopath picked up that out of all the things I do, I might pull an 18, 19, 20 hour day. Sometimes you look at my steps and they're not that many because I'm moving around in the car and from the car to inside the appointment and then back from the appointment to the car isn't a great amount of steps. I'm on the phone, I'm using my brain, I'm on the computer, I'm driving but I'm not moving, you know. [00:55:01] Speaker A: Yeah, it's funny, you can, you can come across opportunities to get a few extra steps like taking the stairs instead of the escalator or well, I try. [00:55:08] Speaker C: To park the car really far away an extra couple of hundred meters or something. I mean that gives us a few steps. But it's the choices too. I mean you're an accountant, you work in an office. Right. And before I came around and offered them both sneaky muffins and sneaky biscuits and Mike says no thanks, no thanks, I'll take the black coffee. So you know, it's the choices too. Along the way they keep you looking fit and keep you fit and keep you. [00:55:32] Speaker D: See, I had one to be sociable and my wife wasn't here. [00:55:36] Speaker C: Well, for me muffins, mate. I've taken them all. Thank you. Yeah, no, you've got to make that effort. Absolutely. [00:55:44] Speaker B: That's great. So tell us about a little bit about that journey from where you started to where you're about now. [00:55:51] Speaker A: Okay. Yeah, so, well, starting my own business you mean? Yeah. So kicking off it was a one man band. Basically wore all the hats, answering the calls, making the appointments, doing the work, doing the exit meetings. So it, yeah, you're doing everything and you rely upon yourself. So it's a bit hard to work on the business, in the business sourcing additional work. So it all lands on you, which is interesting. I was fortunate that I had some friends in the industry that allowed me to rent some space from their office. So having clients come to an actual premises, it made me look sort of a bit more down the line than I really was. But in reality it was me, a laptop and a little, little all in one scanner, printer, one of those little brother machines. And so I was just pumping out the, the work just as I said, as a one man band. And then slowly but surely clients would either by word of mouth referrals, happy with the service that they then told their friends. And then slowly but surely it grew and thankfully in time I got to a size where I was able to put on someone two days a week because I wasn't prepared to jump into a full time employee and have that responsibility on my shoulders as well. But thankfully that two day a week turned into a full time role for this particular person who's still with us now. I'm very thankful for his dedication and hard work over the 15 odd years or not quite that long because it was a few years in, but you know what I mean. And then yeah, slowly but surely grew again through word of mouth and doing the right things by people and clients. Word got around and yeah, we're able to put more and more staff on in due course. So it's a, it's been a good journey and as the time goes by you come across various different scenarios and people's, you come across a lot of different things that occur that don't always happen from day to day. So a bit of an anomaly or something that just comes up that's been random they have to do some research on. Now you're better placed to help deal with that matter when it arises again with someone else. And that's happened many times over the journey. So I'm well versed in some of the random things that may pop up. But we're still small enough I think to still be able to have your finger on the pulse and still be able to interact with the client and they're talking to the owner. It's not just hand passed down the line and you just a number like some of the big practices out there probably do. [00:58:24] Speaker C: It's a big problem. I mean people ask us all the time for connections to businesses and they don't want to be just fobbed off, they don't want to wait days or weeks for a response or, you know, they want that personal contact. [00:58:36] Speaker B: Yeah. [00:58:36] Speaker C: They want that small business vibe, you know, and they want it done right. [00:58:39] Speaker A: So, yeah, that's something that we try and pride ourselves on. Contact and communication is a big thing. You know, it's not that difficult to get back to them within the day or the next day. Worst case, even just an email saying, yes, I've got your. Your inquiry, we're not ignoring you, we're going to be with you asap. At least they know you've received it, you're important or they're important to us and, you know, it's just part and parcel of business, I think, having that communication and. And just probably putting yourself in their shoes sometimes. [00:59:10] Speaker C: Of course, yeah, that's very important. [00:59:12] Speaker A: What would you like to receive? And that's what we seek to provide them. [00:59:16] Speaker C: Amazing work. And in terms of property matter, you're dealing with trust accounting for real estate agents, sales agents, property managers, the annual audits, is that something that you dabble in as well? [00:59:27] Speaker A: No, not so much that. Typically, depending on the specs, but they probably need a registered company auditor for those type of audits for trust accounts, so we pretty much aren't set up for that aspect. It may be confusing, the SMSF audits that we do do. [00:59:46] Speaker C: Yes, that's right. [00:59:47] Speaker A: But trust account auditing is a little bit more specialised and may require that extra registered company auditor to do, because. [00:59:56] Speaker C: It'S a national registration, isn't it? It doesn't matter whether your auditor's based in Queensland or Tasmania, he can still audit your box. [01:00:04] Speaker D: Not sure, because real estate trust accounting comes under wa. Act. Real Estate Act. [01:00:10] Speaker C: I'll tell you, my auditor's based in Darwin, so. And there was a very specific point where they wanted his registration, his details and yeah, it went through. So it's a national, sort of nationally recognized. It makes sense to me because like you say, the companies, they're. They're operating nationally, aren't they? [01:00:30] Speaker A: No, that's right, yeah. [01:00:31] Speaker C: And you're a forensic account. Forensic bookkeeper, Alex, which is. I've always found this so fascinating about you through experience. [01:00:41] Speaker D: In the old days when we started, of course, everything was manual, there were no PCs. IBM didn't have PC in Australia. Microsoft was 1.1 and ran on a computer with two different sets of memory and two different chips. And so as we took over manual work, we would expect to find Addition errors and stuff like that. And that was fine. We got all those sorted out and then that took us through to the, to the 80s, late 80s, 90s, everybody started getting PCs, however, they didn't know how to work them. And in that period for about 10 years or so, nearly all of our work came from accountants where they would say so and so's had their books, they're no good, you have to redo them. And we'd have to do a whole year's work so the tax returns could be done. [01:01:38] Speaker C: Then you started chasing all the fishy transactions down when you're already doing the books. [01:01:43] Speaker D: Yeah, we did all that stuff and got it all sorted out and then things settled down a bit. But a lot of the, the bookkeeping programs that came out in, in the late 80s have disappeared and gone under and that's a continuing process if you like. What generally happens, people will work for one company and want to make changes and for various reasons they're not allowed to. So they leave and they set up their own company and do things differently. And we've seen that happen time and time again with accounting. A problem now that we find is that the systems are designed to be user friendly rather than stick to accounting rules. So they make it easy for people, we call them data entry operators to put data in without understanding what they're doing. Yeah, and it became such a big problem. We actually did have to prepare a report for Tax Practitioners Board. We interviewed quite a few accountants and got written submissions and the general consensus was anywhere between 60 and 90% of the bookkeepers in inverted commas were up to scratch and were producing inaccurate books. So much so that we then went on and developed the Forensic Bookkeeping division. We have a free online tool where people can put in their own figures, doesn't matter whether they're manual, in house system, online system or whatever. And it will check to see how accurate those figures are because by the time financier or finance broker calls us in because they can't arrange finance for a company. Yeah, it's a bit late, we have to redo the whole lot. Very expensive and time consuming. [01:03:27] Speaker C: How are you finding this, Mike, in terms of bookkeepers, the quality of bookkeepers and their submissions to you because you're the one signing off, aren't you? [01:03:36] Speaker A: Yeah, I mean we're always perusing the accounts just to be sure that what has been presented is correct. We don't obviously don't just take it on face value. [01:03:44] Speaker C: So a bookkeeper's job will you just like an Audit, you will randomly just check some of their work. [01:03:50] Speaker A: Yeah. As a matter, we basically run through the general ledger, which is just the itemized listing of everything that makes up the sum. So if there's, let's say accounting fees is $3,000, you look at the general ledger and it might say five different transactions of X. So it breaks up the. The components and we just look through that to see if anything has been miscoded, perhaps GST has been included when it shouldn't, things of that sort. And then. Yeah, it's probably getting better of late, maybe, because we only deal with those bookkeepers who are the good ones. [01:04:23] Speaker C: Yeah. [01:04:24] Speaker A: But more often back in the day particularly. [01:04:26] Speaker C: Yeah. [01:04:26] Speaker A: Like you say, 6 out of 10 would have some level of miscoding or some issue, whether that's misunderstanding or just an inadvertent error. But no, it's definitely on the up now. I think things are getting better in that space, maybe because the lesser bookkeepers are probably falling off the perch and the better ones are staying on. [01:04:49] Speaker C: Yeah. Right. So the bookkeepers are doing the detailed work, the ins and the outs of the accounts, and the accountants are signing off, checking everything's right, checking against legislation and then talking directly to the big man upstairs, the ato. [01:05:05] Speaker A: Yeah, basically, yeah. [01:05:07] Speaker C: Not the other big man, the ato. [01:05:10] Speaker B: Yeah. [01:05:11] Speaker A: Now we definitely run the ruler over what the bookkeeper's done because they're like the gatekeepers initially and then, yes, cross checking. [01:05:18] Speaker C: It's just, it's such an interesting. That's why we've been going into the detail to break this down. You know, what's the difference between a bookkeeper and an accountant? You know, somebody that's a landlord that has a property, you know, how can that integrate with their property management to date, over to the bookkeeper, then over to the account. Do you know what I mean? [01:05:35] Speaker D: Yeah. We say arrangements like navigating a ship. The captain is the business owner, the navigator is the accountant, the bookkeeper is the junior navigator. So a business charts a course to make a profit, but it's up to the captain to stick to that. The accountant, being the navigator, says, if you want to get there, make that much profit, these are the things you have to do. The bookkeeper's looking out the back saying, hang on, we're off course here, and providing the information for the decision to be made to get back onto course, on the course. And if you all work together, it works like a chart. [01:06:17] Speaker C: Isn't that amazing? [01:06:18] Speaker A: I thought of it that way. [01:06:21] Speaker C: That's why I love these Two guys. We see these guys every single week and you know, always learn something, especially how to think about things. That's the important thing. What was the other thing you said before? I found that so awesome about the fees. [01:06:37] Speaker D: A tax is a fine for doing good and a fine is a tax for doing bad. [01:06:44] Speaker C: That's the quote of the day, hands down. Unless you've got a better one. Mike? [01:06:48] Speaker A: No, not yet. [01:06:50] Speaker C: Well, that's your homework for the next hour or so. Okay, let's have a quick break. We'll be back soon with Michael Bellasini and Alex. Paul Glaze, you're on the Perth Property Bros with Carlos and Josh. [01:07:01] Speaker A: More music, better mental health only on IPL radio. [01:07:09] Speaker C: And we're back again with the Perth property Bros with Carlos and Josh, Carlos and Josh. And our very special guests Alex Polglaze and Michael Bellasini. This is part of our power team, our property power team. Our accountant, our bookkeeper, buyer's agent, real estate agent. And we're just talking over the break about how we work in together quite seamlessly. We met on Wednesdays. [01:07:35] Speaker B: Let's say that we have the best conversations during the break. [01:07:38] Speaker C: Yeah, I think next time I'm just going to broadcast what's going on the break and we'll just go to music when you think you're on the air. [01:07:46] Speaker B: Sounds like a way to go. [01:07:48] Speaker C: Yeah. Just to remind the kids, we have the Mind the Water event on Sunday 2nd November at Rotary Park, Rotary Park Reserve in Rockingham on the foreshore. It's an initiative by the Rotary Club of Rockingham, Palm beach and bow divers. The event starts at about 8:30. That's when the guided walks kick off around Rockingham for about five kilometres. You get to know about the local history, heritage and a lot of interesting stuff. We've also got musicians, we've got West Oz Wildlife, Greyhound adoption, raffles, Margaret river to you will be there. Yoga, bootcamp, kids games and lots of stalls, even stalls from the the city of Rockingham. So get on down to Rotary Reserve park on Sunday 2nd November for Mind the walk. And I think it's only a few dollars to get in, not very much but it's a great event. Josh, you better be there. You can play with the koalas and the greyhounds. That's my favorite bit. [01:08:44] Speaker B: Well, I've got a kid who loves koalas so there you go. [01:08:48] Speaker C: Now we got to get a morning coffee, get a morning breakfast roll. Palm beach is usually cooking up a storm with the with our trailer it's just a great event. It happens annually and I just can't believe it's come around. Like I'm on the committee for this. We've been meeting every month for a year and all of a sudden it's happening this Sunday. [01:09:07] Speaker A: Yeah. [01:09:07] Speaker C: I just can't believe how quickly the year's gone. [01:09:10] Speaker B: We need our friends from up north coming down here. [01:09:14] Speaker C: Yes. Can we twist your arms to come down from Stirling, from North Perth? [01:09:20] Speaker D: I'll be further up north on the weekend. We're going up to Sandy Cape for check out a friend's caravan, so. [01:09:28] Speaker C: Very nice. [01:09:29] Speaker B: You always have to travel now. What do you think? [01:09:32] Speaker D: I try to. Yeah. Get out, see how you keep your sanity. [01:09:37] Speaker C: Yeah. And the way to get Mike down here is to talk about soccer. Just to tell him there's a. There's a soccer star gonna be there signing autographs. [01:09:46] Speaker B: We need a game bounce out again. [01:09:48] Speaker A: Yeah, very good. [01:09:50] Speaker B: All right, let's get. Let's get back into it. So, Michael, we did talk a little bit in the break about different structures we can buy an investment property under. So obviously, you know, you can buy it under your own name, you can buy it under a company, you can buy it under a trust, you can buy it under an smsf. Obviously, this is not tax advice. Right. [01:10:11] Speaker A: Y. [01:10:11] Speaker B: We were just giving general advice and it's not for anyone mentioning it. [01:10:17] Speaker A: Yeah, thanks. [01:10:18] Speaker B: So, yeah, please take it away. Tell us a little bit about the differences, you know, in this. Different entities that you can buy under. What are the kind of benefits and pitfalls, I guess, in each one? [01:10:28] Speaker A: Yeah, absolutely. Okay, no worries. Yes. As you said, no one. One size fits all. It's got to evaluate your own personal situation to be able to figure out what ultimately would be better for you in the short term and mid to long term. So as you said, the options are you can just buy it in your own name. So you could just buy it in your name. That has some pros and cons. So for example, if it's a negatively geared asset, so that means your expenses exceed the rent that you're receiving, you can apply that loss against your wage income or other sources of income. So that's usually a good little tax break for an individual. If that person happens to be on a lower income, it's not that great because obviously the lot, you know, the tax rates up to 45,000, you're only paying 16% plus Medicare's 18 cents in the dollar. If you're losing 10 grand a year on a property and you're saving 18%, $1,800, it's not a great deal. But if you're on the Highest tax rate, 47 cents in the dollar, now all of a sudden $4,700 is saved in tax, makes a little bit more sense. So that's one positive. On the flip side, if it's a positively geared asset, which is sort of probably getting a little bit more along the lines of what things are like nowadays with interest rates being relatively low in comparison and rate and rent to income is pretty high, it seems to be inflated. So properties could be positively geared, in which case if you're on the highest tax bracket, it works in reverse. Now if you're making 10 grand a year, you're just copying a $4,700 bill, whereas a lower income person keeps more of that rent. The common one would be between husband and wife or partners, or just two people or two or more people can own it in tenants in common or joint tenants, in which case you just account for your share of the profit or loss in your own personal returns. And again it flows through the individual tax position. So if again, if you've got a lot of income, it could be more tax advantageous for you. And if it's not so big income external to that rental property, it's not such a great tax break. Trusts are good in that if it's a cash positive rental, you can distribute that net rent to your family members, which can help. If you've got a lower income spouse or perhaps adult children who might be at uni or something like that. As long as they're over 18, you can distribute to them and they're taxed based on their marginal tax rate. So if they're low income from other sources, they might have a part time job or something, but may not be on very high incomes, they could be a prime candidate to be allocated these distributions. The downside to a trust is should it be negatively geared and you're losing money, it gets stuck within the trust. So you can't distribute a loss, it's stuck within the trust. And it's only when the trust makes money, it can offset that loss against that profit. [01:13:35] Speaker B: So, meaning if you ever sell the property. [01:13:37] Speaker A: Pretty much, yeah. If you ever sell that property, or if in due course it gets into a positive territory, you can start offsetting those old losses against the current and future rental income. Companies typically wouldn't necessarily see a rental being held in a company and the reason for that would be capital gains discounts. So you may know or may or not Know if you hold an asset for more than 12 months when you sell it and make a capital gain, you get a 50% discount. So you're only paying tax on half of the gain. That doesn't extend to companies. So companies aren't eligible or don't get that 50% deduction. So it's a bit short sighted I guess to buy it in a company knowing that you're going to have to pay full tilt tax, albeit at the company rate, which is 25% or 30% depending on the size and the nature of the company. So again, there could be reasons for doing it, could be some asset protection reasons or some external factors like that that we're not aware of. So again, you got to run the ruler over the person's personal situation to see where they sit. And super funds I guess is another good option if you've got the cash there. I mean you can borrow through limited recourse borrowings. Good news there is it's only 15% tax and once you hit pension age, if you convert your super to pension, it could be tax free when you sell them at a profit down the line. Downside is obviously you can't get access to that money until you're old and gray or maybe you won't be grey. But are you going to get to that age 60 and retire or age 65? So it's good in the long term. Obviously that would be where most people want to maybe perhaps get their wealth in super fund because it's going to be a better tax environment than any other structure. But not having access to it now, particularly in the younger years, like say early, just getting into the workforce at 20 years old, you may be thinking, wow, I'm not going to put my money aside to not be able to touch it for 40 odd years. I'm sure the financial advisors out there would say, well the modeling says you'll be way better off at age, which is true. But when you're living in the now, I'd much rather use that money to pay for something that I can use right here and now. [01:15:55] Speaker C: So Mike, can I pick your brain mate? I've got one here. Now I'm not going to go specifically obviously into the names, but I wanted to help you help me understand this structure in terms of how an accountant would look at this. So let' call it Bellisseni Nominees Proprietary Limited as trustee for the Bellisseni Property Trust Brackets bear trustee for Bellissini Investments. Proprietary Limited as trustee for the Bellisseni Family Superannuation Fund So there's four structures there that I've mentioned and then that's care of, of course, Michael Bellasini. I'm using you as an example, if you haven't already gathered, as the authorized signatory and guarant for. So can you break that down for me? Because I get these come across my desk and obviously I've got to build these contracts, but there it is. There now I'm across that you know exactly what it is. Yeah. Can you please break that down because we're talking about these structures and this is, this is some very savvy investors that are putting commercial property. [01:17:01] Speaker A: Yep. [01:17:02] Speaker C: Into these structures. [01:17:03] Speaker A: Gotcha. [01:17:03] Speaker C: What does it mean and what are they doing with them? [01:17:05] Speaker A: So this particular one, it's being bought in a self managed super fund. And so for example. Well, we can't mention names, but no, no. [01:17:15] Speaker C: So call it a Bellasini. [01:17:16] Speaker A: Bellasini. So you've got a trustee company of the super fund. So the trustee runs the trust or runs the super fund, basically. [01:17:25] Speaker C: And the Bear trust. Well, in this. [01:17:27] Speaker B: Yeah. [01:17:27] Speaker A: So that is the case in the top one. [01:17:30] Speaker B: So. [01:17:33] Speaker C: These are the structures we're talking about setting up. So I thought why not a live example here? [01:17:37] Speaker A: Yeah, no, that's a good question. So when you borrow within a super fund, you can't actually borrow. You can't buy the asset in the super fund's name. It's actually bought in a bear trust. So it holds the asset on behalf of the super fund until that debt is paid off. [01:17:52] Speaker C: So we're talking about say Michael Bellasini's personal super money, is that right? [01:17:57] Speaker B: Yep. [01:17:57] Speaker C: Michael's got X amount in super and he wants to buy a property. [01:18:00] Speaker A: Yep, spot on. So say if it's a $500,000 property that I want to acquire, but I've only got 300 in super, so now I seek to borrow the other 200 odd grand. That property purchase has to be bought in trust for the super fund. It can't be bought in the super fund's name. It's a Bear trust. It buys the asset purely on behalf of the super fund. [01:18:23] Speaker C: Right. Okay. [01:18:24] Speaker A: That, that bear trust has a corporate trustee as well. So that's a company that runs the trust. [01:18:30] Speaker C: Yes. [01:18:31] Speaker A: And then that buys the asset on behalf of. [01:18:38] Speaker C: It. Makes sense in my mind, but I. [01:18:39] Speaker A: Probably need to draw it for you. Basically the trust is holding that asset on behalf of the super fund until that debt gets paid off. [01:18:46] Speaker C: Awesome. [01:18:47] Speaker A: But so why the contract has to be worded as such is that you're saying the Company who runs the trust. The Bear Trust is buying the asset on behalf of this company who runs this Super Fund. Yes, but it's this one buying the asset. [01:19:02] Speaker C: Yeah. Okay. [01:19:03] Speaker A: But when that debt is paid off, it can be transferred stamp duty free into the Super Fund's name itself or it can stay in the Bear Trust. [01:19:12] Speaker C: That's the money. [01:19:12] Speaker D: That's why you have to have all of that listed. [01:19:15] Speaker B: Yeah. [01:19:15] Speaker D: On at the time of purchase. [01:19:17] Speaker C: So that's the money going back to the Super Fund that you borrowed it from that you can't really touch until what, you're 67 odd, correct? [01:19:24] Speaker A: Yeah. Well, 60 and retire or age 65 is a condition of release, but yeah. All the rent that you receive from that property goes into the Super Fund. No problem. All the repayments to the bank or the financial institution that you borrow from that gets paid from the Super Fund. [01:19:39] Speaker C: What about repairs, maintenance and depreciation we were talking about earlier? [01:19:43] Speaker A: Yeah, all through the Super Fund. [01:19:46] Speaker C: The Super Fund pays the bills. [01:19:47] Speaker A: Pays the bills, receives the income. But for all purposes, it's held in the trust because it's a limited recourse loan. It means that the, the lenders can't take anything more from the fund than the asset that it's borrowed against. [01:20:01] Speaker C: Okay. [01:20:01] Speaker A: And that's why it's got to be held in trust so that it's separate from all the other assets of the Super Fund. But it's, it's. For all purposes, the only beneficiary of this Bear Trust is the Super Fund. So it can't go to anyone else but the Super Fund. But it's just a technicality that it can't borrow in and itself has to be borrowed for. In the Bear Trust. Yeah, for. And the assets held on behalf of the Super Fund. [01:20:26] Speaker C: So we really had to read that backwards. Or that long list. If you actually read it backwards. [01:20:30] Speaker A: Yeah, I guess. [01:20:31] Speaker C: So you can trace back where it actually starts from. [01:20:34] Speaker D: On the other hand, if the Super Fund didn't have to borrow the money in the first place and had sufficient cash, the property could go straight into the name of Super Fund. [01:20:43] Speaker A: Absolutely. Yeah. [01:20:44] Speaker C: Right. Oh, okay. So if the, if the safe. The property is like in this case it was 1.56 odd or whatever. Whatever. If that money was in. Sitting there in cash in the Super Fund or accessible, you know, then the property becomes the Bellasini Superannuation Fund. That's it. That's just the owner. [01:21:05] Speaker A: Yep. [01:21:06] Speaker C: And the authorized signatory, the trustees. [01:21:09] Speaker A: Yep. So whoever. [01:21:10] Speaker C: So they're still trustees. [01:21:11] Speaker A: Yep. So Super Funds can either have a corporate trustee, which is a company and all the members have to be directors and shareholders of that company, or, or you can have it as individuals and all the members have to be trustees. [01:21:26] Speaker C: So what about for listeners that have their money with say an industry super fund? Can the Industry Super Fund sign can the money be used or does it have to be in a self managed super fund? [01:21:35] Speaker A: If you're going down the property route, you pretty much have to go smsf, Self managed super fund. [01:21:40] Speaker C: Okay. [01:21:40] Speaker A: Because yeah, the commercial. The Australian supers out there, they just do their thing and they're probably mandated to invest in a certain way. [01:21:48] Speaker C: They do invest and they lose your money generally. [01:21:50] Speaker A: I don't know about that. [01:21:54] Speaker B: Oh, it's. [01:21:55] Speaker C: The gloves are off. Did you understand all that? [01:21:58] Speaker D: More or less. I mean from the point of view you've got layers. So what you've got to do, as Michael said, is read it up backwards. So the ultimate owner is the Bear Trust who's acting for the Super Fund. The Super Fund then's got trustee in its own right which eventually gets back to the members. But by doing it that way, as we said, when the debt's paid, it's automatically transferred, becomes the property of the Super Fund. Whereas if it was just bought purely outside the Super Fund, then you'd have to pay transfers back into property transfers and all that sort of stuff. So by doing it this way, eventually the Super Fund will own it. [01:22:41] Speaker C: Eventually. [01:22:44] Speaker B: Your one as well. About, you know, you're not being able to. All right, I'm coming close. Not being able to kind of renovate the properties and stuff like that. Do you know much about. [01:22:55] Speaker A: Yeah. If a property is under one of those lending arrangements where you've borrowed money to facilitate the purchase, you can't do any major structural improvements to the property which fundamentally changes the character of the place. I guess the reasoning there is that should something go wrong with the property, the lenders obviously don't have any further recourse than the property. And so for you to. You then use money and plug it into a place that could get pulled from you by the lender. You just wasted some of your Super Fund investment. [01:23:27] Speaker B: That makes sense. But should it be paid off in full then you can do something? [01:23:31] Speaker A: Yeah, absolutely. Yeah. [01:23:32] Speaker D: Then it's owned by the super Fund. [01:23:34] Speaker B: Falls under some fund. [01:23:35] Speaker D: Yeah. [01:23:35] Speaker B: Now that kind of makes sense. A lot more better than my previous understanding. [01:23:40] Speaker A: Yeah. [01:23:40] Speaker C: So we're getting very close to our quick fire round just after the break, but I touched on an issue that I'm very interested in actually Mike, earlier, when people are managing their own super funds, they're responsible for whether it goes well, if they've invested in the right property or you know, the right market or whatever. Whatever. Or you've got your industry super funds that are investing for you. You just see the account, the statement of accounts, monthly or annually or whatever. Whatever. What's your opinion or what's your, what would be your advice? Without giving advice? Because we're not giving advice. What would you be say, okay, your, your personal opinion in terms of people's money sitting in their super funds? Should they have it in a self managed super fund? Is it safer in a self managed super fund or are we. Like you said, they're regulated. They've got certain rules about where they invest and how they invest. What do you think? [01:24:36] Speaker A: I like your question. I guess ultimately my view, which is just a personal view, is if you're just going to invest in shares and ETFs and the usual managed funds, the stock standard sort of usual investments that you'd have within a self managed super fund, then I'd probably suggest leaving it in a public fund. Makes the most sense. You've got professional doing it. They're probably mandated to buy the top say 200 shares, share companies or whatnot. Whereas if your intention was to buy property, so whether that be perhaps even an office or something for your business or a warehouse or some sort of structure where you can operate your business from, then you pretty much have to go down the SMSF route because that's the only structure that will enable that to happen. So I guess my suggestion would be if you're just going to stick to the standard cash shares, things like that, maybe leaving it in the likes of Australian super makes sense. [01:25:33] Speaker C: Yeah. Right. So there. So the person that's just working as an employee for, for a business and they've got a very stable career, the employer is paying their super weekly, monthly, whatever it is. Yeah, that's five. That's that it's good enough. [01:25:47] Speaker A: Yeah, that's right. [01:25:47] Speaker C: I mean safe enough. [01:25:48] Speaker A: Someone may be really in the crypto train. Maybe they think that's the way, the way of the future and they, they want to invest in crypto. You can't do that in any other structure. I mean using your super, you can invest in it obviously personally and whatnot. [01:26:01] Speaker C: But you can invest super into crypto. [01:26:03] Speaker A: You can and I don't recommend it. There's definitely no going straight. [01:26:10] Speaker C: To say. [01:26:10] Speaker A: That straight to it is an Essex class and it's you've got to be sure that it's in the name of the super fun. It's a minefield and it's easy to trip up. It's particularly in a super fun where you. It's like you've got to have all your ducks in a row. [01:26:25] Speaker C: Jeez, that's. That's incredible. Did you know that? [01:26:28] Speaker B: Yeah. [01:26:29] Speaker C: You did know that? It didn't tell me. [01:26:31] Speaker A: Obviously. Speculative shares, you know, you can roll the dice with some of your, you know, your species if you that way inclined, if you're risk tolerances of that sort. [01:26:42] Speaker C: It is a risk, isn't it? [01:26:43] Speaker A: It is, yes. [01:26:43] Speaker C: It's all risk management. [01:26:45] Speaker D: But just touching on a point Michael said earlier about having a property in smsf. If you're in business and need a premise, it's a lot of times much better for the super fund to buy the premise and you rent it from the super fund. [01:27:02] Speaker C: I've seen that done recently. [01:27:03] Speaker D: Yeah, you have to pay rent to somebody. If you're paying it to your super fund, eventually you'll get it back or most of it back. Whereas if you pay it to another landlord, from your point of view it's gone. So if you're in a business that requires a premise, it's often a good idea to own it in your super fund. [01:27:23] Speaker C: I sold a property in Joondalup for a friend that sold it from her personal name to her super fund. It was a commercial premises where she's operating her own business and now she's going to be paying herself rent. I remember Joy, I had to do a commercial rental appraisal before I did a commercial contract on it. So she just, she transferred that into Super. [01:27:45] Speaker A: Yeah. Other than the stamp duty that she would have copped for this. [01:27:50] Speaker C: That had to happen. [01:27:50] Speaker A: Yeah, yeah. [01:27:51] Speaker C: So because now she's got the structure to go off and do other things more into Super. [01:27:54] Speaker A: But yeah, she would have more than likely been able to use some capital gains concessions to not pay tax on it personally because it is a deemed sale to her. She's physically sold it at market value to her super. [01:28:05] Speaker C: She did and she was very specific and she needed an. And even though she was an agent herself, runs her own real estate agency, she wanted a third party, somebody she trusted to do this transaction for her. [01:28:16] Speaker D: So from personal name, arm's length transaction. [01:28:19] Speaker A: Yeah, they would have had to run the ruler to be sure that overall she's better off over in the short to long term or short to medium term. I would guess that she'd have to Be sure that the stamp duty that the super fund's paying on the purchase. [01:28:32] Speaker C: Outweighs the outweighs loss. [01:28:34] Speaker A: Yeah, exactly. [01:28:35] Speaker C: Well, that's really interesting. Josh. Hey, we're going to have a very quick break. I'm going to come back to your quick fire round. [01:28:40] Speaker B: Yeah, well, again, I've had a few questions. Some people have asked me. Maybe we'll get that. [01:28:46] Speaker C: Questions. Let's. Do you want to do the questions now? You want to come back? [01:28:50] Speaker B: Well, I had one question most often comes up. Can I claim interest on loan on a loan if my property is vacant for repairs? [01:29:02] Speaker D: Well, how long is it vacant for? [01:29:06] Speaker A: So basically the terminology is it's got to be available for rent. So as long as the property is available for rent, you can claim deductions for it if it's not tenanted because you have to do repairs. So long as soon as the repairs are complete and it's livable again, you start getting tenants in, then you should be right to claim it. Particularly if you've had tenants in there and they've damaged the place before they've left or as a result of leaving and you've got to bring the house up to speed so that new people can come in, that's clearly deductible and the interest on that loan will still maintain its deductibility over that time. But if you are just dragging your feet and you're getting, well, since I've got to do some renos anyway, I might as well do the whole kitchen and I'm going to do the whole bathroom. And now you're just dragging it out because you want to. Maybe you want to prepare it for sale or something. So the devil's in the details there. [01:30:01] Speaker C: Because the loss of rent component applies here, doesn't it? Well, that's the thing. [01:30:04] Speaker A: I mean, if they're truly preparing it for sale, maybe they're just making it pretty it up so they can put the for sale sign at the front. [01:30:11] Speaker B: How do you decide? [01:30:12] Speaker A: Well, I guess it comes down to intention. How you prove that. I mean, if you haven't engaged an agent to look for tenants in the. [01:30:19] Speaker C: Meantime, or perhaps that was always an indicator. I think the rule was or still is, I'm not sure. I haven't done rentals in a while. But if you, when you've. From the date you've signed your managing authority, that's when you can start deducting loss of rent up until when you. [01:30:34] Speaker A: Rent it to some extent. I mean that's. It's got to be available for rent. And that's one of the, I guess, indicators that suggests it was because you've now engaged an agent to go find someone to rent it that's ready to go. I'm willing to rent this place. So to answer your question, it depends. [01:30:53] Speaker C: He's functioning highly over. Is he heating up a bit? Can you feel his brain sort of warming up a bit? [01:31:00] Speaker D: It sounds like a politician. Having said that, let me say this. [01:31:05] Speaker C: Let's have a quick break. [01:31:06] Speaker B: I'll ask one more question and then we'll go into a break. Okay, mate, Do I need a bookkeeper if I only own one rental? [01:31:15] Speaker D: Well, I'd say yes, because you've got the. You've got somebody overseeing your paperwork if you like. And it doesn't matter what sort of business you're in, Getting the paperwork right is most important. The single biggest cause of small business failure in Australia, and in fact the rest of the western world, was lack of bookkeeping. Because if you don't know where you're at, your advisors can't tell you and find out too late and, oh, this is what you should have done. But if you've got your books done and it's tax deductible, so it's worth the effort, you can get the right advice when you need it. [01:31:55] Speaker B: So in short, what you're saying is it's always good to have a book. [01:31:58] Speaker D: Always good. [01:31:59] Speaker C: All right, kids, let's do it. You're on the Perth property bros with Josh and Carlos. [01:32:06] Speaker A: Your voice, your community station. You are listening to IPL radio broadcasting. [01:32:13] Speaker C: Live from Rockingham with our very special guests, Alex Polglaze and Michael Bellasini. How's the show been, guys? Are we happy? Yeah, absolutely. We've made it through. [01:32:23] Speaker A: Yeah, no, I'm impressed. [01:32:26] Speaker D: It's gone very fast, actually. [01:32:27] Speaker C: It's very fast. And now it's going to go even faster because we have Josh's famous quick fire round. [01:32:32] Speaker B: Yeah, we're doing the rapid fire question, so pretty much quick answers if you need to elaborate a little bit. Yeah, that's fine. [01:32:40] Speaker C: Do I have a gunshot effect here? Sound effect. All right, let's get into it. Brace yourselves, people. Here we go. [01:32:48] Speaker B: Michael, we'll start with you, you, single most overlooked tax deduction for investors. [01:32:55] Speaker A: Go. Depreciation appreciation. [01:32:57] Speaker B: Yeah. All right, Alex. Most common bookkeeping mistakes you see daily. [01:33:03] Speaker D: Including GST in the expenses, transactions or in all the transactions. [01:33:08] Speaker B: Michael, trust or company for most investors. [01:33:12] Speaker A: Your pick and why out of those two specifically, probably a trust due to the flexibility of distributing income and or the capital gains discount, as we talked about before. [01:33:23] Speaker B: Alex, best software for property tracking. [01:33:27] Speaker D: Well, it's not so much the software, it's the operator that's important because if you can do it properly, you could use a manual system. So it's more the operator rather than the system. [01:33:41] Speaker B: Excellent. Michael, favorite part of your end of financial year season? [01:33:46] Speaker A: The end of season. The end of financial year party, of course. [01:33:51] Speaker B: Alex, how often should clients reconcile their books? [01:33:56] Speaker D: Well, for clients that we've got access to the bank, we do it daily, but at least monthly you can pick up anything that's gone awry. The more often, the better. Better it is, really. [01:34:08] Speaker B: Michael, biggest change in the tax world you've seen in the last 20 years? [01:34:13] Speaker A: Biggest change? Probably the introduction of GST. Yeah, that was a bit of a curveball for everyone. And still, however many years later, it's causing headaches across the board. I'm sure. [01:34:24] Speaker D: Happened before you started. [01:34:25] Speaker B: Yeah. [01:34:26] Speaker A: Yeah, that's right. [01:34:27] Speaker B: Alex, Paper or digital receipts? [01:34:31] Speaker D: Both. If you can control digital receipts. Good. You need to keep a record. Doesn't matter whether it is paper or whether it's digital, if you lose it, you file your tax audit. [01:34:43] Speaker B: Michael, dream client type to work with. [01:34:47] Speaker A: Someone who's willing to take advice, I guess, and not just go on your own tangent. Despite being sort of explained to why we should go down this path, to actually follow that direction would be nice. [01:35:00] Speaker B: We'll ask the same question to you. Alex. [01:35:04] Speaker D: Favorite client? Oh, the ones who are prepared to basically do what they're told, you know, keep their receipts and things. One of the things we find that after three months with a client, we don't have contracts or anything, they come back and say, I don't know why I didn't start this before. When they realize how easy it is to do things properly, they don't leave. Oldest clients, 28, 29 years old, work for them every week. [01:35:31] Speaker B: All right, question for both of you. One thing every property investor should do before June 30. [01:35:39] Speaker D: Reconcile all their expenses. Make sure that they've got. Got the. The right category. Repairs, maintenance or capital improvements. Make sure they've got all the paperwork, depreciation up to date. [01:35:57] Speaker B: Good advice you give earlier. [01:35:59] Speaker A: Yeah, I'd say just bring forward your deductions. So if you're. If you've got repairs to do or if you've got expenses coming up, you may as well squeeze it in before 30 June to get the tax deduction for it. No point doing it soon after and you've got 12 months or so before you get the tax break. [01:36:16] Speaker B: Excellent. All right, this is some fun bit. All right. Just for the both of you, are you? For both of you. All right, so you bought early birds or night owls. [01:36:23] Speaker A: Else I'm an early bird. [01:36:25] Speaker D: Both go to bed late. Get up at dawn. [01:36:30] Speaker B: Coffee order of choice during best time. [01:36:34] Speaker C: Long black. [01:36:35] Speaker A: Nah, double espresso all the way. [01:36:37] Speaker C: Double espresso, Alex. [01:36:39] Speaker D: I have flat white bass. Is straightforward. Now we've got nailed. [01:36:43] Speaker B: Favorite holiday destination to unwind. [01:36:49] Speaker C: Good question. [01:36:53] Speaker B: Mate. [01:36:54] Speaker A: It doesn't necessarily have to be overseas, to be honest. Just down south's good for me. Like down Busselton way or something. Just to chill out with family and friends. I think it's pretty good. [01:37:02] Speaker C: Nice. We're doing that a couple of weeks. Going down to Bridgetown. [01:37:05] Speaker A: Yeah. [01:37:06] Speaker C: Nice. You've been down there. [01:37:07] Speaker D: Brome for me. Broom hot, laid back. [01:37:12] Speaker B: Right. If you weren't doing what you do, what career would you be? Beard. [01:37:16] Speaker A: That's a very good question. [01:37:18] Speaker C: Soccer player. Professional soccer player. Soccer. [01:37:22] Speaker A: If that was an option, I'll take that up for sure. [01:37:25] Speaker C: But no. [01:37:26] Speaker A: Yeah, I have no idea what I'd actually be doing. That's a good question. [01:37:30] Speaker C: Yeah. [01:37:30] Speaker D: Electronic engineer. [01:37:32] Speaker B: Oh, wow. [01:37:33] Speaker C: Wow, okay. You've got the brains for it. [01:37:35] Speaker D: Well, I studied at uni for a few years. [01:37:37] Speaker C: Well, there you go. [01:37:39] Speaker A: Oh, maybe a bookkeeper. [01:37:44] Speaker B: What's the first thing you do in the morning? Email or coffee? [01:37:48] Speaker A: Coffee. [01:37:51] Speaker D: First thing in the morning is bank reconciliations. First job. [01:37:56] Speaker C: We'll put that in the email category. [01:37:58] Speaker D: Well, yeah, then I answer the emails. [01:38:00] Speaker C: Yeah. All right. [01:38:01] Speaker B: Favorite band or song to get you through a busy day? [01:38:07] Speaker C: I like. [01:38:09] Speaker A: I like the killers. Mr. Brightside's always a good tune for me to listen to. [01:38:13] Speaker B: Let me have that song. [01:38:15] Speaker C: I'm checking. [01:38:17] Speaker B: All right, last one. So, before we wrap this up, Michael, if you could give every property investor one golden rule for tax time, what would it be? [01:38:25] Speaker A: Ah. Speak to your accountant before decision making and keep your receipts. [01:38:31] Speaker C: I thought you were going to say use M and M Accounting Solutions, North Perth. [01:38:35] Speaker D: I'd say get a good bookkeeper. [01:38:38] Speaker B: All right, and last one, Alex. If you had to describe good bookkeeping in just three words, what would they be? [01:38:45] Speaker D: Fast, accurate and cost effective. [01:38:46] Speaker A: Excellent. [01:38:47] Speaker B: All right, there you go. [01:38:48] Speaker C: Good job, Josh. That's Josh's famous Quick Fire round. [01:38:51] Speaker B: Famous. [01:38:52] Speaker C: All right, and we're done. We're almost done. So thanks for coming in, guys. Really appreciate it. We've come a long way. Of course. We're. We're part of a very important Group that we meet on Wednesdays in Belmont. You got that group been running for quite a number of years now. [01:39:06] Speaker B: Yeah. [01:39:07] Speaker C: You guys are foundation members, aren't you? [01:39:09] Speaker B: Not me. [01:39:09] Speaker A: Not quite Foundation. [01:39:11] Speaker B: No, it was around. [01:39:12] Speaker C: That was Amir. Yeah, Amir. Okay. [01:39:14] Speaker A: He's probably the longest running. Yeah. [01:39:16] Speaker C: There you go. Okay, well, we're going to see you guys again on Wednesday. [01:39:20] Speaker A: Absolutely. [01:39:20] Speaker C: And I'm glad we spent this time together. I mean, it was about giving you visibility, showing, you know, giving our listeners, you know, all access to you and your knowledge and I think great case study we did, Michael. That was a good one. A live case study. And yeah, yeah, we're very lucky to have had you. So thank you for coming on. [01:39:40] Speaker D: Appreciate the opportunity. [01:39:41] Speaker C: If anybody wants to contact you both, can you give us your websites and your contact numbers, please? Emails as well, whatever you. However people can get in touch with. [01:39:49] Speaker D: Websites, just www.mmasolutions.com landline 089-443-2899, www.book hyphen keepingnetwork.com phone 0419-double-76348. [01:40:09] Speaker C: Good job. Thanks for coming on, guys. [01:40:12] Speaker D: Thank you. [01:40:12] Speaker C: Great property chat today. Awesome work. That's another week for us, Josh. Wrapping up another week. Can you believe it? [01:40:20] Speaker B: Yeah. [01:40:20] Speaker C: I don't know how you managed to get Mike and Alex down here, but mate, I owe you a beer. [01:40:24] Speaker B: Lots of, lots of corpses. [01:40:28] Speaker D: Well, Michael came back from Italy for this. [01:40:30] Speaker C: Yeah, Mike came back from Italy to join us today. [01:40:32] Speaker B: So another time, all right? [01:40:34] Speaker C: All right, my friend. Well, we're going to be back again next week. Don't forget the Mind the walk event at Rotary Reserve park this Sunday, kicking off about 8am it's only 20, 20 bucks for adults and children. A gold coin donation. [01:40:49] Speaker B: Excellent. Well, have a good week. [01:40:51] Speaker C: All right, my brother Property bro. I'll see you next week. And you've been listening to the Perth Property Bros with Josh and Carlos. [01:40:58] Speaker A: Your voice, your community station. You are listening to IPL Radio.