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The tiny house movement is as popular as ever, but can you actually finance your tiny house build, and are they even legal? We look at the current state of play around Australia, and how investors can help solve the housing affordability crisis by converting single-family homes into co-living micro-apartment properties.


Jackson (00:09): Hello, and welcome to Ticker Home where each week we will dive into the latest trends on the property market and answer the questions you need to know. It’s great as always to have cohost, Ian Ugarte, he’s the co-founder of Small Is The New Big. Hello, how are you going?

Ian Ugarte (00:26): Good. Well, thank you, Jackson. Hope you’re well.

Jackson (00:28): Yeah, I am. Thank you. What are you looking forward to today? I believe that the tiny house movement has got your attention.

Ian Ugarte (00:36): Yeah. Look, today we’re going to be talking about large living, but actually making smaller spaces to get a better outcome out of life. And yeah, tiny houses, this is an article by Heather Shearer and Paul Burton on The Conversation. Tiny houses took off about seven years ago and the talk is huge. There’s a lot of people within the tiny house fraternity saying that this is the fix to the housing problem, but in seven years, there’s not many people actually living in tiny houses.

And a few reasons behind that. Firstly, plot planning laws don’t allow it anywhere in Australia, there’s no finance options to be able to finance a tiny house because you’re literally talking about a house on a caravan base, and then the cost to build these are about $3,000 a square meter when normal building costs are about $1,100 a square meter. So research is showing that 90% of the tiny house residents want to leave in a little community based outcome where they share veggie gardens, et cetera, et cetera. But again, we’re trying to advise councils around the country on how we can help this out and actually get a tiny house movement started for real, rather than just a conversation.

Jackson (01:39): Can you tell me about the North Perth Dollhouse? I believe this has been designed to demonstrate how small houses can be livable, but without needing to compromise lifestyle.

Ian Ugarte (01:50): Yeah. This is a young couple, architect Laura and her husband who’s a designer, his name’s Jakub, which is a foreign way of saying Jacob. And they’ve built themselves a little Perth Dollhouse is what they’ve called it. It’s on 174 square meters of land. It’s a three bedroom, two bathroom. The bottom floor, 50% of it is taken up by the garage. But that garage is also adaptable because it joins with the living space in the backyard. So if they want to have a party, it can mean that you can open up the space by removing the cars. There’s no main bathroom, there’s only two bathrooms and they’re both main bathrooms. So ensuites are a waste of space. This is a really great outcome of showing how you can use space with an architectural design, really close to the city for those people that like to eat out or like to be part of the lifestyle that is the city. And they’re just about to have a child. So they’re going to be able to test whether this actual little doll house suits their needs as a family as well.

Jackson (02:47): And to our third story that’s trending on Ticker Home this week, NewsCorp has pitched in to rebuild fire effected communities. Tell me more about this.

Ian Ugarte (02:56): Yeah. This is Rhiannon Down on The Australia, she is basically writing about the $3 million that’s been handed out to charity by NewsCorp through the NewsCorp bushfire fund. Amongst the grants is $25,000 handed out to a charity called Container of Dreams. What they did was they built themselves a shelter so they could build smaller houses for people that really needed housing at the time of the bushfire. So small housing bushfire housing has helped out all those people that have suffered, but it’s happy to see that these people that have suffered floods, fires, and droughts are actually getting an outcome from NewsCorp, and I’m a big fan of helping people out when they’re in their lowest situations. That helps them rebound much quicker.

Jackson (03:40): Yeah, absolutely. So we’ve been talking renovations for a couple of weeks now, but of course the main type of renovations you help people carry out are micro apartment conversions. So what exactly are micro apartments and what do you believe are their benefits?

Ian Ugarte (03:55): So micro apartments are simply a reflection of what we had in the sixties and seventies with a house that looks the same as next door, except the inside is broken up into little smaller living areas. So each person has their own kitchenette, their own sitting area, their own bedroom and their own bathroom. And they share the heart of the home which is the kitchen where they can do their cooking. Bringing back genuine community connection and benefits for all the residents as they have a secure place called home, and they save themselves one half to one third off their normal weekly rent, and that includes their utilities. So they’re far, far ahead. At the same time, the investors or the owners of the property are now actually doubling their cashflow by doing this sort of accommodation. Now we’ve got a huge rental crisis in Australia and here I’m seeing that both parties win at the same time. This is a real solution for affordable housing in Australia.

Jackson (04:49): Okay. So when it comes to converting a property into micro apartments, what are some of the key factors that really need to be taken into account when designing the revised layout?

Ian Ugarte (05:04): Yeah. Like with any renovation that you’re ever going to do, you got to look at the load bearing walls in the property, making sure you’re not taking away the structure. And the big thing that we look for is plumbing. Now, Jackson, you don’t know this, but I’m a builder and plumber by trade. And if I don’t have to move plumbing, that’s a big bonus for costs. What we also do with plumbing is we don’t… when we add extra bathrooms, we don’t dig into the concrete. We do everything above the floor level.

We then look at communal spaces for gathering so that people can mingle together if they want to if they’re social butterflies, but we also make sure that they’ve got self-contained. So if they want to actually be in their own space, they can stay there and they don’t really need to mingle if they don’t want to. I love the use of outdoor spaces where you can actually incorporate that into the veggie gardens and sitting spaces and barbecue areas, and also make sure that the property is adaptable so that it can be used for co-living and micro-apartments, but can used for a family home can be used for multi-generational family. It’s really important to think that this home can be a home for many or a home for a bigger family.

Jackson (06:05): Okay. So once you’ve settled on the new layout, what can renovators do to make this the smaller space feel large, but I guess also to make it visually appealing?

Ian Ugarte (06:16): Yeah. Light is everything, Jackson. When we’re designing something, as much light as we can get into a room will give it space and we’ll give it larger complexity of what’s actually in there. So think about circulation space. So walk into the room, where do I want to put a bed? Where do I want to put a sofa? Where do I want to put a dining table? These are the things that we look at. And smaller furnishings for everything except the beds. So smaller dining table, smaller sofa, but when it comes to the bed, queen size bed all the time. When we talk about cabinetry, make sure the cabinetry goes from floor to ceiling because you’re going to need that extra storage space. And it gives you, again, a bigger view of how large this space can be. And the last thing you want to do is make sure that if you can have direct access to the external of the building, so it gives you a little courtyard of some sort, because that will actually make the place feel larger as well.

Jackson (07:08): Okay. So you’ve said that you advocate for each piece of furniture having multiple purposes. What are some examples of what you mean?

Ian Ugarte (07:17): Oh, look Jackson, you cannot go without a wall bed or a Murphy bed when you’re talking about creating space. So if I walked into a small bedroom with a queen size bed in it, it’s a small bedroom, but if I fold that bed out of the way, I now have a functional room and you’ve got… You can see right now, this functional space, we’re talking about desks that fold up. We’ve got bookshelves that are incorporated and the Murphy beds, you can spin beds around and hide the bookshelves. It’s like a little… one of those old shows with the secret passageways that you can go through. Ottomans have really come to life too. We’ve got an ottoman in our own home that’s actually a two bed… sorry, a double bed. 

And my own home actually has five bedrooms and five bathrooms. We’ve got a Murphy bed in every room. Three of the bedrooms are incorporated into the house. So we actually have a full working and maneuverable wall that maneuvers itself out of the way so that the bedroom becomes part of the living space during the day and becomes a bedroom at night by closing it down. Now this adaptable furniture is out there. It was actually quite prevalent in the seventies, and right now, it’s making a comeback and there is not a property that I would not put a wall bed in to create more space.

Jackson (08:28): Okay. So if someone wants to do a micro apartment conversion, do they need to get building approval for these internal modifications? And if so, how do they go about getting the right permits to make it quite a smooth process?

Ian Ugarte (08:41): Yeah. Look, there is an approval process required. Now I don’t particularly like dealing with councils direct, which is why we like the policies that have been created around the country so that you can go to a professional called a private certifier or a building surveyor, depends on what state you’re in. And what they are are they’re professionals that are licensed by the council to act on your behalf. So you go to them, they make sure they’ve got all the paperwork, they lodge that with council, and that means that you don’t have to deal with council at all. And that’s always a good thing. It is an approval process, it’s just not the traditional approval process.

Now at Small is the New Big, we’re advocators for affordable accommodation and I’m an advisor around the country. And right now our mission is to reshape housing so it’s affordable again. And we’re finding that most governments and councils around the country are looking at what we’re doing and are changing policies as we go. Now, if I want to be able to help more people get into affordable housing, I actually need to help them understand it more. So we have a free co-living 101 course for everyone that’s watching Ticker. All you need to do is go to smallisthenewbig.com.au/tickerhome and they’ll be able to get access to that free course.

Jackson (09:58): Okay. We still have a couple of minutes left. Are there any other tips, any other bits of advice that you have for people who are keen to try out a micro apartment, to get involved?

Ian Ugarte (10:09): Yeah, absolutely. So when you’re looking at online tools, we’ve talked a little bit about it last week, you’ve got Google [inaudible 00:10:17], there’s a couple of different apps where you can stand in the middle of the room and take photos of the rooms it’ll download on the GPS, so Magic Plan is an example of that. So use those and look at the templates. There’s plenty of information out there about co-living properties and we’re specialists in it, so we can also help people out. Don’t sacrifice the aesthetics of the property for functionality, okay? So we want people to walk into a micro apartment and feel like it’s going to be their home so that they can actually fall in love, sit there and enjoy their life while saving themselves a huge amount of money. As I said, use adaptable furniture wherever you can. Anything that converts from a bed into a coffee table into a desk or a bookshelf or an Ottoman that has a transparency of being able to be used as a coffee table as well. All of these things make a big difference.

Make sure that you get approval for this, because there are foreign safety upgrades that are required as part of what we do. You have to protect the residents in your house. And if you don’t do that, you won’t have insurance. So follow the process of getting approvals, and as always, Small is the New Big is here because we do want to reshape so we can create that 1 million self-contained homes in the next six or seven years. And then that will actually make a big difference to people to be able to afford to live again, save some money, and hopefully buy their own home.

Jackson (11:40): Okay. To wrap up the show, would you like to recap your top tips or offer any further thoughts?

Ian Ugarte (11:46): Yeah. Use online design tools like I’ve just said, make sure you don’t sacrifice the looks of the property, use adaptable furniture wherever you, ensure the correct approvals are in place. As always, smallisthenewbig.com.au/tickerhome, we’ve got a download cheat sheet every week for all the listeners to be able to get the best outcome of what we spoke about today.

Jackson (12:06): Okay. Ian Ugarte, as always, thank you so much for your company here on Ticker Home. Thank you, Jackson. We’ll see you next week.

Ian Ugarte (12:15): Of course. Ticker Home as presented by our partners at Small is the New Big who are on a mission to create 1 million affordable homes in the next 10 years and help Aussies struggling with housing stress. Learn more at smallisthenewbig.com.au. Thanks for your company.



Why there’s a new construction boom and how the world-wide shortage of timber could affect your upcoming renovation. Plus, how to get the best bang for your renovation buck. Make sure your renovation improves your property value with Ian Ugarte’s top tips!



Adrian (00:06): Okay, welcome back to TICKER HOME where each week we will dive in the latest trends on the property market and answer the questions that you need to know. It’s great as always to have my cohost Ian Ugarte co-founder of Small Is The New Big. Hello mate, how are you?

Ian Ugarte (00:20): Hi, Adrian. How are you? Good weekend?

Adrian (00:22): Good weekend. Weather’s a bit rubbish down here in Melbourne. What’s it like out there for you?

Ian Ugarte (00:27):

It’s perfect. It’s Queensland. What’d you expect?

Adrian (00:31): I don’t like, I don’t appreciate that tone. As [inaudible 00:00:33] would say, I don’t appreciate that tone. That’s fine. What are you looking forward to talking about today? What’s on the agenda?

Ian Ugarte (00:42): Today, we’re going to talk about the best bang for your buck when renovating and so we want to make sure that people get the best outcome and they remove emotion. Emotional decisions are not good financial decisions. So I see investors make that mistake every day. So let’s see if we can stop them doing that from this, from this week’s session.

Adrian (01:00): Sounds good to me. So take it home. Of course, presented by our partners at Small Is The New Big who are on a mission to create 1 million affordable homes in the next 10 years and help Aussies struggling with housing stress, it can be stressful we know that, learn more at smallisthenewbig.com.au. All right, Mr. Ugarte back you come, what’s trending for you this week?

Ian Ugarte (01:21): We got Gerv Tacadena in yourmortgage.com.au talking about construction loans. The December to February quarter has had a 47.6% increase to home loans for renovation, particularly that’s the highest since 2009 is come about because of the false savings that’s happened in the marketplace. People not being able to travel because of COVID. So they’re directing it to their home and then getting construction loan to pay for the rest. Western Australia has reported the biggest gain at 255% for the quarter, Northern territory 200%, Queensland at 191% and to Tasmania at 176. This is the perfect storm. We got the home builder grant. We’ve got low interest rates. People are shifting out away from apartments and into, and away from capital cities, and into housing. And interestingly, 40% of all new construction loans are first home buyers. So it’s good to see young people getting into the market.

Adrian (02:09): That’s some pretty good news, but the bad news, I guess in some ways is an apparent our timber shortage. We’re looking at the renovation boom, and it’s causing a bit of a shortage. Tell us more about this.

Ian Ugarte (02:20): We’ve got a worldwide shortage of timber and that’s created a huge issue and we haven’t even hit a peak yet of when we need the timber. We’re six months away from that. So it’s pretty scary that we can’t even get timber now. Our minister, Jason Claire playing politics here saying that people aren’t going to be able to get the HomeBuilder Grant because they won’t be able to start the construction. We all know Mr. Claire, that if you put an excavator on site and to dig a sand castle, you get the grant. So let’s not politicize this.

Some outlets are actually ordering stuff from Russia, I didn’t even know how to market over there for timber that they’re bringing an importing in. Prices in the U.S have gone up by 200% in timber. So we’re talking to a bunch rep recently, one of the ships coming out to Australia for Bunnings got turned in the middle of the ocean towards the U.S because they got more money. So when pre-COVID, if I bought a container load of timber was $3,000 a container, we’re now at $9,000 a container. So we’ve got some huge issues going on with that. And it’s a good argument to look at steel frame construction, as long as there’s not a shortage of steel around the world. So, it’s an interesting time ahead.

Adrian (03:23): Let’s have a look at Canada. This story seems fascinating. They’re investing in home renovations to improve their quality of life rather than adding value necessarily to their homes. What’s going on here?

Ian Ugarte (03:35): In the last year Canada has renovated, 50% of Canadians have renovated their home, 30% for lifestyle, 30% for maintenance, and only 16% have done it for a return on investment, and so that number should be higher. You know, Canadians are conscious about overcapitalizing, but at the same time, the market is moving as quickly as in Australia, so they’re not really concerning themselves too much. In Canada, they do renovate to the climate based. So if it’s in a colder climate, they spend money internal for lifestyle, and if it’s a warmer climate, they go outside. But to me like Australia, Canadians I think that Reno is the best strategy to lift the manufactured growth in the property. I think it’s the hardest way to do it. And the rest of the article is let’s watch this space because it’s an interesting space to be in, particularly with those people sitting at home more often and wanting to live in a nicer house home.

Adrian (04:26): All right, let’s get into our main conversation this week. So last week, of course, we talked about having a three by three strategy when it comes to buying property. One of those strategies included renovating as a way of manufacturing growth for your investment property. But you say not all renovations are created equal. What do you mean by this?

Ian Ugarte (04:46): There’s a risk of emotional renovating. So what we do is we ensure that when we renovate that, we make sure that we’re doing it because of the money uplift. We’re not doing a renovation to make our heart sing. So if we’re renovating to make a profit, then we’ll need to follow a set of standards and criteria that is different to renovating when you want to put your personal touches on, or you want your personal taste on the property. You want to make sure that you hit the majority of the marketplace. And for some people, money does make their heart sing. It’s not the way that I live my life. I make sure that people get a good home to live in if I renovate it for them. But if you can get the best of both worlds, and that’s probably the way that you should be operating and making sure that you stick to that standard and criteria that the general market wants.

Adrian (05:29): So what are the main areas to renovate, to ensure a property owner gets the best bang for their renovation buck?

Ian Ugarte (05:37): Look, the best bang for your buck is definitely in kitchens and bathrooms. So if we talk about bathroom, it’s the wet area of house and people spend a lot of time in bathrooms. Now you might think, Oh yeah, because they’re sitting on the toilet. Well, no. Think about the home that has that bath in it. How many times have you seen your mum, just say, I’m going to have a bath just to wash away the worries of the day, or just get away from the stress. So you want them living in a comfortable bathroom that actually fits the needs of de-stressing. From the kitchen it’s the heart of the home. You know, that’s where people are constantly interacting. They’re either going to the fridge or they’re cooking, or they’re sitting at the breakfast bar or having discussions about the day. You want to make that the place that people like to congregate and get together in. Now equally, you mustn’t overcapitalize. If you’re doing an investment property and you get a little bit emotional, you might end up with a $5,000 Miele cooker, which is not really going to make an outcome to your rental or to your sale. 

You’re better off getting the Fisher & Paykel $1,500 stainless steel, that looks exactly the same, and then that way you don’t have to spend that much money. Bathroom. Exactly the same. I remember 20 years ago buying a really nice toilet for $2,000 and that same toilet, the same look today, you can get for $200. So you don’t need to pay the million dollar price tag to get the million dollar outcome. And you don’t need bidets or bidets in your house. No one in Australia uses them.

Adrian (07:00): So having decided on either the bathroom or kitchen or both potentially, what’s the first thing to get sorted before you start we wielding that sledgehammer, which I’m sure you’d love to use.

Ian Ugarte (07:12): Yeah, slew time is always fun. Build a team of tradies around you that are trusted and reliable. And if you don’t have that team, then go off and find your friends that have used someone that they’ve used before and they’re happy with. So if you get a good plumber from among your friends, it’s quite likely that they’ve got a good sparky and a good chippy that goes along and works on other job sites with them. Stick to your budget and don’t stray away from it. If you’re going to spend more on one area of a budget, you’re going to have to compensate by dropping the price of the budget in other areas of the renovation and make sure you commit to that budget, especially with bathrooms, don’t change the layout. Now, if you change the layout of, if you want to move a toilet from one side of a room to the other, that’s a minimum of two hundred, two and a half thousand dollars. Now I’m a plumber myself. And I will not change the layout of my bathrooms unless I absolutely have to because plumbers charge a bomb. And I don’t know if you know this Adrian, but before I was a plumber, I was a doctor. I wasn’t earning enough money. And that’s why I went into plumbing.

Adrian (08:09): I did not know. Are you serious? Is that a serious story?

Ian Ugarte (08:12): No, I’m just joking. I’m just joking. Just joking.

Adrian (08:14): All right. I’m gullible. You know that, you know that. Anyway, moving on. Are there any other, are there any helpful renovating tools or guides that people can access to, to learn more about this?

Ian Ugarte (08:27): There’s quite a few out there that I’ll mention 5 of them. Homestyler app. It’s a great little app. What you do is you draw your floor plan up 2D. You then make the floor plan changes that you want. You then put your pallor schemes in, change the little bits and pieces of the finishes that you want, drag in some furniture. And then what it’ll do is a pop out a 3D image where you can do a virtual walkthrough and see what the renovation is going to look like. I love Google SketchUp. Google SketchUp is a great little CAD tool. What it is is that a DWG file. That means that the people around you like your designers and architects, if you can get the stuff out of your head and into SketchUp, then you’ll get a great outcome because then they can draw up and transpose to there.

Now YouTube has a hundred people that have made videos cause they got way too much time on their hand for you to be able to learn how to use SketchUp. I also love magicplan. You grab magicplan. You download it onto your phone. You stand in the middle of the room. You take a picture of the four corners of your room. GPS will download it, move into the next room, put the floor plan together. I’m always about budget. If you’ve got an ABN, go down to Bunnings, get a PowerPass card. It’s 5% discount off everything in store and they’ve got the PowerPass app. You can do all your research on the products you want. Put it into a cart, send it off. They’ll get it ready for you. They’ll even deliver for you if you want to.

And the fifth one is not a construction one. It’s an app called Sleep Cycle. You put your phone onto airport mode, stick it under your pillow so that when you’re sleeping at night time, it picks up your deep sleep and your light sleep cycle. And it wakes you up in your light sleep cycle. So you don’t get out of bed out of the wrong side of bed. And you’re going to need some sleep if you’re going to start renovating.

Adrian (10:00): Very good. You are a man of action. There’s no doubt about that. And finally, having completed the renovation, paid all the tradies, what benefits can the property owner now sit back and enjoy?

Ian Ugarte (10:12): Look, if the property you’re renovating is long-term key, you’ve got depreciation schedule you can put in there. And if you can get tax back from the government, you should always do that. So that’s the number one thing that I would say. With a renovated property that you’re going to keep, there are three advantages to renovating well. The rental will fill quicker and ahead of any other rental on the market. Number two, the tenants will always be happy to pay a little bit extra to live in your property. Number three, those tenants will stay there for longterm, which means less vacancy, more money in your pocket. If you’re selling, the three advantages are that it will sell quicker, it will have a higher buy price and less discount, and the third reason is you’ll have less objections from the marketplace because people will see themselves being able to live in your property because it’s fully renovated. Only 90% of people are only 10% of people can actually visualize living in a home. If you can make it like they can see themselves sitting in the couch or sitting in the bath or standing around the breakfast bar, that’s what you should be doing

Adrian (11:06): Nicely done. So just to wrap, let’s just take through some of those major key points in terms of the biggest bang for our renovation. I think you’ve got, what do we got? Five ready to go? So just tick through to wrap up.

Ian Ugarte (11:19): No worries. Prioritize to high impact zones, making sure that you do the best in the best parts of the property. Stick to a budget, don’t stray away from it. Invest in trades to avoid the “Do it yourself” disasters because that can be very dangerous. Always use professionals. Use free renovating tools and apps that are available to you and always align your renovation to other strategies that you’re stacking as well. As always, smallisthenewbig.com.au\tickerhome, we’ve got an unreal download cheat sheet for you this week on how to help you get the best bang for your buck out of your renovation, Adrian. And thanks again for having me this week.

Adrian (11:53): Of course, people need to check it out. We want to make sure people are aware of it. We are learning so much here. Thank you so much for your time. We’ll talk again really soon. Okay?

Ian Ugarte (12:02):

So yeah.

Adrian (12:03): TICKER HOME of course, presented by our great partners at Small Is The New Big who are on a mission to create 1 million affordable homes in the next 10 years and help Aussies struggling with distress. Learn more atsmallisthenewbig.com.au. Catch you soon.




Is ‘fear of missing out’ – aka FOMO, leading your investment strategy astray? Do you jump into property deals, excited by the opportunity without thinking about your long-term strategy? Then you might need to tame your inner ‘restless puppy investor’ and learn to research strategies OVER properties. Join Ian Ugarte as he gives his top tips to keep you focussed on your end financial goal.


Adrian (00:09): Hey there. Welcome to Ticker Home, where each week we’ll dive into the latest trends on the property market and answer the questions you need to know. It’s great as always to have my cohost and co-founder of Small Is The New Big. Good day mate, what are you looking forward to talking about today? Exactly.

Ian Ugarte (00:24): Today I’m going to bring up something we call the restless puppy dog syndrome, where you take emotion out of your decisions. So you can settle down, prepare, focus. And so you don’t make mistakes that 90% of investors make when buying a property and that is that they purchase emotionally.

Adrian (00:39): All right, look forward to that Ticket Home presented by our partners at Small Is The New Big, who are on a mission to create one million affordable homes in the next 10 years and help Aussie struggling with housing stress learn more at smallisthenewbig.com.au. All right, we’ve got a few what’s trending topics. So what are we going to start with today Ian?

Ian Ugarte (00:59): An article by Alex Brewster in Savings.com where they’re quoting Dr. Andrew Wilson from Archistar. His basic saying the market hasn’t hit its peak yet. And we’ve got some huge increases in property prices over the last year. Brisbane is out ahead and streaks, which actually I predicted about 18 months ago. We’re at 29.3% increase in price. Sydney’s at 16.4% increase in a year Canberra 12.2% Melbourne, 11% and Adelaide at 10.9. So prices are pushing auction clearance rates up. We’ve got Sydney, Adelaide, and now Canberra at 90% clearance rate in auctions, Melbourne at 82% and Brisbane at 81. Tim Lawless from CoreLogic has indicated that there’s 33,791 auctions last week. That’s the highest auction amount since March 2018 at the last peak of the market. And we can see that, we seeing, Melbourne back at its highest ever median house price. It declined 6.1% during COVID, but has now increased 6.7% sitting 0.2% in the hedonic daily home value index. So there’s still a long way to go in this property cycle. I’d say Adrian.

Adrian (02:12): And it’s taking place in New Zealand as well. Their market is super strong right now. So there’s something Australians can learn from how New Zealand are managing this side of things.

Ian Ugarte (02:23): Yeah. Look again, I’ll be controversial on this one. I think that Jacinda made another move, I love Jacinda as a leader, but I think that some of the moves that she’s made is affecting the housing market in particular, every market, in a bad way. They’ve taken away the capital gains tax of five years. You have to now wait 10 years before you can get capital gains tax-free over there. We already have capital gains tax in Australia. So it won’t affect the Australian market. If they put it in over here, tax deductibility on interest rates, well interest rates are really low, so that’s not going to make a big difference in the short term anyway.

I can understand why they’re doing this. New Zealand is the highest median house price in the OECD at 759,767 Australian dollars. Australia’s median house price is 598,884. We have a lot more land and we have a lot more housing and people. So you can’t really compare the two. Dr. Cameron Murray, who’s an economist, has said that those changes that they’ve made in New Zealand, it’s like throwing stuffed toys on the train line to slow the train down. And I agree totally. You know, the negative gearing was a big topic in the election, our last election, it really comes down to supply and demand. If we can fix the supply and demand problem, then we’ll be in a better place when it comes to housing.

Adrian (03:38): And let’s look at Australia once again, in terms of low income earners and what’s available to them in terms of homes, what are you seeing here?

Ian Ugarte (03:53): I’ve lost you.

Adrian (03:53): No. Did you get that last one? Have you got me there?

Ian Ugarte (04:00): Yeah, I’ve got you.

Adrian (04:00): So the affordable homes just for low income earners. What have you got for us there?

Ian Ugarte (04:06): Melissa Heagney in Domain. So pulling out data, even before the pandemic, there was a shortage of 173,000 people in Australia that were living unaffordably. So effectively, we’re short of housing. A study by AHURI in Swinburne University on housing affordability, says that people are now commuting longer than ever before. So effectively from the time that they leave home and get home. It’s one third of that day is spent traveling and that’s just not affordable because you’ve got petrol or transport costs. Regional city vacancy rates have declined and then down Dulong [inaudible 00:04:38] Gold Coast and Sunshine Coast to down Sunshine Coast has a negative 0.3% vacancy rate. We have 1500 families on the coast here that have no where to live. They’re living in caravans or sleeping with the other people in other houses.

Sydney is probably the worst in the country. 60,000 households are living unaffordably. 71% of all lower income earners in private rentals are living unaffordably. And that was before COVID and it’s worse now. There’s an increase of low income earners living unaffordably. In 2006 there was 29% of the population, in 2016 it was 46% of the population. And this year’s census is going to show some extreme data. That’s going to be about even worse. The rest of the articles, talking about government, throwing more money at housing. Governments have got no money. They need to create better policies. The private market can actually fix that problem and at least stagnate the rentals and the cost of properties.

Adrian (05:32): Yeah, it makes a lot of sense. So you’ve given us heaps of advice over the past few weeks on how to really master property investing and maximize the growth of investment properties. But today you have some cautious advice. You’re warning against people becoming the restless puppy. I liked this one of the property scene. Who are these people? What does this mean exactly?

Ian Ugarte (05:51): Well firstly, let me explain the restless puppy dog syndrome. Here’s one I prepared earlier. This is my little Fox Terrier, right? And this guy is nonstop energy. He runs all day long. So for me, I say, well, why don’t I take him out to the paddock? I’m an hour away. I put him in the backseat and he’s on the backseat. And for the whole trip he’s looking across the one side. He’s looking at the dog over there. And now look, look at the cow over there and look at the tree over there. And he’s using all this energy running across the backseat. And finally we get to our destination. I opened the back door and there he is asleep and lost all his energy. Now I’ve spoken to over 300,000 people in the last 11 years talking about property. How can they invest in property and how can they have a better outcome?

And they all get so excited. They go off and they go to real estate.com and they start looking at houses in WA and unit blocks in Victoria and industrial deals in Queensland. And what happens is their eyeballs get fatigued. So they can’t see a good deal. Even if it hits them in the face. It’s what we call a scotoma, Adrian. That’s a scotoma is like when you open the pantry, looking for the salt and you can’t find it and you yell out to your partner, “Hey, where’s the salt?” they come over, it’s right in front of your face. And that’s what happens when you lose the energy. So we need to have more focus when we’re looking for property.

Adrian (07:03): Love it. Absolutely love it. I can’t believe. I mean, I actually can’t believe you have your dog there. Nothing surprises me. That was amazing. So that makes sense in terms of people racing from one property to another, and then getting confused about which option is best, it sounds exhausting. So, what should people focus on when they’re looking for a property in order to attain this restless puppy?

Ian Ugarte (07:24): Well, property purchasers need to think about how they’re going to manufacture growth first. Okay? So are they going to renovate or are they going to subdivide are they constructing, strata titling, are they going to do co-living. Figure out exactly what you want to do. Now. There’s an Italian scientist named Pareto. And he came up with the 80 20 rule, which is actually now the 90 10 rule. Basically 10% of the work that you do on a daily basis gives you 90% of the results. So what I say is get the property right, and be clear about the strategy. And by default, 90% of the properties that are on the market will now no longer fit your criteria. That means that you’ll choose the right property and you’ll know exactly what you are looking for and what can be done on that property, because you’re now an expert spend 10% of the time that you need to prepare. And that you’ll have a 90% result from that.

Adrian (08:14): And when it comes to identifying strategies, you recommend only focusing on a three by three strategy. What does this mean?

Ian Ugarte (08:21): Yeah. The three by three strategy is where you are. Firstly, you’re implementing three strategies in three geographical areas. Now the reason for three strategies is because you will have an outcome that’s better off if you stack strategies on top of each other, that means only one agent, one lawyer, one designer, one architect, one builder, and that will all give you a big uplift. Then the three areas I’m not talking about Europe, Antarctica and Asia, I’m talking about three suburbs where you become an expert, such an expert that when a property comes on the market, you won’t to even need to look at the price of that property. Because you’ll know its value because you know the area so well. So you might implement as an example, a subdivision where you then build a new dwelling on the spare block of land. And then you implement the co-living policy on top of that. Now Zig Ziglar says that success is when opportunity meets preparation. I say that success happens when you prepare and then opportunity appears.

Adrian (09:19): So does this strategy only apply to investment properties or is it also to the home you live in?

Ian Ugarte (09:26): It’s even more important that you implement the three by three strategy in the home that you’re purchasing for your family. Otherwise, you can get caught up in emotion. You could make the mistake of buying something, living in it, the gloss wears off, and then you realize, well, I actually wait for capital growth and I can’t manufacture growth out of this. So every property you buy, including your own home should be a business decision. It’s one of the last tax-free havens that we have in Australia. And you have the right to minimize your tax so that you can take advantage of an uplift.

And even this home, my dream home, took me 25 years to get to here. It’s my home. I have extra rental income that comes from a granny flat. I have sheds for all my equipment. I have this recording studio here. I’ve got my office on site. I also have co-living potential in the new house that I’ve built. And it’s also a wedding venue because I’ve got a thousand square meters of grass on a river where people would love to get married here. I didn’t buy this 25 years ago, but every home that I bought also had manufactured growth strategy so that when I sold it, I had an app uplift. I had a tax-free haven and then I put it into the next one to finally get to where we are today, where I can have my dog in my studio.

Adrian (10:35): You are a smart man, just finally. What should people do if they find themselves falling into the restless puppy trap or perhaps suffering from FOMO?

Ian Ugarte (10:46): Well, property prices are rising quickly and people are making decisions that are detrimental to their short-term investing strategies. So you might say, look, I’m going to live in this property for 20 years. So I don’t care. The property prices will be good in 20 years. But you’ve lost out on the short term. So I don’t like hot markets because people make decisions based on FOMO and saying, everyone else is buying and you get caught in the emotion. So to stop bad purchasing decisions, all you have to do is make sure that you’re not the restless puppy dog. Prepare, make sure you know your three areas and three strategies that you’re going to be able to buy a property in and base your decision on real data.

In episode one of Ticker Home Agent, we talked about not buying in the hotspots and buying in the warm spot. So on our website, we’ve got all the episodes from Ticker Home, including the cheat sheet and download of how you can buy in the warm spot and stay away from that. And if all else fails, go to an advisor and an expert to help you through that process like myself. And then that way you can remove the emotion and make good business decisions.

Adrian (11:42): Makes a lot of sense to me. Let’s just run through ,briefly, the main points for taming the property investor.

Ian Ugarte (11:50): Research your strategies, make sure you know what you want to do. Eliminate properties, limit your search so that you can use the 10 90 rule. 10% of the properties is all you should be looking at. Three areas, three strategies that will help you go to the place where you know exactly what you want. Don’t succumb to the fear of missing out. The emotional based decisions are never a good one and make sure you get expert advice from qualified professional advisors that are around you as always smallisthenewbig.com.as/tickerhome. Where you can have this episode and other episodes and download the cheat sheet every week.

Adrian (12:23): You’re a star. So much information. We’ll talk to you soon. Ticker Home presented by our partners at Small Is The New Big, who were on a mission to create one million affordable homes in the next 10 years and help Aussies struggling with this stress. Learn more at smallisthenewbig.com.au.




Join Ian Ugarte as he reviews what’s happening in property news this week. Plus, what exactly is the difference between a cosmetic renovation, code assessment renovation, and a structural renovation? How much should you spend on your renovation, and can you really make a profit on a cosmetic renovation?


Adrian (00:09): Hello, and welcome to Ticker Home where each week we dive into the latest trends on the property market and answer the questions you need to know. It’s great as always to bring in, I reckon he’s almost my number one here at Ticker News, Ian Ugarte, co-founder of Small is the New Big. Ian, do you like being my number one here? Does that feel good to you?

Ian Ugarte (00:27): Actually, that’s probably one of the first times I’ve ever got a first prize, so it’s awesome to be your number one.

Adrian (00:32): Hey, don’t cry. Don’t you cry.

Ian Ugarte (00:35): No, I won’t. I promise.

Adrian (00:36): Okay. Hey, what are you excited to talk about today in particular?

Ian Ugarte (00:42): Yeah, we’ve been talking last couple of weeks about renovation, and I just wanted to get the details of the types of renovations you can do, the purchasing, what money you should be spending and then contracting and the right contracts. Hopefully, you’d be making a profit out of it.

Then I want to make sure that you can see the house that I grew up in because I did say that I’d show you last week.

Adrian (01:03): Very good. Producers, get that ready to go. Can’t wait for it. Let’s get into this Ticker Home, of course, presented by our partners at Small is the New Big, who are on a mission to create 1 million affordable homes in the next 10 years and help Aussies struggling with housing stress, as we do learn more at smallisthenewbig.com.au.

Okay, let’s get into what’s trending, Ian. What’s off the start? What have you got? We’ve got three points to hit. What’s number one?

Ian Ugarte (01:28): Yeah, Master Builders South Australia, an article by Elizabeth Henson in The Advertiser, they’ve asked the federal government to extend the HomeBuilder Grant start date by an extra six months to take it from six months to 12 months. Essentially, the rules are that if they’re going to use the HomeBuilder Grant, the purchaser, they have six months from the date of the contract being signed for the builder to turn soil, basically start the excavation and the slab.

Well, we’ve got huge holdups and delays around the world on materials. There’s a shortage on trusses and frames that are throwing builders three to four months out. 73% of the businesses in South Australia that are building businesses are on delays right now, and they’re asking to ship it out to 12 months.

Now, look, I think if I look at this and I think if I was a man, that’s probably how I’d handle it. But if females ran the building construction trades, they’d simply say, “Well, the rules are that I need to turn an excavator and I need to turn some soil and build a sandcastle before we get the grant okay. So why don’t you just say to your clients, ‘Let’s shift the contract date out so that we’ve got along the build contract, and let’s get the excavators onsite so they can pay it.'”

I sometimes look at this and I wonder, “Are they being smart about this, and they could probably do it in a better way?”

Adrian (02:43): Yeah. Well said.

Let’s move on to the next point. Developers rush to beat the clock on affordable housing rule changes. What’s this about?

Ian Ugarte (02:52): As you know, Adrian, this is my specialty area. We’re talking about boarding houses in particular, in new South Wales. It’s three state planning policies that are in relation to housing, and they’re pulling it together into one.

This is generally because of the community backlash, which means councils will then back the community about the developers out there just getting a little bit… Well, they’re taking the mickey a little bit. They’re building these massive boarding houses of 100 and 200 and 300 rooms using the current new generation boarding house policy. Of course, that means the council will fight it. There’s not enough housing being put out. It’s a vicious circle because not enough housing means an increase to housing, which meant affordability gets worse.

So I’m actually on the coalface on this one. We’re currently working with the New South Wales State Government, and we should see some changes in the next three to six months of policy that will be a great outcome for those people that are needing to rent houses at an affordable rate.

Adrian (03:48):

Yeah, nice. Just finally, our building watchdog finds a patio builder. What’s going on here?

Ian Ugarte (03:54): Yeah. Queensland Building Construction Commission has just fined a Brisbane building company $13,000 after they were warned to not continue doing the trading because they weren’t licensed to do the work that they were doing. Because you don’t listen, you get fined.

They also fined a termite management business that did $40,000 worth of work that was not licensed. It was faulty, and it was defective. So the Queensland Building Construction Commission Commissioner Brett Bassett basically says those people out there that have a license have to use that license correctly, and you as the consumer should be protected to make sure that you check on those as well. We’ll talk about that today as well.

Adrian (04:38): Let’s get stuck into that, our main conversation for today.

Last week we discussed renovating for reality, rather than reality TV, which I can’t remember if you like it or not. I don’t even have a TV, so I don’t like it, but that’s not the point. You mentioned a cosmetic renovation being like putting makeup on a property, so following that episode, we’ve got some questions about the different types of renovations.

Can you go into a bit more detail about the different types, including the ins and outs on how much people should be spending? This is the question, and the types of returns they should be aiming for.

Ian Ugarte (05:09): Yeah. Again, I do not like reality TV because it’s not real. It’s about tidying the place up for cosmetic renovation, like you’re going out and you’re just making it look nice and giving it a fresh, modern look, door handles, mulching gardens, paint the gutter.

Let’s take an example. We take a property, we purchase it for $500,000. There’s actually costs coming in, which is about 9%. That’s the building and pest inspection stamp duty, some legal, paying the selling agent on the way out.

I think you should spend no more than 9% of the purchase price towards a cosmetic renovation, which means you start to look at it and say, “What’s my entire amount of spend on this renovation?” That means that you’ll end up spending about $590,000. Now I’m all for people making a profit. You should sell it for 135% of the original price, which means that you should make 17% of the purchase price as a profit, so that profit will come in at about $85,000 for the work that you’re doing. Now that doesn’t include interest and costs, but that’s a good way to go and have a look at how you can make money out of property, especially cosmetic.

Now I’ll show you a couple of examples of ours. Here’s one of our properties here that we simply just did a paint job over the top of it. We then staged the furniture, made it look nice. We changed some door handles in the kitchen, and we just gave it a fresh lift and a fresh feel. Sometimes it doesn’t take much at all. We’re talking a small amount of furnishing and a better outcome.

Here we’ve got a dated 1980s home, older curtains, not looking that great. What we then did was we just gave it a freshen-up. We got some lighter colors in there, some lighter curtains, and we just gave it something that people could see, and they could appeal to the major part of the marketplace.

Adrian (06:58): Okay. You’ve talked about a code-assessable renovation. Can you elaborate a little bit more on this type of renovation as well?

Ian Ugarte (07:05): Yeah. When we talk about code assessment, it’s about keeping the roof light, same purchase price, $500,000. Then we go off, and we’ve got that purchase costs are going to be about 10% now. So we now got $50,000 of legals, building and pests, and the other costs that are associated to putting these type of properties together when we do code assessment. We’ve got to certify that we need to pay, then spend 16% of the purchase price.

In this one here, we would spend $80,000. Previously it was 45, now we’re spending more money. Total cost goes up now, so we’ve got $630,000 worth of costs. So you should be selling this for about 150% more than what the original buy price was, so 500 times 150 is $750,000. Now, again, we want to make sure we make a profit. In this one here we’ll make a 24% profit of about $120,000.

Adrian (07:57): You said the third type of renovation was a major or structural-

Ian Ugarte (08:00): Oh, sorry. I’ll just come back to you, Adrian.

Adrian (08:00): Yeah, go ahead.

Ian Ugarte (08:03): This is one of these properties that we did.

Adrian (08:03): Go ahead.

Ian Ugarte (08:05): This is a beautiful… I hate A-frame houses, then I thought, why not? Let’s get stuck into one of these. You could see the difference here, where we’ve got the brick work and open plan and it’s not that nice. We simply put some kitchen in. Look at that difference in there.

Adrian (08:22): Wow.

Ian Ugarte (08:22): Just by putting some paint, changing the curtains, putting some furniture in and a nice feature above the bed then, again, just gives it so much difference.

This one here, we added a couple bathrooms, too, but we didn’t change the externals of the building at all. So we just gave the outside a paint and look at the difference in the lounge room alone. Would you really want to walk into that one there? So that’s a really great outcome for that property.

Adrian (08:45): Yeah. The front of those two is incredible, so you’ve done an awesome job there. Nicely done.

As you said, the third type of renovation was a major or structural renovation. Can you explain more about this, what’s involved when it comes to carrying out one of these?

Ian Ugarte (09:00):

Yeah. You can’t live through a structural renovation. It’s like pulling a Rubik’s cube apart, and then putting it back together again.

Again, in this one, purchase price of 500,000, we’ve got an increased cost of the purchase costs in and out. About 31% is what you need to spend on that renovation so that you’ll have to spend $155,000 on renovations cost there. That’s a big reno when you start talking about renovating a property. That’s a total cost of $710,000.

Now, again, we have to make a profit so your selling price is important. You make your money when you buy, not when you sell so you know what the sell price has to be. At $900,000, 180% of the original purchase price means that you’ll make a profit of 38%. In this one that’s $190,000, but this is hard work and hard yakka, and you certainly don’t want to be stuck in that place.

Here’s actually the last house we lived in Sydney before we moved to Queensland. You can see the difference between the two there. You’ve got this older dated house on the left. All we needed to do with just tart it up, make it look nice. We threw some LED lights in the backyard.

Adrian (10:05): Wow.

Ian Ugarte (10:05): You can see the difference there. We extended out. We almost doubled the footprint of this building. We made sure that we had a really nice kitchen because that wallpaper was probably something I grew up with, and it’s just about making the place feel modern and not dated.

When you start doing this, again, you’re appealing to the major marketplace. If I start putting featured colored walls in and bits and pieces into those, it’s not going to cut it. People aren’t going to like it, and it’s not going to sell quickly and easily.

Adrian (10:38): Amazing. So that was your home previously? That one we just showed?

Ian Ugarte (10:42): No. That was our home, yeah. The home we lived in-

Adrian (10:44): Way back.

Ian Ugarte (10:44): … before we moved to Queensland, yeah. Oh, we’re talking probably 10 years ago now. Yeah.

Adrian (10:49): Nicely done. We’ll get to another one in just a moment.

But, finally, what about contracts? I imagine it’s important for homeowners to have a clear contract in place with the tradie doing the work. What are some of the things to look out for when it comes to negotiating contracts?

Ian Ugarte (11:03): Yeah. Nobody likes contracts, nobody likes the fine print. You should learn to like the fine print because if you don’t, it’ll come back to bite you in the bum. So don’t work off assumptions and presumptions. Any verbal contract will come back and hurt you financially and also create huge anxiety, so I’ve got three basic tips.

Firstly, make sure that you check the contractor’s licensed for the actual work that they’re going to do and that they have insurance. Secondly, most people don’t know that for a project that goes over as little as $3,000, so if you pay a tradie in some states above $3,000, you actually have to put a contract in place. It has to be written, and you have to read the fine print. Lastly, for any work above as little as $12,000 in some states, you need home warranty insurance. Now that home warranty insurance gets paid for by the contractor, and you need to get a copy of the receipt. That means that you’re protected for somewhere between three to seven years for any faulty work or anything that goes wrong for you.

So you’re going to make sure that you understand every state’s policy. Every state has a great website through Fair Trading or through the licensing authority, and it’s simple and easy to use. You really need to be educated when you start employing tradespeople to start doing work on your property.

Adrian (12:20): Now last week you said you should always renovate for the market, not for yourself, and you describe your parents’ renovation as an example of this mistake. You promised pictures, Ian, as well. Do you have some pictures for us? Yes you do.

Ian Ugarte (12:33): Yes. This is the beautiful house that I grew up in, in Sydney, quite close to the airport, and this only appeals to about 5% of the marketplace when you should be building for 70%.

Adrian (12:33): Whoa.

Ian Ugarte (12:44): I mean, look at those floor tiles. The best room in the house really was the bathroom. You look at all those arches, the copper range hood, the brick work-

Adrian (12:44):

Oh, boy.

Ian Ugarte (12:56): … and look at the tiles in this bathroom, right? We’re about the green bathroom with brown toilets and PC items. Like I told you, there’s not a skid mark inside in that toilet there.

Adrian (13:07):

You did say that.

Ian Ugarte (13:08): Then look inside the shower. Oh yeah, it’s amazing.

But I’ve got a funny story about this. My parents put it on the marketplace. I think they put it on for about, it was like years and years ago in Sydney, $510,000. They had to drop price, drop price. My mom says, “I don’t know why they not sell.” Then they ended up selling it for 436,000 so they dropped a good 20% in price to get an outcome.

There was this big fridge in there. My brother and I had to go in and help move the fridge when the rest of the house was empty. The new purchaser was coming in the door as we were walking out, and she thought we were the removalist. I said to her, “Are you happy with the house?” She said, “Oh, I love the house. It’s so beautiful. I cannot believe I bought it so cheap.” So there is a buyer for everything. You just got to find them.

Adrian (13:58): Very, very good. I love the fact that you dropped in your mother’s accent. That can be every single week.

We’ve got about 45 seconds to go. Let’s just tick through the need-to-knows for renovation just nice and quickly.

Ian Ugarte (14:09): Sure. No worries. Top of reno, you need to understand what level are you going to go to, cosmetic-assessable or structural. Make sure you understand your target market and the cost of getting in and out. Every cent and every dollar should be put in writing about variation. Make sure you need to get approval for all of these and get the contracts right.

As always, Adrian, smallisthenewbig.com.au/tickerhome, and we’ve got a sheet of quick tips and information for you right there. Thank you again for having me this week.

Adrian (14:39): Of course, mate, always a pleasure. We’ll chat soon, okay?

Ian Ugarte (14:43): Cheers. See you.

Adrian (14:43): Ticker Home is presented by our partners at Small is the New Big, who are on a mission to create 1 million affordable homes in the next 10 years and help Aussies struggling with the stress. Learn more at smallisthenewbig.com.au. Catch us soon.




Planning a renovation? It’s easy to get carried away a Pinterest board full of design #inspo and a budget that’s as long as a piece of string. But savvy investors and renovators keep their budget tight and their design choices within market expectations. Follow Ian Ugarte as he gives his Top 5 Tips to avoid overcapitalising on your renovation.


Adrian (00:06): Hello. Welcome back to the ticker HOME, where each week we will dive into the latest trends on the property market and answer the questions that you need to know. It’s great, as always, to have my co-host in the house, Ian Ugarte, co-founder of Small Is The New Big. Hey, mate, how are you today?

Ian Ugarte (00:21): Hi, Adrian. How are you?

Adrian (00:22): Going very well. What are you looking forward to talking about today exactly?

Ian Ugarte (00:26): Today, we’re going to talk about what is not reality TV, we’re talking about real stuff today, so about not being emotional when you’re looking at spending money and I can tell you that renovation is not a fun game. I’ve had plenty of renovation and I’ll start with saying, don’t do feature walls, I don’t like feature walls.

Adrian (00:45): All right. Very good. Straight into it. I like it. I like ticker HOME presented by our partners at Small Is The New Big, who are on a mission to create 1 million affordable homes in the next 10 years and help Ozzie struggling with housing stress, but no feature walls. Learn more at smallisthenewbig.com.au. Let’s go. What’s trending? First of all, our first topic for you, Ian, what do you got?

Ian Ugarte (01:07): Well, we’ve got three articles today about renovation and this one, first one here is by Melissa Hackney and domain. This is a classic case of overcapitalizing probably extreme case. Not Australia, it’s in Oregon, in the U.S. the Hollywood video entrepreneur, whatever that means, bought a property for $1.6 million, spent $15 million on this thing, got in trouble with the council for doing the wrong thing and ended up selling it for $5 million. Good loss. Right. And he suggested that he may have gone overboard building the house the size of the White House. No crap. Right? So the next buyer bought it, has now turned it into a Tuscan Villa, but again, unfinished, they did get the approvals for it. And it’s back on the market. No one really knows how much was spent on it. I hope [inaudible 00:01:55] Ticker TV today. Australian experts like myself have said, adding things to properties may not be a good thing. Adding a pool in Victoria might be nice, but it won’t increase the price of the property. Always appeal to the masses, is basically what this article says.

Adrian (02:09):Interesting. So, we’ll get more into the renovation side of things, which is going to be a fascinating conversation. So the next one, renovate or sell up, what have you got here for us?

Ian Ugarte (02:20): So this is the thing, do you renovate before you sell? Michael Smart, the director of Ray White Cannington in his article by Eric Lopez of the Reflections on the state of Australia has said that, he himself being in real estate overcapitalized on his property, but he was happy to do so. They spent $440,000 for property worth $350,000 but they knew they were going to be there for 20 years. So it really didn’t matter to them. So they always say in the property game that time fixes everything. So, the difference between a good deal and a bad deal is about five years. So if you wait, the market will meet you eventually, you just don’t want to have to be in a bad spot. So, always make your property saleable. And I’m not sure if I’ve mentioned this, but I don’t really like feature walls Adrian.

Adrian (03:00): Got you, got you loud and clear. I’m never going to do it in my life. I don’t know what they are, to be honest, so whatever. And the last one in terms of what’s trending, what’s the riskiest renovation and how homeowners can avoid the headache?

Ian Ugarte (03:13): Yeah. This is a Queensland man who engaged a painter for $23,000 to paint the house, now Edwina Seselja and Kate O’Toole from ABC News have basically put this article together. And this guy just wants everyone to be aware because the paint started peeling, he made the complaint to the painter, the painter sort of fluffed around. Eventually he went to the Queensland Building Construction Commission, and they said,” we can’t help you because you should have seen us within the first seven months of the problem starting. Now, you’re going to have to go to QCAT.” So QBCC, the top five renovation complaints for the year were; painting 1,641 complaints, joinery 720 complaints, wall and ceiling finishes 451, tiling 417 and roof cladding at number five at 317 complaints.

When you’re choosing tradies, always look for red flags, make sure you do a license check on them, make sure you get everything in writing, any contract over a certain value will need a written contract. Make sure that they don’t ask for too much deposit that usually 20% or a little bit over 20%, if you’ve got a problem, always make sure that a non-structural defect is reported straight away as a complaint, a structural defect within three months. Really, it’s all just about protecting yourself and making sure you’re well aware of your rights as a consumer when you in place.

Adrian (04:30): Yeah, that would be an absolute nightmare spending that much money on such a big job and then what happens next? Goodness, me. All right. Let’s get into our main conversation today. Now we’ve talked in recent weeks, of course, about manufacturing growth, which means doing some sort of modification or renovation to the property to increase its value, simple stuff. But I can imagine there are some people that go all out and maybe over the top in terms of overcapitalizing. So what is that? What does it mean exactly? And how can people avoid the trap?

Ian Ugarte (04:58): I think where it starts is these reality TV shows right now, are showing incredible features in properties like curbed walls and sinking baths and floating beds. And everyone thinks, well, I’ve got to do that to be able to appeal to the market. That would be overcapitalizing. So overcapitalizing in the simplest form is spending more on a property than what it ends up being worth. And it’s not just renovation where people do that. Some people go and buy these blocks of land that have got huge potential to be subdivided and they go and put a house smack bang in the middle of it, move the house to the side, use the house for now, if you want to, but in the future, you’ve got the opportunity to subdivide.

And so the risk is that if you follow these trends, these ideas that are shoved in front of your face, then you may not be appealing to the major population. And whilst many people like the spa or the curved walls, they’re not willing to pay the extra money that cost you to put it in. So don’t do it. And how do you avoid the issues, you research the market, and by understanding the comparables in the market place that you’ve got your property, that will be a better outcome for you.

Adrian (06:03): So you recommend the people who are looking to do some sort of renovation on their property to check out the sold price figures for their area rather than for sale asking amounts. But why is the sold section so much more important in helping people not to overcapitalize?

Ian Ugarte (06:19):

Yeah. So when you go looking for comparable sales and you go to the bisection of real estate.com or domain, what you’re looking at is what people are dreaming to sell the house full. When you got to the sold section, that’s the realistic sold price. You have real data that you can work off. So you want to look for properties that are unrenovated just like yours in an area in the sold section that will give you the price of your property. Then what you want to do is go off and find the renovated properties so that you can see the difference from where yours is and where you’re all going to take your property to.

I’ll give you an example. If you go off and you’ve got a three bedroom, one bathroom property, and you find that renovated properties similar to yours are selling for $30,000 more. It’s probably not worth doing the renovation because for $30,000, you’re not going to be able to do much, but you might find that in the same area, a four bedroom, two bathroom property is selling for $150,000 more. That means that you can go in, spend a hundred thousand dollars, add a bedroom and a bathroom. And now you’re in a place where you’ve actually got some real numbers working in your favor rather than the emotion of just wanting to do a renovation.

Adrian (07:28):

So it sounds like the three keywords which were spoken about many times before, but when looking at doing some sort of property renovation is in terms of increasing its value research, research and then also the word researcher. You’re really big on researching the numbers with feasibility calculations. But the question is, how does the average person do a decent feasibility on their proposed renovations?

Ian Ugarte (07:51): Look, research has never been more important than right now. So I would say in the home builders grant stimulate the construction industry, Chinese are busier than ever been before, which means their prices are going up. Secondly, we’ve got some issues of shortage of materials across the country. China, COVID stopped importing a lot of importing and we’ve also got a shortage of timber. So timber and hardware is really hard to come by. So prices are going up there as well. So now more than ever, you must do a feasibility study to make sure that it works. And the way that you do this is you have to start with a scope of works. That’s just a fancy term that says, what are the jobs that I have to do? And what are the materials we need for this job?

And then you go off and you get three trade prices from every trait. Now I’ll tell you a little secret in the industry. Adrian, if you want three quotes from one trade, you’re going to need to talk to 15 tradies to get three quotes. So that means you’re going to talk to a lot of tradies. Now that you’ve got a cost of the tribes, now that you’ve got a cost of all the materials. Now you’ve got real value, you’ve got your comparables and now you can actually start to work out what the fixed renovation cost of the property that you’re going to renovate is and truly and really understand your profit.

Adrian (09:05): So what sort of percentage return should people be aiming for when they are renovating for manual or manufactured growth?

Ian Ugarte (09:11):

I think that people should aim at a minimum of 15%. Now, the thing when you’re aiming at a minimum of 15% is that people think, well, I’ll buy a property for $500,000. Now, if you bought a property for $500,000 today and you sold it tomorrow for $500,000 you would lose money because in the buy and in the sale, you’ve got some extra costs. You’ve got to pay for stamp duty. You’ve got to pay for legals building and pest inspections. And if you’re going to sell this property, you’re also going to have to pay a selling agent. So realistically that $500,000 property has cost you $550,000.

Now, if you’re going to do a renovation for a cosmetic renovation which is literally putting makeup on a property, you will probably spend about 10%. So that’s $50,000 of the buyer price. So now our true cost is $600,000. So for me to be able to make a profit of 15% on that $600,000, I’m going to have to sell it for a minimum of $690,000. And then that why I know I’ve actually made a profit, I’ve paid for all my costs and I’ve also paid for the purchase of the property. And it makes simple sense to look at it in that way.

Adrian (10:24): So finally when renovating for manual growth, your advice is for people to ignore their own personal preferences. So why is it important that they don’t simply renovate the property to cater for their own tastes or wants?

Ian Ugarte (10:38):

People make the mistake of following their own taste. And I’ve got a classic example for you. I Adrian, my parents’ first house in Australia, it had white speckle window, brown bowels on all the windows, it had different floor tiles all the way through the house, arches everywhere, a green bathroom, we’ve got brown toilet, Adrian. There wasn’t a skim Octa. We stayed inside and I couldn’t understand why their house wouldn’t sell. Right. And that’s because that house would sell in Spain every day of the week. But in Australia it was actually a very small limited amount of people that would buy it. So always renovate to the majority of the marketplace.

And if we look at a bell curve, it’s basically the top of the middle market is where you want to renovate to because that’s where the majority of buyers are looking. That’s just above the median house price for the whole entire suburb because the majority of buyers that are looking at, some are looking at it on the average price. So make sure you go to the top of the middle of the market appeal to 70% of the buyers and that means you’ll get a quick effective sale. And that will mean that you’ll be a legend amongst your family and friends and your neighbors because you got in and got out real quick.

Adrian (11:45): I would have loved to abate a fly on the wall, listening to your conversations with your parents around the house that they made and just the tiles and all the things. Is there any vision of that somewhere that we can get?

Ian Ugarte (11:55): There is actually, I might bring it up next week because we want to do a little bit of renovation next week. My mum in her fantastic accent said,” I don’t know why people know by my couch is so beautiful, but not many people thought it was beautiful.” Adrian.

Adrian (12:11): I’m definitely going to ask you to do that accent again, every single show but that’s okay. To finish, let’s just put up the graphic on screen and we’ll tick through just these major renovating for reality points. Take us through it.

Ian Ugarte (12:23): Research the sole prices in the area and not the full sale prices. Make sure investigate an area and ask all the locals. It’s always a lot of information that comes out of them. Crunching numbers make sure you do a feasibility plan and budget and don’t break that budget, be realistic on how much growth is possible in an area. And don’t even rely on growth. You should be working on today’s figures, renovate for the market. Make sure you hit the 70% and done to your own taste. And I’ll add a six one done to feature walls.

Adrian (12:50): So what, and just to finish, what’s the biggest mistake people make, is it on that list there? What’s the one thing that you just look at and go, it happens all the time too often.

Ian Ugarte (13:01): I’m not crunching the numbers. Thinking that I renovation is going to cost about $30,000 when realistically it costs $150,000. And the reason I think that is they watch reality TV and reality TV doesn’t give you some real numbers. The experience will give you real numbers that’s for certain

Adrian (13:16): Great, great stuff. I don’t watch any reality TV. So this is my reality TV. You and me Ian. This is it for me.

Ian Ugarte (13:24): I’m as real as it can be. Adrian. I am like my mother said, “she’s made it realize well okay.”

Adrian (13:31): Oh my goodness. I was not asleep before, but I’m certainly awake after we chat with you every single episode of ticker HOME. Great stuff. Enjoy your day, we’ll talk soon. Okay.

Ian Ugarte (13:42): Thank you. So Adrian.

Adrian (13:44): There you go. Couple words to that, but I’ll try, ticker HOME presented by our partners@smallisthenewbig who are on a mission to create one million affordable homes in the next ten years and help Ozzie struggling with housing stress learn more at smallisthenewbig.com.edu that is ticker HOME for another week. I’m not going to try and do the accent. I was thinking of it. I’m not going to. I’ll see you very soon.




All mortgages are not created equal. The type of mortgage you get, where you source your mortgage, and the unique features of your mortgage, all have a huge impact on how much you ultimately pay. Understanding how to shop around for the right mortgage product, can save you tens of thousands over the lifetime of your loan. Ian Ugarte, unveils his top 5 tips for navigating the mortgage minefield!



Adrian (00:09): Hello, and welcome to Ticker Home where each week we will dive into the latest trends on the property market and answer the questions that you need to know. It’s a pleasure as always to welcome my cohost, Ian Ugarte, co-founder of Small is the New Big. Hello mate, what are you looking forward to chatting about today exactly?

Ian Ugarte (00:25): Yeah, today Adrian, we’re going to talk about the mortgage minefield and do you know what a TLA and an FLA is?

Adrian (00:33): I have no idea what that means. Please tell me more.

Ian Ugarte (00:36): That’s a three-letter acronym and a four-letter acronym. And this whole mortgage industry is full of those acronyms that we want to get rid of the jargon. But firstly, let me start with mortgage is actually a Latin word where mort means death and gage means pledge. So it’s a pledge till death and hopefully at the end of today, you won’t feel like that.

Adrian (00:58): Is that actually true?

Ian Ugarte (01:00): Absolutely.

Adrian (01:02): My goodness me, that’s amazing. There we go, straight off the top I’ve learnt something bizarre and new. Anyway, we’ll get back into that in just a moment. Ticker Home of course, presented by our partners at Small is the New Big who are on a mission to create 1 million affordable homes in the next 10 years and help Aussies struggling with housing stress. Learn more at smallisthenewbig.com.au. All right my man, come back in, you can tell us more about mortgage and dying and all the things if you want, or not. But what is trending this week on Ticker Home exactly?

Ian Ugarte (01:31): Yeah, Shane Wright in the Sydney Morning Herald has an article in here where he’s quoting the RBA governor Philip Lowe. Phillip Lowe suggesting that there’s not going to be any change to interest rates in the next three years until 2024, until they see some wage growth happening. Interest rates are at 0.1% so there’s a lot of economists that are predicting that the interest rates will go up earlier than that because of the rebound of the economy. Wage growth is at 1.4% so Dr. Lowe wants to see it at 3% and unemployment below 4% before interest rates get moved. The property market has definitely been a major mover and the proposed lending changes that the government announced may not come through because of the strength of that. The OECD has actually had a prediction that Australia will grow by 4.5% this year. And the wondering here is, was it the fiscal policy that did that? Only time will tell on that one.

Adrian (02:25): Let’s look at Westpac and St. George who I believe have cut to the lowest ever home loan rates. What’s going on here?

Ian Ugarte (02:34): Harrison Astbury from savings.com.au talking about Westpac at its lowest ever home loan rate at a 1.79% principal and interest. I mean years gone by, 1.79% of the savings rate you would be upset. So this is a really good outcome. They dropped it by 20 basis points and so did their subsidiaries now. Their subsidiaries are St. George, Bank of Melbourne and the Bank of South Australia. For investors, not far off the 2% at 2.19%, but again, understanding of the lending jargon and how it works is what we’ll be working on today and will make more sense as we go through.

Adrian (03:11): Let’s talk about just to wrap what’s trending, mortgage trouble. A lot of people I think last year were wondering after the pandemic in coming years whether people would have a bit of trouble with their mortgage. It seems like some are, tell us more about this.

Ian Ugarte (03:26): Yeah, look, it’s not often that I get a little bit upset by the media. I’m not a fan of this story. It’s in Yahoo Finance where the headline says 1.5 million households in mortgage trouble, and that’s a scary headlight. And it goes on to say that 4 in 10 households are actually under mortgage stress and when jobseeker and jobkeeper gets wound back it’s going to get worse. There’s someone in [inaudible 00:03:51] that’s saying that the figures of mortgage stress has increased from 32% to 41% and that 899,000 Australians are looking at mortgage stress.

What I want to say here is that it’s very much a scaremongering article and I don’t agree with a lot of the figures in there, especially when that 899,000 figure was derived from a survey of 446 people. That’s not a good quantitative survey. I think what we’ve got to look at here is that housing stress means paying more than 30% of your income towards mortgage repayments, which doesn’t mean that you’re in arrears, it just means that you’re suffering and you’re not saving as much as you should be every week. Again, it really upsets me when articles are put out into the media to create the scare mongering, when people need to be confident about what they’re doing in investing and understanding what mortgages mean and how much you should be budgeting for every week.

Adrian (04:46): No, I think that’s a great call and I appreciate you calling that out. Yeah, that’s what they do and you’ve looked at the figures and the numbers and how many people are surveyed and you’re calling it out, which is a very good thing to do. Let’s get into our main conversation today. So Ian, when someone is looking to buy a property, either to live in or as an investment, the idea of going cap in hand to a bank can be intimidating of course. You’ve done this many times in your investing career so what’s one of the first things buyers need to understand before they ask the bank for cash?

Ian Ugarte (05:15): Yeah. 30 years ago Adrian I walked into the bank for the first time to see the bank manager. That’s what you did back then. I felt intimidated, anxious, and I felt like I was pleading and begging for money. Now it doesn’t have to be like that if you understand the process. So it’s important to understand and know how much deposit you have because that’s one of the factors that’ll allow you to be able to borrow, to be able to purchase a property. Now, the deposit will impact known as the loan to value ratio or TLA-1, LVR. Now the loan to value ratio is the amount of deposit the borrower has versus the amount they’re going to borrow. So if you’re buying a property for $500,000 and you’ve got a $100,000 dollar deposit, you’ll be borrowing $400,000. Now that’s 80% LVR because you’ve got a 20% deposit. Now, the lower the LVR, the better off you are because it gives you more flexibility and the banks like you more because it de-risks their area and their risk department says we really like that person.

Adrian (06:18): So what happens if someone doesn’t have the 20% deposit? Are there additional fees that they need to pay in this case to ensure that the bank lends them the money?

Ian Ugarte (06:29): Yeah. TLA-2 is LMI or loan mortgage insurance. Now, if you have less than 20%, the bank wants to lend you 80%, but because you have less than that, they want to protect themselves. So let’s say in that same example you were buying that property for $500,000 and you had $50,000 as a deposit. They would say, well, that’s a 90% LVR. In which case, we want you to pay insurance to protect us as the bank, because the bank is literally saying, you are putting us at risk and if you stop paying, we need something to back us up. So if you have an LVR of greater than 85%, you will pay LMI. The LMI fee is about 1.5% of the loan value. And it’s not an actual fee up front, they put it onto your loan and you’ll pay it off over 25 or 30 years.

Adrian (07:16): Okay. So armed with all of this information, many people then question what type of loan they should ask for either principal or interest, or then interest only. What’s your view on what’s best in terms of how to structure a loan, or is it very much a case by case, property by property decision?

Ian Ugarte (07:33): Yeah, as always, we’re talking in general terms and you need to get specific advice. When you’re purchasing an interest only loan for your investment property, that’s the way I think you should go. The reason I say that is when we’re doing investment properties, we’re looking at manufacturing growth, like we said in the last couple of episodes, and at the end of that you’ll be refinancing or revaluing. And generally every three to five years, you revalue in your building stage of your investment properties. Now if you’re paying down that loan, it doesn’t make any sense to refinance at the end of it anyway.

However, when you’re talking about principal place of residence or your PPR, the home that you live in, then you really should be paying down the principal as much as you possibly can. I’ll explain soon about the difference of good debt and bad debt. Now, earning your home outright is a very fulfilling position to be in. And it also puts you in a really strong position because the banks then start looking at you and saying, very handy saver, has actually paid down their house and I’m willing to give them more money to be able to go off and buy more investment properties.

Adrian (08:35): So are all mortgages pretty much created equal, or are there some features that people should look out for in particular, like I’ve heard of terms like offset accounts, redraw facility, what do these terms mean and are they right for everyone do you think?

Ian Ugarte (08:50): Yeah, look, there’s place and purpose for a lot of these, let’s start with a redraw facility or what someone might call a line of credit. It’s essentially a facility where people that are good savers will start to pay down the debt on that property. They might get to a point where they’re paid off a hundred thousand dollars more, then I can go back to the bank and say, “Hey, that hundred thousand dollars, can I redraw that because I want to go off and buy an investment property?” Now that type of loan is not a good loan for those people that are the now generation. “I want to go and buy a car. I want to go and have a holiday. I want to go and spend money on clothes.” That’s the sort of thing you don’t want to spend money on when you’ve got a redraw facility.

Now the offset account is a slightly different loan. Offset account is like, instead of having a savings account where your income comes into every week, your income comes into your mortgage account. Now the interest rate is calculated on a daily basis. So if you’ve got more money sitting against your mortgage, that means that you’ve got lower interest. That means that from that account, you would just go off and pay your bills. Now, the first reason you do that is because of that calculation every day. The second reason you do that is your savings account may only be earning you 2%, but when you put it against your mortgage, you’re actually saving yourself 4%, which is a better outcome. Now the offset account allows you to pay all those bills, but more effectively what it does is it reduces your term and you can save up to seven years off a full 25 year term on your mortgage if you use that offset account

Adrian (10:23): And let’s talk about interest rates, it’s what people are looking at closely at the moment. It’s so low so it’s tempting for people probably to look at fixing their interest rate in at the moment for a period of time. So what do you think about this? Is it the best option right now, or is a mixed or fixed variable of all of these options? What’s your opinion?

Ian Ugarte (10:44): It’s really tempting right now with interest rates the lowest they’ve ever been to fix interest rates, but I can say one thing, in the last 30 years, I fixed two loans and I lost out twice. The first one because interest rates dropped out so I was paying a higher interest rate. And the second one is I wanted to break the fixed period, which meant they charged me for that break. Now I’ve heard of a case and I know of a case of a woman who only last year almost lost everything. She had locked her interest rate in for 10 years, she thought she was on a good deal, but that was 10 years at 8.9% and from last week she was cross securitized. So she got close to losing everything and they would have taken her own home as well.

So for me, I look at it, the banks pay economists hundreds of thousands of dollars, I’m not willing to bet against them. If they were weather forecasters, I might bet against them. But for me, I don’t fix. If you want to take the road of anxiety reduction, then you might fix half your loan to variable and half of it to interest only.

Adrian (11:51): And let’s talk about debt, just to wrap up. You talk about the fact that not all debt is created equal. So is there some kind of good debt out there? What do we need to know here?

Ian Ugarte (12:01): Yeah. Look, I’ll explain the difference between the two. Bad debt is debt that regardless of your situation, you have to pay bills, and you can’t get any income from it. So the interest and the principal on your own home, you’ve got no income coming in. Credit cards, personal loans, that’s what we refer to as bad debt. Now, good debt is debt that gives you income. So if I took money from my home and I used a redraw facility to go and buy an investment property, I know that I could be sitting on a beach in The Bahamas and that investment property is producing income and paying for the interest while I’m sitting on that beach. Now, here’s the kicker. The kicker with this is that interest for an investment property is tax deductible, where interest on your own home is not. Which is why there’s a whole bunch of investors that don’t buy their own home and they do what they call rentvesting. They rent a house and they go off and they buy investment properties and that income pays for their cost of living. Now that’s a completely different topic for another day, but certainly it’s a good way to start thinking about investing.

Adrian (13:08): Yeah, nicely done. Great wrap from you. We’ll finish with putting up just some of the key points up on the screen now and you can just tick through these to finish off. What have you got? Let’s have a look at these key points here.

Ian Ugarte (13:19): Yeah. As usual, if you understand all the jargon it’ll make your anxiety levels drop out. Understand what an LVR is, your loan to value ratio. If you need to go to LMI, understand what that means. Set up an investment property loan as interest only if you can. Remember, all mortgages are not created equal. And pay down all your bad debt so that at the end of the day, you know regardless of what you do, you’ve got a good outcome for your personal situation. As always, smallisthenewbig.com.au/tickerhome is where you can get the special [inaudible 00:13:47] that we’ve created for you so that you’ve got an understanding of everything we’ve talked about today.

Adrian (13:55): Nicely done. Such important information and displayed so well again. Ian, we’ll talk really soon, enjoy the rest of your day.

Ian Ugarte (14:02): Thanks Adrian, same.

Adrian (14:03): Ticker Home of course presented by our partners at Small is the New Big who are on a mission to create 1 million affordable homes in the next 10 years and help Aussies struggling with housing stress. Learn more at smallisthenewbig.com.au. Catch you soon.


Purchasing a property without a clear strategy or long-term aim can be disastrous. There are many traps that newbie investors fall into that prevent them from growing their income and wealth, or worse; cost investors dearly. Ian Ugarte reveals his Top 7 Property Investment Mistakes and how to avoid them.


Adrian (00:00):

Hello welcome back into Ticker Home, where each week we will dive into the latest trends on the property market and answer the questions you need to know. It’s a pleasure, as always, to welcome my cohost ian Ugarte, co-founder of Small is the New Big. Mate, good to see you. How was your weekend?


Ian Ugarte (00:21):

It was awesome, actually, I did a big cleanup at home and sat on a mower for about an hour. So it was good.


Adrian (00:26):

Sometimes that feels good, doesn’t it? Just to make a bit of a change, clean up everywhere.


Ian Ugarte (00:31):

It does. It feels like you’re cleansing your soul at the same time.


Adrian (00:35):

It really does. Something about cleaning, you never want to do it, but when you do it, it’s actually not too bad. Hey, what are you looking forward to talking about today?


Ian Ugarte (00:46):

I’m going to go through today the six mistakes that property investors make, and the six mistakes that I made, that actually got me in a really precarious situation. And learning from someone who’s already made the mistakes is much better than making the mistakes yourself.


Adrian (00:59):

Absolutely, I look forward to going through and analyzing some of your mistakes. I like the fact that you can be open about that. Let’s get into that in just a moment, but firstly, Ticker Home presented by our partners at Small is the New Big, who are on a mission to create 1 million affordable homes in the next 10 years and help Aussies struggling with housing stress. Learn more at smallisthenewbig.com.au.


All right, let’s get into it. I’ve got about two or three talking points off the top. What’s trending this week, Ian, for you on Ticker Home?


Ian Ugarte (01:27):

Yeah, we’ve got an article here from Richard Ferguson and Greg Brown in the Australian about labor and the policies that they took into their election, that essentially lost them the election. Our confusion always equals no, so capital gains tax, franking credits and winding back of negative gearing. You know, the NBA and the property council of Australia have said that you really shouldn’t be targeting property, because property is really the backbone of the economy. So Dr. Jim Charmers, the shadow treasurer has quoted saying that the next elections policies will be very clear and they actually are backing away from those promises that may have actually winding back property.


End of this month is the national labor conference, which is usually a very rowdy affair, but this time it’s being held online for the first time. So it’ll be interesting to see how many people get muted and are told that their internet connection is not good when they’re yelling and screaming.


Adrian (02:23):

Very, very good. Yeah, labor, what a massive mistake that was for them. And it’s going to be interesting to see how conscious they will be in elections moving forward, because most people say that’s why they lost it, as you say. Let’s look at housing prices, you’ve seen another piece or an article on the housing prices. We know they’re booming in Australia, what’s the latest here?


Ian Ugarte (02:44):

David Adams in Business Insider, talking about the mortgage cliff. We had 900,000 households in Australia put deferral on their mortgages, so essentially stopped paying their mortgage for the year. They were talking about this huge cliff of fall, that come to the end of this month when that 12 month comes up and they have to start paying their mortgage again, but really, the housing pricing and the strength of the housing economy is quite strong. In February we had a 0.4% rise in the median house price across Australia, which means we’ve now up to a 5.9% growth from the beginning of this year to where we are nationally right now. So that’s an extraordinary amount of growth for a short period of time.


The winding back of the job keeping job’s sake, it doesn’t look like it’s going to affect property too hard. And out of the 900,000 deferrals that happened a year ago, we’re only down to a 101,342 households that come the end of March had the choice of extending the deferral if they need to, but more importantly, if they’ve got themselves in a really bad spot or bother, they can sell their property. We’ve got low amount of stock on the market and it’s quite likely they’ll sell at a profit, anyway.

Adrian (03:53):


Let’s look at Brisbane now just to finish, in terms of house prices and also units and apartments. What are you seeing here?


Ian Ugarte (04:02):

Yeah, so this is Sophie Roster and real estate.com.au reporting on an RBA survey of 40 experts in housing. Brisbane came up quite well, effectively out of the 40 experts that were saying that it’s three times more risky to buy a unit ahead of a house, Brisbane actually emerged with the best confidence level with only 14% of the experts saying that it was risky. At the top of the risk list was Perth for housing at 30%, we then had Melbourne at 24%, Sydney at 23%. Adelaide’s actually quite strong at only a 15% risk factor, but Brisbane and Melbourne also came out the worst when it came to units. So Brisbane has the strongest for housing, but also the worst for units, with out of the 40 experts, 68% of them saying that the unit market is certainly a market you don’t want to be in.


Adrian (04:53):

Interesting. All right, that is what’s trending off the top. Let’s get into our main conversation and you’ve introduced it already, some of the mistakes that you’ve made. So my first question over to you, you’ve been involved in property investing for many years. So you’ve made mistakes, we know that. Why do you think people make so many mistakes when it comes to buying property?


Ian Ugarte (05:11):

Yeah, Adrian, experts come out of armchairs when these times of periods come along, and we are making decisions based on the dentist and the taxi driver, and that’s certainly not a time or a place to be making decisions. And, it’s fundamentally a lack of strategy which is actually driving the problems and people are going into FOMO. They need to buy a property, but you need to learn from someone who’s done it before. It’s like starting a skydiving business, right? You get a red balloon skydive, you go out, you’re skydiving, you think it’s amazing. So I’m going to start a business based off that emotional feel. You haven’t got a plan, you haven’t got a license, you have got an airport. You actually don’t know if there’s actually a business structure behind it. And even if you could get that business off the ground and pardon the pun there, it’s quite likely that it’s going to drop very quickly. And property’s exactly the same. You go out without strategy, you’re going to get yourself in a lot of trouble.


Adrian (06:01):

So you talk about strategy as you’ve touched on there. Most people I know buy a property so they can negatively gear it. But you say this is the wrong approach entirely. Why is that exactly?


Ian Ugarte (06:13):

Yeah, Adrian, negative gearing is as simple as buying a property and going out on purpose to make a loss so you can get your tax back. It’s a crazy strategy, and it’s a crazy myth that people should do it. I’m sure Aaron, when he started Ticker, didn’t start a business plan with the fact that he wanted to lose money, right? No one in their right mind starts a business to lose money. And property is a business and you should profit. So negative gearing means that you’re actually pulling money out of your pocket every week, every month, every year to make up for the short floor fall. And it’s just to get your tax back, and it’s a flawed strategy.


So it’s the same as someone pulling out a hundred dollars in their pocket, giving it to me and then me giving them back $30. It doesn’t make any monetary sense. And you know, I hear the argument from brainwashed investors that they don’t want positive gearing. So let’s say that after this episode, Aaron comes into you and says, “Hey, Adrian, I’m going to give you a $10,000 pay rise.” And you say, “No, no, I don’t want the pay rise, I’ll have to pay tax.” That’s what property investors in Australia have got to. They think that negative gearing, they think that you have to lose money and it’s just silly. It’s stupid. And I reckon that Aaron should give you the $10,000 pay rise, by the way.


Adrian (07:30):

Well, he’s just there. He’s just behind us, so I’m going to ask him straight after this. So thank you. Let’s do this every episode, okay? Let’s do this every episode. Another mistake you say, when people make, in terms of buying property, is buying multiple properties and then they’re looking at sticking with the same bank for all of their loans. So on the surface, this seems to make some sense. If they’ve given you money once, they probably will again. When you talk about the fact that this is risky, what are the risks of having all of your loans with one lender?


Ian Ugarte (08:00):

Yeah, look, you do your banking with the same bank. You go to the same bank and you get a loan for your property, and after a while you decide you want to buy an investment property, so you go back to the same bank. And it makes it simple. They’ve got your figures, they know your spending habits, which is scary by the way, and then they say, “Yeah, yeah, we’ll just cross securitize you. We will get you that property over there by linking the loans together.” Now, even if the loans are separate, they’ve actually got an all monies clause. So effectively they are tied together.


The downside of that is that you have no control. They can actually start to dictate what you can and can’t do when you want to move forward in investing. And as soon as you want to do something with those assets effectively, they control those decisions, and that means you can’t manufacture growth, which is what we talked about last week.


You know, it’s a really big galactic mistake if you go down the line of going and cross securitizing or going to the same lender. And often, they give you a .2% reduction in interest rate. I would rather pay more interest and go to different lenders and get a better outcome for myself. Now, I even have my personal savings accounts with a different bank that I have no loans for. Now, this is not a conspiracy theory, but there is a credit rating score across Australia right now, where they look at your spending habits. And if you’ve got your mortgage with a bank where your savings accounts are also held, they’re watching your income coming in, they’re watching your spending habits. And let’s say that your wife has just had a baby, they’re now watching that your income has been reduced. It’s a very, very scary situation where a bank can control your decision, moving forward,


Adrian (09:34):

Interesting stuff. And I’ve heard that issues can also arise when your investment properties are purchased in your own name. Tell us more about what you’re thinking here.


Ian Ugarte (09:44):

You know, as always Adrian, everything we speak about, you need to go out and get qualified advice. And when we talk about buying properties in structures, you’d need to do that. Now, the first thing I’ll say is that your principal place of residence, the home that you live in, you should purchase in your own name because there is a hundred percent tax exemption on that. Now, any property you purchase as an investment property should be in a structure, because Australia is actually the second highest litigated country in the world. And most people don’t know that. And you might think, oh, well, what’s the big deal about that? I’ll never get sued, so I’m not really worried about my assets. Well, you’ve got showing on the screen right now, an unknown guy called Mark Shanahan who went down and played a charity golf day, hit the ball down the fairway, hit a guy. Unfortunately, that person has now got brain damage and needs care for the rest of their life.


The litigation lawyers came in after 10 years of fighting in court, $2.6 million handed against him. He went bankrupt, lost all the assets and all he did was play golf. And you know, there’s no upside to this story. If he had been protected by buying instructors and in asset protection structures, he would have had at least the ability to continue living his life in the standard everyday way without having to lose everything.


Adrian (10:58):

And these days, there are so many real estate agents out there, as we know, and it seems there’s a big developer spruiking a new house and land package every week, so there’s a lot of noise for prospective buyers. So how can they sort through this, cut through the noise to find a property that actually suits their needs?

Ian Ugarte (11:14):

Yeah, I’m just smiling, myself. It seems like I bang on about this every week, but just be aware of snake oil sales.


Adrian (11:21):

It’s important, though.


an Ugarte (11:22):

Well, it is. The snake oil salespeople that are selling a property to you are making huge commissions and fees, and they’re not really interested in your future income. They’re interested in their income, today. So again, last week we talked about manufactured growth. You are buying profit when you buy a house and land package. And the capital growth is likely to be limited, because you’re buying around farm land, which is not going to go up in price too much, right? So you need to be aware of the property spruiker, the all singing, all dancing, all fixtures included type outcomes. If it’s too good to true, it’s likely to be.


So be very cautious. Do your own research, don’t use their research. And there’s a simple way to protect yourself, Adrian. Ask the person selling you a property whether they’ve bought one in the same estate. And if they haven’t, then run like Forrest Gump, because otherwise you’re going to succumb to the sizzle. And what you should be doing is actually building the barbecue yourself.


Adrian (12:15):

Very good. And just finally, what would you say is the one thing that people neglect when it comes to buying property?


Ian Ugarte (12:23):

Yeah, you know Adrian, when I was young, and I know I still look young, but when I was younger, I thought I was a big deal. If you’d met me at a barbecue, I would have told you I’m a property investor and I’ve got seven properties. And my big ego would have said that you probably wouldn’t want to be my friend. Now the fact was, that those seven properties almost sent me under. I was cross securitized, I’d bought them in my own name, I’d done everything wrong. I’d negative geared it, I was $36,000, negative geared with seven properties. To put that into context, that was $692 coming out of my pocket every Monday morning, before I even got out of bed. And that was actually, I had my ghoulies in a vice and the bank was slowly tightening them up just so I could prolong the pain.


So I had to sell down. It was the only way I could get myself out of trouble. I lost 50% of my wealth by doing that, but what I did do was the one big mistake that people do. And I went and got some education, because I thought I knew it all. And by getting educated, I set myself a goal. 13 months to the day after I set my goal, I was out of paid employment. So essentially, I earned enough money to pay for myself to not need to work. And that’s what I want people to do. You know, I actually have a degree. I’m a plumber and a builder and I actually have a degree in adult education. So teaching is my passion. I love teaching people, and more importantly, I love teaching people what not to do because then they’d have to go through the same pain that I went through all those years ago.


Adrian (13:54):

I love the honesty. I love the fact that you can just tell us how it is. I’ve made mistakes, I’ve learned from it, it’s the best way to do it. Let’s wrap up. We’re going to show the six property investment mistakes to avoid. So just tick through these, just to wrap up there, Ian.


Ian Ugarte (14:09):

Sure, yeah. Always have a clear strategy. You need to know why you’re buying a property and have a better outcome at the back end. Don’t buy a property just so you can get negative gearing. Don’t let banks control you. Investments, never buy them in your own name. Don’t succumb to the sizzle, get the BBQ, and always get educated and stay informed.


As always, Adrian, all of this information is available at smallisthenewbig.com.au/tickerhome. And thanks for having me back on again.


Adrian (14:36):

Great stuff. We’ll totally get really soon, okay? As Ian said, Ticker Home presented by our partners at Small is the New Big, who are on a mission to create 1 million affordable homes in the next 10 years and help Aussies struggling with stress. Learn at smallisthenewbig.com.au



The old days of buying an investment property, sitting back passively,  raking in rent, and waiting for huge capitol growth so that you can cash in are long gone. Now you need to be an active participant in your property’s growth. Ian Ugarte reveals the strategies you can use to manufacture growth in your property.



Adrian Franklin (00:09):

Hello, and welcome to Ticker Home, where each week we will dive into the latest trends on the property market and answer the questions you need to know. It’s a pleasure, as always, to welcome my cohost Ian Ugarte, co-founder of Small Is The New Big. Hello, mate. How are you today? 


Ian Ugarte (00:24):

Hi, how are you? I’m well.


Adrian Franklin (00:25):

Very well. What are you looking forward to talking about today?


Ian Ugarte (00:30):

Yeah, today I want to show people how they can create and not wait for growth. And effectively, what I want to talk about is people being active in their growth strategy rather than just a passive sit back and wait and hope for capital growth.


Adrian Franklin (00:44):

Nicely done. I’ve already had a look at some of the questions and I’m very excited about this conversation. Firstly, Ticker Home is presented by our partners at Small Is The New Big, who are on a mission to create one million affordable homes in the next 10 years and help Aussies struggling with housing stress. Learn more at SmallIsTheNewBig.com.au. Let’s get him back in, my man, Ian. For what is trending, we’ve got three talking points. What’s first for you this week?


Ian Ugarte (01:11):

Yeah, I got an article here from Greta Andrews-Taylor in the West Australian, and this article is about Western Australians using the ability to be able to subdivide their blocks close to the city more than they ever have before. It’s what they call infield development across the country, and Western Australians are taking it up in droves. Effectively over there, they’ve got a really great planning system. And they’re creating what they call the battle ax blocks. So rather than building two houses side by side on a block, they’re actually creating the concrete driveway, which is the ax handle, and then the backyard becomes the ax head, which is what they call it a battle ax.


But you end up with a smaller block. But these downsizes are looking at design. Design’s come a long way in the last few years, especially with the open plan living area so you can actually have a smaller house and be quite comfortable. What’s important here is block shape, the size and the zoning. And these are important aspects of choosing a property to buy, and it’s something that we’re going to be talking about today.


Adrian Franklin (02:10):

Nicely done. Second point, you’ve mentioned the regional areas of Australia over recent weeks, but there’s a bit of a moment here for our regional renaissance. What have you got here?


Ian Ugarte (02:21):

Yeah. Tom Dusevic in The Australian has brought up Dubbo and it’s a great story in New South Wales where unemployment actually fell during COVID to 1.4%, when the national average at its worst was 7.6%. There’s actually 90% more jobs being advertised this month than last month in the Dubbo region. Out of the 37 regions that the national skills commission looks at, it’s the best performing region. The mayor’s saying, “Come on in, we’ve got plenty of space.”


They’ve already got 80% of occupancy in hotels, local attractions, like the Dubbo Zoo are doubling in numbers and some businesses, Adrian, instead of opening up five days are now open up seven days. So this is a place that, 18 months ago, was devastated by drought. They almost ran out of water, which would have been a very harsh thing for the whole city.


It’s a thriving city. Now we’ve got the deputy PM announcing some regional awareness programs. There’s other associations and Farmers Federation announcing regional programs. In the next 10 years, the federal governments are spending $110 billion in regional centers. As always, the opposition is saying that they shouldn’t be doing that, but that’s their job. Regional is a really great area to be in with property right now.


Adrian Franklin (03:39):

And just finally, to wrap up what’s trending, let’s talk about the red hot property market as a whole and prices. Do you think it’s out of control at the moment, would you say? Or what are you thinking?


Ian Ugarte (03:52):

I think it’s something that happens once in a generation, sometimes twice in a generation. And this is Martin Farrer in The Guardian. And prices are going up high than ever. We’ve got low interest rates, we’ve got government stimulus, and lifestyle changes that people are looking forward to doing because of COVID. So core logic has said that we’re now showing a 2.3% increase nationally for all the median house prices, which means we’re only 0.1% of our all time high in October 2017.


Domain has revealed that Sydney has its highest ever median at $1,211,488 dollars, a 4.8% increase in December quarter in Sydney. The central coast had a 12.7% increase, which we talked about. The Northern beaches of Sydney, a 10.7% increase over the last 12 months. Units and apartments are suffering, which means that Melbourne particularly, with the COVID lock downs, people are generally in a negative position if they bought just before COVID.


But it is recovering and there are some outliers like the Mornington peninsula. And after the first recession in 30 years, recovery has been pretty quick. They’re all looking to see what happens with Europe in the US, and what happens when the job seeker stops. If the job seeker does stop and create an impact, we’ll see property prices impacted. But if it doesn’t, we’ll see property prices go in an upward direction, like the likes of 1985 to ’88, where property prices almost doubled for over a three year period.


Adrian Franklin (05:22):

Yeah. It’s going to be a talking point all throughout this year, of course. Let’s get into our main conversation right now. One of the things you mentioned last week was manufacturing growth in properties. You touched on it earlier. So this got me thinking, so I wanted to explore this a little bit more with you this week. What do you mean when you talk about manufacturing growth, and how does this differ from the more commonly known form of growth, which is capital growth, of course?


Ian Ugarte (05:45):

Yeah. Last week I got a lot of questions and feedback about wanting to know more about manufactured growth. Fundamentally, there’s two ways that you can get growth: you can sit back and be passive and hope for capital growth and be a lazy investor or lazy home owner, and you can use what they call the BHP strategy, which is buy, hope, and pray that it’s going to go in an upward direction.


But I much prefer a proactive approach to growth. And this is the strategy that we call manual or manufactured growth. And this is where you look at various aspects of property and where you can add value to the property. And the proactive way is to spend a little and end up with a higher value property. And it’s much, much better than buying, hoping, and praying because you’re in control, Adrian. And no one is in control of capital growth. So if you’ve got control, then you’re in a much better position.


Adrian Franklin (06:36):

So what you’re talking about here is property owners being really proactive about increasing the value of their assets. So what are some of the ways that property owners can actually do this?


Ian Ugarte (06:45):

Well, you can look at it and say, well, let’s look at the one that most people would think about and that’s renovation. So you could do a cosmetic renovation where you simply just change some door handles, do some painting, fix up the gardens, and then increase its value. Or you could do a structure innovation where you go out, you knock out walls, and you do a whole bunch of things to the property. You can’t live in it. And by doing that, you increase the value of the property.


A lot of people are starting to do granny flats around the country. Now, in some areas of the country, you can rank the granny flat to a second party, which means it increases value because you’ve got more rent. The granny flats around the country are either called an ancillary dwelling or an auxiliary dwelling or a secondary dwelling. You could possibly build a duplex. So that is where you build two houses side by side where they used to only be one. And because you’ve got two properties, it increases in value.


Subdivision, like we talked about that in the first article there, where you take a block of land and essentially create smaller parcels out of it. And a lot of people would say, “Oh, look, I just want to be passive, and that it’s way too complex to do this.” But you know what? If you just follow a system and process and follow in the people that have already paved the way ahead of you, it’s actually not that complex, and it’s something that you really shouldn’t be thinking about.


Adrian Franklin (08:03):

So with all of those different options, I’m assuming that not every property is suitable for all of those strategies you’ve touched on. So should buyers perhaps have some of these strategies in mind when they are looking to purchase?


Ian Ugarte (08:16):

Yeah, absolutely. If you’re looking at purchasing, look for a big block, because there’s quite a good potential that you’d be able to chop the block in half. If it’s a larger house that you’re looking at, can you actually create a co-living property where you can get more rent and create more housing for more people? Maybe you’re looking at properties and you drive down the road and you see a duplex on one side or the other. If there’s a duplex in that street already, it’s quite likely you can do the same thing.


And you really should have a shopping list of strategies when you’re going out to look for a property. And you want to be able to do one, if not two, if not all of the strategies. And were always looking for the unicorn, and the unicorn is where a whole bunch of strategies are on a list and I can tick off and do all of those strategies in one property. But as long as you can do one preferred strategy, and your thought process is around being an active investor, then at the end of the day, you should end up better off.


Adrian Franklin (09:10):

And in your 30 years of probably experience, what’s one of the most successful ways that you’re found to reliably and consistently manufacture or create growth in a property? What’s the one thing that sticks out to you?


Ian Ugarte (09:23):

Yeah, Adrian. Like I just said, if you can stack strategies or put all the strategies in one, and here’s an example of a strategy that was completely stacked. This is a property that was subdivided. They went and … This was in a warm spot, not in a hot spot, so they had capital growth around it. And on each one of those blocks, they built a duplex.


So effectively, what they did was I took one dwelling, turned it into four dwellings, put co-living property on top of that, and had a really great outcome. The stocking strategies is the way that you can do this. And the more strategies you stack, the better off you are in your active investing.


Adrian Franklin (10:05):

And just to finish, having said all of this. With all this talk of property prices setting to rise to record highs this year, do you think it’s safer, potentially, to just purchase and then sit on the property and then just wait for the growth?


Ian Ugarte (10:20):

Yeah, look, it would be really easy to think that, Adrian. “I’m just going to sit back and everyone else is growing.” But FOMO is kicking in, so people are buying stuff for the sake of buying it, and they really shouldn’t do the buy high price strategy. It’s not a good way to invest. They may end up worse off than when they started.


And I talk about double dipping. You shouldn’t double dip at a party, but certainly in property, you can. Buying a property is going to be the most significant capital investment that someone will ever make. And the difference at the end of your working life is huge. And it’s always interesting to compare the two, if you did the passive versus the active. Get the capital growth that you really want out of your property, but also get the manual growth.


The manual growth strategies are huge. If you go to a party and you double dip into the hummus, people look at you and say, “That was the wrong thing to do.” But if you double dip it in property, you’re going to have friends and family around you saying, “You have done really well for yourself, and we’re so happy for you.” What would you rather? Get 10% capital growth on one property, or turn a property into four and getting capital growth on top of those of 10%, and on top of that, have the manual growth strategy? Why not double dip? You can get your capital growth and also get your manufactured growth by using really great manual growth strategies.


Adrian Franklin (11:39):

Loving these analogies. You brought it this episode, there’s no doubt about that. So just to wrap, I’m hearing a lot of, have a strategy, be proactive, have something in place, have a plan moving forward, don’t just sit back and around and hope for the best, in a way. Would that be the best way to summarize this chat?


Ian Ugarte (11:58):

Yeah. I think the five ways you can create growth is by not waiting for capital growth. Create it. Make sure you investigate the ability to subdivide or explore partial internal conversions. Make sure you can build additional external buildings, and always look to increase density wherever you can. And as always, there’s a free download for this episode at SmallIsTheNewBig.com.au/tickerhome. Adrian?


Adrian Franklin (12:24):

Of course there is. So we can double dip in property, but when it comes to the hummus or hummus, whichever way you go, no, double-dipping. I appreciate that. I love some hummus too, with carrots. One of my favorites. What are you like with hummus, Ian? To finish, what’s your favorite go-to?


Ian Ugarte (12:38):

I’m not a hummus man. I’m actually a pumpkin and cashew nut dip, man. I’m sorry. Or a beet root man. That’s me.


Adrian Franklin (12:47):

I can see that. I can see that, actually. Make great conversation, learn plenty. As always. Talk soon, okay?

Ian Ugarte (12:53):

Thanks, Adrian. See you next week.


Adrian Franklin (12:55):

Ticker Home presented by our partners at Small Is The New Big, who are on a mission to create one million affordable homes in the next 10 years and help Aussies struggling with housing stress. Learn more at SmallIs TheNewBig.com.au. Catch you soon.


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This week, I reveal the traps that first home buyers should avoid when they dive into the property market for the fist time. My biggest takeaway? Property will most likely be your most significant wealth creating strategy. So think of every transaction strategically, and don’t get emotional!


Adrian (00:07):

Hi there. Welcome to Ticker HOME where each week we’ll dive into the latest trends on the property market and answer the questions you need to know. It’s a pleasure as always to welcome my cohost, Ian Ugarte, Co-founder of Small Is The New Big. Mate, good to see you. What are you looking forward to talking about today?


Ian Ugarte (00:25):

Looking forward to talking about first-time purchases and how maybe I’ll be able to do a bit of a quantum shift on how people think about purchasing property.


Adrian (00:33):

I like it. That’s a great topic. Let’s get into it. Ticker HOME presented by our partners, that’s Small Is The New Big, who are on a mission to create 1 million affordable homes in the next 10 years and help Aussies struggling with housing stress. Learn more at Smallisthenewbig.com.au. All right, let’s get into this, Ian. And I am fascinated by all of these topics that you bring every week, but what is trending this week on Ticker HOME? What have you got for us?


Ian Ugarte (00:58):

Yeah, I’ve got an article from Kate Burke on Domain. It’s now cheaper to buy in 11 suburbs of Sydney, that’s cheaper to buy than to rent. You know, there was only one suburb in 2019 where that was the case. So, we’ve had a good increase in affordability as far as that’s concerned. Now this is based on principal and interest payments, and that doesn’t include things like council rates and a few things on that. But hitting the top of the box is Box Hill where mortgage repayments are $424 and to rent is $575. So, that’s $151 difference. Coming in second was Kanwal on the Central Coast with only $29 of difference between the two. Interesting, eight of the 11 suburbs are on the Central Coast. There might be some good buying in there. The unit market, Warwick Farm was at $29 difference between owning versus renting, and that could be for a number of different reasons, but most of the units were scattered all around the Western and Southwestern Sydney.


Now wait for this one, Adrian. If you were to go outside of Sydney, Mollymook Beach, your rental repayments would be $615 with a median rent at 1,260. That’s $645 difference mostly based on the fact that it’s a seaside location with short stay rentals and a lot of people that are now looking for rentals because they want to get out of the Sydney because of COVID.


Adrian (02:14):

Wow. That is a huge gap indeed. What was it called again? Molly?


Ian Ugarte (02:19):

Mollymook Beach.


Adrian (02:20):

Mollymook Beach.


Ian Ugarte (02:20):

Down on the south coast.


Adrian (02:21):

I’m going to type that in here and I’m going to look it up after the show. Hey, our next topic to talk about Australia’s housing market is boosted by policies designed to ensure prices keep rising. Tell us more about this.


Ian Ugarte (02:33):

Yeah. Greg Jericho in the Guardian. You know, he’s basically saying the government’s only really there look to look after property investors and homeowners. This year in 2020, so sorry, in 2020, there was $243 billion of lending. That’s the third largest years, which was only beaten by 2017 and 2015, but we had a recession in the middle of 2020. So that’s a pretty good thing. He was a bit tongue-in-cheek because he was one of the people predicting a huge drop in the prices. And he says, “Well, how silly of me? You know, when I look back, we’ve got an LNP government that was really not going to allow that to drop.” Property prices actually dropped by 11% May last year, but now has had a huge increase. The owner-occupier market increased lending by 37%. And in Western Australia, there’s been an 83% increase in financing for purchasing property in an area, 87% increase since the same time last year for first home buyers, which is an incredible increase.


Phillip Lowe is not too concerned about prices rising because they’re only just above what they were four years ago. Although Sydney’s huge rides four years ago made them actually tweak the median house price across the whole country. But yeah, it’s interesting to see that the government is supporting with interest rates and grants, to be able to make sure that property market doesn’t dive.


Adrian (03:51):

And just finally apartments there, it’s an interesting conversation in Melbourne right now when it comes to buying apartments. What do you see?


Ian Ugarte (03:59):

Yeah, we’ve seen similar things in Sydney with the sinking buildings and concrete foundations falling apart. This one’s now in Melbourne, Lauren Bird who purchased a property, did everything right. She got a legal team in to make sure her contractor was right. She got a building and pest inspection done. The mistake she made was that she didn’t get the building and pest inspector to look outside her box into the common areas. And her legal team really should have actually asked for a strata report, which would have picked up some issues during the body corporate meetings about all the money being spent. So, she’s effectively now having to pay money towards special levies to fix things around the property that had nothing to do with her. They’re builder’s issue. So now she’s paying legal fees with the rest of the people and the body corporate. And this is one of the reasons I suggest you never buy a unit or anything that’s got a strata over the top of it.


Adrian (04:46):

Interesting stuff. Okay. That is what is trending. Let’s get into our conversation for today. So, we’re going to talk about people investing in their first property. That’s today. So whether to live in or as an investment. In your 30 years of experience, helping people get into and stay in the property market, I’m sure you’ve seen some winners, but also some losers in the decision-making process. Broadly speaking, what’s your one piece of advice for people looking to get into the property market?


Ian Ugarte (05:13):

Yeah. The first investment into property should be strong enough to lead you into a second investment. And so you don’t want to fall into that trap of being emotionally attached to the dream home as your first purchase, but rather a stepping stone to get to your dream home eventually. After 30 years of investing in property, I only just finished building my dream home. And that dream home is actually a business decision. It can be used as a home, can be used as co-living, can be used as a wedding venue. So, you’ve always going to think about what’s the purpose and the outcome. What we want to do is take the emotional filter off, and we want to put an investment filter on, even though it’s on your own home. And we want to make sure you leverage that to get to a better home, and then another better home, and then another better home.


I mean the average hold on a first home or any home in Australia is about 11.8 years. When I first started investing, it was only seven years before you flipped onto the next property. So, the first purchase is the base ingredient of your portfolio cake, Adrian. You want to make sure that the butter and the flour, the base ingredient, is what’s going to make the make or break the bake. And the icing is actually the dream home at the end. So broadly speaking, my advices to look at this as a first investment of many, and that this is not your first home, this is your first investment property and will fundamentally mean that it changes the thinking of the first time buyer.


Adrian (06:32):

Yeah. And I guess that’s all about mindset and thinking what you’re talking about and then also having a plan in some ways. Maybe some people probably don’t have that plan, but that’s what you’re talking about, to be ready and to be thinking future planning forward. So, if we take the view that the first property should also be the first investment, what does this mean for buyers in terms of any government grants that might be available?


Ian Ugarte (06:55):

Yeah. Look, grants at the moment are huge. There’s a lot of money out there at the moment, but the first thing to say about grants, Adrian, is that not all grants are created equal. And just because you can get a grant doesn’t mean that you should be using it. You know, I’ve seen people use a $25,000 grant and spend $50,000 too much on a property. You need to be strategic as we’ve been talking about. And it means that the first property may not be the one that you live in. So think long and hard about grants before you use them because a cash grab may not be the best thing outcome, best outcome for you.


What I can say is that most States in Australia will allow you to buy an investment property first. And if you don’t live in it, still have the ability to be able to use first time owner grants and concessions for stamp duty moving forward. So, it doesn’t necessarily mean that you have to buy your first home first, you can buy an investment property and then do what we call rent vesting as always.


Adrian (07:50):

Right. Really interesting. I think for people that’d be fascinating to learn about because, yeah, a lot of people talk about grants, but you’ve just outlined what’s good and sometimes what to look out for. So, just on the point of looking at what property to buy, what sort of properties make a good first investment, would you say?


Ian Ugarte (08:07):

Yeah, let me start with what not to buy. Never buy in a greenfield estate, near farm land. We talked about the last week. And again, if you can get away from strata and body corporates, that’s also a good thing to stay away from. But effectively there are two types of growth. The capital growth and there’s manufactured growth. Capital growth, we have no control of. Manufactured growth is buying a property that has the ability for you to be able to do something to it to increase its value.


So, if we look on the screen right now, if you’re going to build or buy a large home as a partner, a young couple would move into this, they would be able to buy this and live in a smaller area and legally rent out two sections, have one child, move into a larger area, have another child, they can then move into the two bedroom area. And from there, they may be crazy like me, they’re still getting two rentals. If they have a third child, they can then take up another part of the house, which means that they’re now using two thirds of the property and crazy like me, four daughters and off and use the same all of the property. And then when one of the daughters or children starts to move out, you then start to remove that backwards.


So effectively there’s again, some rental income coming on, paying down debt. Then, you’re back to two children in the house, one child in the house, and then you’re a retiree couples sitting in there with a driveway and a caravan in the driveway, back into the studio, having two-thirds of the rental property. People young, especially millennials, need to right now think about the affordability and how they can pay their home off quicker by using that type of strategy.


Adrian (09:39):

And you, I mean, I was listening to everything there, but one point you write, do you have four daughters, Ian, did you say?


Ian Ugarte (09:45):

I do. God blessed me with four daughters and it’s absolutely awesome. There’s plenty of learning in that.


Adrian (09:50):

For sure. My goodness, man. You are just the man for the job though, there’s no doubt about that. Anyway, let’s stay on track. So you say no units. You mentioned that a couple of times. Why is this given that a lot of people new to property buying think this is the logical and obvious first step to buy a unit?


Ian Ugarte (10:08):

Firstly, Australians aren’t actually ready to live vertically. They actually want to live horizontally with grass on their toes when they step outside. So, that’s the first thing. We’re still about 15 years away from that type of thinking in Australia. But houses, more importantly, houses give you control and units don’t. So, if you talk about an off-the-plan purchase. The danger with an off-the-plan purchase is that you’re signing up on a contract for a property that hasn’t been built yet and the builder or developer usually relies on those signatures to be able to get funding to build the property, and that’s a scary thing to start with. The price could end up lower than what you paid for it. So, you buy off-the-plan at $400,000. When it settles, it’s worth $300,000. You’ve got to come up with $100,000.

So buying any unit, new or existing, is not a good investment for that reason also that you’ve got no control. If you want to change your floor plan, you need to get permission from the rest of the people in there. If you want to do anything, it’s controlled by a committee. There are rules and there are rules and there are rules and everyone is enforcing those rules. And that’s just not a good place to live.


Strata frees aren’t as cheap as what people think and the only way to manufacture growth is to renovate the property and in my opinion, renovation’s not a great strategy. More importantly, the special levies are the killer. When something goes wrong on the entire building, you’re going to have to pull money out of your pocket, along with everyone else, to come up and fix that problem and here’s the worst of it all. When someone sells a unit in your complex and sells it cheap because they get themselves in financial stress, your unit is now worth exactly the same as that unit, regardless of what condition your unit is in. It’s just not a good thing to buy anything with the body corporate.


Adrian (11:48):

Wow, I didn’t realize that. That’s one to watch out for, for sure. Before we finish with the five traps to avoid buying your first property, just briefly to finish, so if you’re planning on buying a house and not a unit, what are some of the key things you look for in the property to ensure it’s also operating as a sound first investment?


Ian Ugarte (12:05):

Yeah, your first home you should buy should always be an income earner, right? It’ll set you up for life. I’ve got Joel and Bianca, an amazing couple. They’re a talented couple that work in my business and they’re great listeners because everything that I’ve been saying, they’ve been implementing themselves. This year, they’re about to start a build on a property that they’re buying, they bought as their own home. So we talked about manufactured growth. They’ve bought a property with an old house on it. It’s the right zoning. They’ve got approval to subdivide the block. They’re putting a duplex on one side of it. On the other side, they’re putting a three-story, co-living property where they’ll have the top floor and the rooftop garden. That’s a hundred square meters to be able to look at the beach. They’ll be able to rent out underneath there.


Let’s consider the increased value of their property is going up because of what they’ve spent and the end value is much higher. The end value. But more importantly, they’ll be getting paid $1,000 per week to live in their own home. So, effectively instead of paying for rent, they’re actually getting money in pocket. So, they’re getting over and above what it costs them to live into their pocket, to be able to do other things and go off and do other investments. So, it’s an absolutely amazing way to be able to kickstart your first home.


Adrian (13:25):

Sounds pretty good to me. Let’s wrap. We’ll give you 45 seconds. The five traps to avoid when buying your first property. Go for it.


Ian Ugarte (13:32):

Yeah, absolutely. Our first property is not your first home. It should be your first investment. No need to live in your first property if it means that you’re going to end up better off in the long run. Don’t claim every grant. It’s not worth it if it’s not worth it, but if it is use it. Avoid buying a restricted zone area. So, make sure you can do more to the property and how adaptable leads your property to be able to fix the property so that it can be used by different demographics in there. As always, all of this information and some downloads are available at smallisthenewbig.com.au/tickerhome. Adrian.


Adrian (14:06):

Nicely done mate. Great chat. I’m learning. I mean, I’m learning too much from you. I got to go back and watch this episode a number of times, get my notepad out, and just list some of these points. It’s awesome again to talk. Enjoy your day. Okay. We’ll talk soon.


Ian Ugarte (14:18):

Same Adrian. See you later.


Adrian (14:21):


Great stuff. Ticker HOME presented by our partners at Small Is The New Big who are on a mission to create 1 million affordable homes in the next 10 years and help Aussies struggling with housing stress. Learn more at smallisthenewbig.com.au. Nice and simple. Catch you soon.



The new ‘norms’ rising out of COVID have created a wave of new trends. In this episode of Ticker HOME, Ian gives his take on the current property market trends and some hot tips on how you can turn those trends into opportunities that will increase the value of your property and your cash flow.


Adrian (00:08):

Hi there. Welcome to Ticker Home, where each week we will dive into the latest trends on the property market and answer the questions you need to know. It’s a pleasure every week to welcome my co-host, Ian Ugarte, co-founder of Small is the New Big. Hello mate, good to see you. 


Ian Ugarte (00:23):

Hi, Adrian, how are you? Another week, it’s been pretty good for the last week in property.


Adrian (00:27):

Absolutely. Well, we’re going to get to that in just a moment with our talking points first. Ticker Home of course is presented by our partners at Small is the New Big who are on a mission to create one million affordable homes in the next 10 years and help Aussies struggling with housing stress. So learn more at smallisthenewbig.com.au. All right Ian, what have we got in terms of what is trending this week on Ticker Home?


Ian Ugarte (00:51):

Yeah. I look at a news article from Malcolm Sutton ABC News talking about working from home and how COVID has actually brought a new complication, occupational health and safety. What’s going to happen if someone trips over a cord or spills coffee on themselves while they’re sitting at home at work and do we need to have to start assessing individual workplaces as your home to make sure that you’ve got insurance cover on there? And does there have to be an audit done? And interestingly enough, the Property Council of Australia did some research from January 20 to 21. 9.6% was the vacancy rate in commercial property, now up to 11.7% year on year, and that’s the largest jump since 1997. So this trend was not only just in metro offices, but it was also regional. And a survey done amongst workers have said that even post pandemic they actually don’t want to go into work. They want to spend a maximum amount of two days at work and possibly the rest of the time in their home office.


Adrian (01:47):

Yeah. That will be one to watch. We’re hearing all sides of that conversation. People talking about whether they work from home and put the cat up on the screen accidentally through their Zoom camera. Not sure if you saw that one recently. That was absolutely hilarious. Don’t do that to us. Okay, Ian. Don’t do that to us.


Ian Ugarte (02:01):

I haven’t got that filter, but I’ve got the Oompa Loompa filter with green eyebrows.


Adrian (02:08):

We’ll have to drop that in at some point. Maybe not this time around. In terms of there was that one as well. There’s a lot of YouTube clips we can look at of course. Let’s talk about Australian property prices potentially rising. There’s some lending laws that might be relaxed here that experts are talking about. What have you got?


Ian Ugarte (02:26):

Yeah, [inaudible 00:02:28]. During the middle of COVID, there will be concern about the property cycle and what was going to happen to it. So they’re talking about relaxation of lending laws. We’ll talk a little bit more about it in this episode as well, but essentially the average borrow, we’ll probably be able to get $70,000 of extra finance to be able to kick in and do more. Now, this is in April last year, I was one of the very few predicting an up slide, not a down slide, in property cycle. And CBA was talking about 10% doom and gloom and then there was someone up to 30%. low and behold, December quarter hit last year, we’ve now hit the highest median house prices across most of the metro cities. Sydney well above $1.2 million. Melbourne above $900,000. Brisbane, the little shy think country town, which is actually turning into a bigger country town now is well over $700,000.


I think there’s great value in there. CBA is predicting an 8% rise this year and the doom and gloom is gone. The easing of lending is really going to stimulate the market again. And the rest of the article is commentary about people putting themselves at risk with the lending criteria changing, but more importantly right now, quicker application process is a better for lenders to be able to get loans approved. There’s one lender at the moment that’s taking 17 days to pick up your file 17 days after you put in an application and that needs to change so that we can get some stimulation into the marketplace.


Adrian (03:51):

Yeah. Well, this might lead us into our final one about into state rushing into Queensland during the COVID-19 pandemic. You had another point on that one.


Ian Ugarte (03:59):

Yeah. This article here by Michael Way and Sheila Pain, Queensland is absolutely booming right now. And so to get it into context, the net migration to Western Australia was 681 people. So they were in second place. In first place was Queensland at 7,237 people entering as a net migration. Victoria lost 3,749 of them just under 4,000 from New South Wales. Nationally, we had 76,200 people moving into state. That’s the lowest number since 2014 and really bolt border restrictions is a culprit to all of this. 11,200 people have left the big smoke and gone out to regional Australia. And it’s an interesting trend to follow that one.


Adrian (04:45):

Well, just on that just briefly, I mean, it’s hard to answer in a way, but do you think that sort of trend is only going to continue over coming years?


Ian Ugarte (04:55):

Oh for sure. I mean, what we’ll talk about today and the bits and pieces that are coming through right now, we’ve certainly got an ability to see that regional Australia has been undervalued for the last 20 years. Metro has gone gangbusters and it’s now catch up time for regional.


Adrian (05:11):

Yeah. Fascinating. We’ll get into that now. So yeah, this is our extended conversation. There our news topics, and now we get right into it. So to begin, we’re all pretty much accustomed to the home office by now as we know. And for some people, this means their kitchen table, Ian. What do you see this as the new trends in the home office space for 2021?


Ian Ugarte (05:30):

Yeah. Short term, people thought the kitchen table, the dining table was going to cut it, but unfortunately COVID has gone on and that’s not no longer a feasible place to be able to hold your home office from. So we’re now seeing a dedicated office space. And my market intelligence is that people are now adding to the wishlist for their dream home a space that’s separated from the rest of the house. So they’re looking for the extra spare bedroom, a granny flat or a studio, an attached garage that they can actually convert and use that as office space. And in some states, there’s actually processes that you can follow without needing to get council approval. For an example, there’s an exempt develop in New South Wales where you can put a 10 square meter studio in your backyard. As long as you use a qualified carpenter to put it together and you meet all the codes, you can do it without getting approval.


And so why do we want a dedicated space? Well, we’ve all seen those Zoom fails that you see in the background there right now, naked partners and kids infiltrating and their cat. And interestingly the lawyer saying, “Judge, I’m not a cat.” Well, clearly cats don’t talk. And add to that the safety issues we talked about earlier, but more importantly, there’s also a tax deductibility to be able to work from home. It does affect your capital gains tax if you do so into the future, but it’s another great outcome where you’d actually be saving yourself some money or at least saving some tax by working from home.


Adrian (06:55):

So with the working from home situation people are now exploring, what’s possible regionally given they no longer need to be close to the company’s office? So how has people’s wishlist of what they needed to enable them to move to regional Australia changed in the past 12 months or so?


Ian Ugarte (07:12):

Yeah, it’s changed dramatically. And traditionally employers have always based living close to their employment. So that’s either am I on a train line or where am I within 45 minutes driving of the front door of my office space? And so they’ve clustered their living according to where they work. So now they’re only needing to travel sometimes a week, once a week, once a fortnight, once a month for some employees, some never. So we’re now seeing the doors of regional Australia opening up with the flexibility of the home office given the expanded relief of not needing to travel to dedicated office spaces every day, which means we’re now seeing the movement of people one to two hours away from the metro areas or the major cities and it’s cheaper to buy.


And there was less competition for purchasing in regional. It’s now increased, but not only are you working from home, you’ve got lifestyle. It’s not as busy as the big smoke. And there’s a real community feel about a lot of these regional centers. And that’s well away from the bustling city. And I know that because I moved well away from the bustling city of Sydney about 10 years ago now. And it’s been absolutely awesome for myself and my family.


Adrian (08:23):

Yeah. I mean, I can speak to that, Ian. I went to a friend’s place over New Year’s Eve and they just bought a place about an hour and 20 outside of Melbourne. So all of us, we live within five K’s of the city here in Melbourne. They bought a place down there for I think about 1.2 million, an unbelievable place, four bedroom, which you could never get close to the city. And it’s only about an hour’s drive and they come up once or twice during the week, but that has to be something we need to look at more. Don’t you think? My goodness, it felt so different to be out there.


Ian Ugarte (08:54):

And I’ll give you my scenario.


Adrian (08:57):

Yeah, go for it.


Ian Ugarte (08:58):

We moved out of Sydney. There’s a point in time where you realize you don’t need to be in Sydney. So we moved out. We moved to the sunshine coast. I’m here in my recording studio that’s built in a 12 by nine meter shed. And not only do I get to work home, I’ve got two acres. I’ve got a waterfront teach. I have my home down here. I’ve got an office space as well. And we’ve got our general manager and her family that lives on site. We’ve got the most. You just cannot believe how nice it is to live regionally. I’m 15 minutes from the beach. I’m 15 minutes from everywhere else that I need to be. And I can get to a major airport if I need to travel around the country. It’s absolutely awesome.


Adrian (09:35):

No, I love it. No, I love that sort of story. I think we need to talk more about it so people get these ideas in their head in some ways. All right, moving on. There’s always been this search for the sun in Australia of course. Have the recent moves to the Northern States been about the sun chasers or in your view, is there something more at play with these moves?


Ian Ugarte (09:53):

Yeah, look, the sun still plays a big role, but the bigger role here is that there’s border insecurity. And so whereas people have been stuck or might get stuck or they feel like it’s stuck, whether their business may get shut down. And you look at the fitness industry that’s been shut down a few times in different areas, where the opportunities lie is where people are going to. And so people may have watched what’s happened across Australia and they’ve made their choices and picked their choices. And Queensland has fared fairly well during the whole of COVID.


So people have moved their lives, families, and businesses 10 years earlier. So those ones who said, “You know, we’ll just live here for 10 years more and then we’ll go to the sunshine.” Well, they’re now saying, “You know what? I’ve had enough of having the border insecurity of what’s going on. Let’s move right now.” And that pent up demand has now triggered something big, especially in Southeast Queensland. We’ve got some regional parts last week. We talked about days on market where we’ve now down to below 40 days on the market as far as listings things. And that is a very peak area when property prices are uncontrollable and the property market up here is in its stride. And it’s not a market that I like buying in, but it’s certainly reacting in a strong way.


Adrian (11:04):

And one of the big shifts in the housing and property markets has of course being the move by banks to adjust the way they assess and lend money for homes, shifting the owners from them to ensure the borrower can make repayments back to the borrower themselves to ensure they can meet these repayments. So what are the impacts of this shift by the banks?


Ian Ugarte (11:23):

Oh, there’s going to be a huge impact on the market when we’re shifting from lender responsibility to borrower responsibility. And if we look at the early 2000s, that’s where we had the stat deck low doc loans. So that essentially meant you’d put a signature on a piece of paper and you’d tell me how much you earn and we will give you the money. Now, thankfully, the Australian Prudential Regulatory Authority or APRA saw the writing on the wall that that was too dangerous and they started to pull back and put the facility onto the lender to make sure that the lender was responsible in giving money out.


The Americans didn’t do that, which is why the GFC happened and people in America just walked away from their loan. So here we’ve got the Australian government stimulating the marketplace to say, “Let’s get some more out there.” Will we go back to the past of where we had those stat deck low doc loans? I don’t think so, but what I think you will see is the Aussie John Simon or Mark Boris or serial entrepreneurs similar to them coming back into the market and creating a lending frontier or a second tier lending facility that will be very, very aggressive in being able to pick up the investor market in property.


Adrian (12:28):

And one of the things that I know you talk a lot about that I’ve not heard of before is the emergence of the office home. So what is an office home and how does it differ from a home office?


Ian Ugarte (12:39):

Well, look, you look back at research and Roy Morgan research in June 2020 showed that there are 4.3 million extra Australians working from home. Owners of businesses have long-term leases. And if you look at a property like this one here with 50 offices, let’s put a boardroom in, let’s create four key offices for the key workers, the people that really run this business for the owner. And let’s then make sure that those offices have the extra one bedroom apartment attached through the backend. The office space isn’t being used anymore so they have a kitchen and a bathroom in there. They have a one bedder and then they have some key meeting rooms. The boardroom acts as the place where once a month, the whole company comes together and they make sure they have their monthly meeting. But in between all of that, you’ve got these four key personnel that run this business that have got close proximity to the office.


Now, let’s look at the advantages of this. They’re now not needing to travel every day. Yes, they’re closer to the work. And you might say, “Well, they work more. They’re probably are already working long hours and millennials know what this is like.” But what if we said to them the owner of this business who now has got empty floor space says to this four key workers, “Please come in and rent. I’m going to give you really little rent. So you’re going to save yourself half your weekly rent. I’m going to include utilities, save yourself some money because I want you to buy a house in the next three to five years because you’ve really influenced my business in a positive way and that’s how I want you to get into the property market.” And so the office home is certainly going to be something you’ll see in the next five years.


Adrian (14:08):

Mate, I love it. Sounds good to me. Let’s hope our governments and policymakers can get on board. Maybe you need to become one of them, Ian Ugarte, because I love the way you speak.


Ian Ugarte (14:17):

I’m not sure I hate myself enough, but let’s see where we go.


Adrian (14:20):

Mate, great stuff from you. I learn something every time as do our viewers. We’ll talk to you again next week, okay.


Ian Ugarte (14:26):

Thanks Adrian.


Adrian (14:27):

Awesome stuff. Ticker Home of course presented by our partners at Small is the New Big who are on a mission to create 1 million affordable homes in the next 10 years and help Aussies struggling with housing stress. They provide unique property education programs, and services for socially conscious property investors. Together, they’re changing the housing landscape in Australia one co-living cashflow positive property at a time. Learn more at smallisthenewbig.com.au. What an episode that was. That’s the website you need to go to. Oh, I learn something every single week. Catch you soon.




Forget property HOT SPOTS. Watch this week’s Ticker HOME to find out why all property investors need to know how to identify warm spots!


Adrian (00:09):

Hello, and welcome to Ticker Home, where each week we will dive into the latest trends on the property market and answer the questions that you need to know. It’s a pleasure to welcome my co-host, Ian Ugarte, co-founder of Small is the New Big. Mate, great to have you back on Ticker, how are you today?

Ian Ugarte (00:25):

Thanks mate. Thank you so much for giving me the opportunity every week to do this and be able to get people to learn something, it’s going to be so awesome for me.

Adrian (00:33):

Yeah, absolutely. We’re going to get into that in just a moment, I reckon this is going to be a great chat. But firstly, Ticker Home is presented by our partners at Small is the New Big, who are on a mission to create one million affordable homes in the next 10 years and help Ozzy’s struggling with housing stress learn more at smallisthenewbig.com.au. We’ll Ian we’ll bring you back in now. Firstly, what are you looking forward to, to bring to this conversation? And some of the messages that we’re going to get out to our viewers over the coming weeks, what are you most looking forward to?

Ian Ugarte (01:05):

I think what I’m looking forward to is the opportunity, especially for millennials, we’re stuck in a place now where the great Australian dream is out of reach. The ability to buy a home has gone. And so there’s so many millennials that are simply waiting for their parents to die so that they can afford to buy a house. And if I can get people into an understanding that there are different ways to be able to look at property, to research and understand where you’re going to go, then hopefully fingers crossed, within the next few weeks, you can see that there’s this potential to be able to invest, do well. And also, maybe perhaps even leave work someday because you’ve got enough income coming from your properties.

Adrian (01:43):

That sounds pretty good to me. I mean, even from my personal point of view, I look forward to learning and hopefully getting into the property market. But this is exactly what we like to talk about here at Ticker. So of course, we’re here to talk about property hotspots for 2021, but based on your 30 years of experience in the property game, you’re saying the hotspot is a total myth at the moment. What do you mean by this?

Ian Ugarte (02:05):

Well, see hotspots are bandied around, especially the ebbs and flows that we’ve seen for the last 12 months. And all you hear is hotspot, hotspot, hotspot. And so it creates a FOMO type set up where people feel like they need to get into the marketplace. And if people are looking at the hotspot, they’ve missed the bus. So that means that there are people that have identified hotspots and they’ve pushed the prices up. And by the time the average buyer’s ready to get in, it’s way too late. So the reason hotspots are a complete myth is that people will pay more in a declared hotspot rather than bringing a little more intelligence and look for the cold spots around the hotspots, which creates what we call warm spots. And that’s where the growth and real opportunity lies.

Adrian (02:50):

So, let’s talk about warm spots. Because I don’t know, I don’t think I’ve ever heard of the term warm spots, but I like it. So can you explain what a warm spot is and how people can find them exactly?

Ian Ugarte (03:02):

Yeah. We want to look at the cold suburbs surrounding the hotspot because we all know that little hot water, little cold water creates warm water. And so a cold spot will become warmer because of the proximity to the hotspot. So sort of like I’ll explain it this way, sort of like sitting on your three seated couch and your parents at one end and they’ve got the portable heater sprayed straight on them so that they get hot. At some point in time, dad’s going to look at mom and say, “Hey, this is way too hot.” Now you’ve been sitting at the other end of the couch, slightly getting warm. So, what dad will do is spin that heater so it faces you and they’re hot now, so now you’re going to get hot because you’re in close proximity. Investors get it wrong. They want to sit on mom and dad’s lap rather than actually sitting at the end of the couch.

                  And that will mean that if you sit at the end of the couch, you’ll get much better returns from a property perspective. One way to find these warm spots is to simply Google property heat maps in your state. So Google heat map, New South Wales, or heatmap Victoria. And they’re coded by median house price with colors from blue, which is cold all the way up to red, which is hot. You’re looking for a whole bunch of red spots with some yellow and orange spots because they’re the spots that will take up the most because of the proximity. And it’s a great visual representation of a hotspot and getting the spot right for you. So, I would also say to that, it’s like a pebble in the pond effect, throw the pebble in and you’ll get this ripple effect that goes out.

                  So again, you can manually track median house prices by looking at hot spots. So, as soon as the dentist and the taxi driver tells you to buy in the suburb, go and research that suburb and find something close by and then historically look at the median data. And the best way that I’ve found is days on market. So, days on market demand.com has a great days on market representation. So, the days on market is how long does it take for a property to sell in a certain suburb? When it’s at about a hundred days, it’s actually a really cold spot, but when it starts to get to 80 days, that’s when you start doing even more research and at 60 days, you should pull the trigger and get stuck in. A hot market is 40 days and anything less than that is a hot, hot market. So, in some markets at the moment, you’re seeing seven days or less days on market. And that’s a really great indicator.

Adrian (05:18):

Yeah, fascinating. So just staying on the hotspot and the warm spot for a moment, what do you think are the main issues that people, or the main mistakes people are making? Are they looking at just the hot spots? Do they not look at the warm spots or even sort of have an understanding of how that process works? What sort of errors are you making? Because I think sometimes when we point out the mistakes, it opens up where the opportunities are.

Ian Ugarte (05:42):

Yeah. I think people base their investing off what they hear in media, in articles. And they hear these hotspots and they don’t get it quite right. They don’t follow the trends that they should follow. You should be looking at infrastructure and how the government is spending money. So, where the government is spending money is where you’ll get the best outcome. And there are plenty of websites where you can get on and find out where they’re spending hundreds of millions of dollars. And if they’re spending hundreds of million dollars, it’s a reason, there’s a growth area of growth corridor that’s going on. Even something like Bunnings is a great place to research where they’re opening a new store, because if they’re opening a new store, it’s because there’s demand in that area. It’s just simply a demand supply equation. So if government is spending money on a hospital, firstly, they’re going to bring construction workers into the area.

                  Secondly, they’re then going to go along and the workers are going to start. So when they go into operational mode, you’ve got the nurses and the doctors. And so think about high proximity to employment areas where people are going to want to live near home. And so in those areas, there’s not enough homes and there’s the law of supply and demand is a really interesting thing. And there’s a small suburb of 25,000 people in Tasmania where the government matched dollar dollar for the state government and the council to spend a hundred million dollars with 25,000 people in the town. Something had to give there. So it’s always a good place to look for that.

Adrian (07:07):

And in terms of infrastructure, is it a good idea, do you think to buy in a new suburb that’s been developed. Those house and land packages that we often see stretch across the sprawling areas that were once paddocks of nothing, just cows, there’s infrastructure going on in there now. Give us a bit of an idea of your understanding there, because I think a lot of people are probably throwing up, 50, 50, should I, or shouldn’t I go into that sort of area?

Ian Ugarte (07:33):

Well, there are two types of infrastructure. There is government and private industry infrastructure where they’re actually putting money into the marketplace, but then there’s a developer imposed infrastructure. So, that is a developer goes out and finds a piece of farm land and puts the smallest type squares into the smallest boxes they can actually get. And so these barren paddocks are, that’s not where you want to be. So, what I’m talking about is these developers create wealth for themselves. They’re not really interested in creating better outcomes.

                  So the house and land is a classic one of these mistakes that people make when they invest in property, they get sold on the marketing numbers. They get told by these marketers that there’s percentage growth here, and there’s this growth corridor. And all of these things are happening. And the thing is that the same person that’s selling this house and land package is unlikely to ever buy one themselves. They get a 30 to $40,000 mark-up and price and money in their pocket every time they do that. So house and land packages have hurt Australian property owners over a number of years with values, not rising for 10 to 20 years.

Adrian (08:39):

So you’re saying that established areas are more likely to be warm spots and then move into a hot spot?

Ian Ugarte (08:47):

Yeah, absolutely. The established areas, when you look at law of supply and demand, which I spoke about earlier, you can’t beat that law. So, we’ve seen the doubling of prices in Australia for the last 200 years, every seven to 10 years. So if I bought a property today for $500,000, the expectation in 10 years time is that that property is going to be worth $1 million. Now the actual building sitting on top of the land has gone down in value, it’s the land that’s gone up. So, if I’m buying a piece of land next to farmland and barren, whatever, that means that they’ve got opportunity to put more land onto the marketplace for the next 10 to 15 years, which means my land value is not going to grow. So if you’re buying a property, that’s never had a house built on it, you’re essentially making a mistake. If you buy in an established area where there’s a shortage of land, that’s where you’re going to do really well.

Adrian (09:40):

There are so many little nuggets of gold that you are throwing out in this 15 minute chat. I’m going to go back and watch this and take notes and all the rest. This is awesome stuff. Just to finish, and we have touched on it earlier, but why is the market so hung up on the term hot spots, if the horse has potentially already bolted?

Ian Ugarte (10:00):

Yeah, look if you are at the races, it’s easy to point at a winner and say, “I should have put money on that horse.” And you can try and bet on the winner after the race, but the fact is that it’s done and it’s dusted. You actually don’t want to be the punter, you want to be the bookie. I mean, the tab doesn’t lose money. And that’s a really simple analogy. It’s a simple science and all you need is knowledge, right? So property hot spots are a marketing spin.

                  What we want to do is bring some reality and tangible research tools to find the warm corridors so that people don’t get sucked into the hype of the hot spots. Hot spots exist, but the myth is that you should buy there. It’s a fear of missing out myth that they put you into and with the tools that we have available and the free download that we’ve created for the viewers, you can step through all the knowledge that you require all the top hats that you can use, and you can do this every day. So, why don’t you use my 30 years of experience and we’ve created that download. All you need to do is go to smallisthenewbig.com.au/tickerhome.

Adrian (11:01):

Nicely done. And just to finish, we were going to start with a couple of news topics. We’ll just wrap up with a couple of these briefly, if we can. So, the first one we’re talking about where to buy property on the Sunshine Coast in 2021, what are you seeing here exactly?

Ian Ugarte (11:16):

Yeah. Look, I was a little bit upset by this because the opening line says that the Sunshine Coast is for newlyweds and nearly deads. I came here eight years ago, I live on the Sunshine Coast. Reason I came here out of Sydney was that I’ve got a two acre waterfront property. I work from here. I live, I’ve got my dream home here, I’m 15 minutes from the beach, 15 minutes from the shops, 15 minutes from new [inaudible 00:11:37], an hour out of Brisbane. The Sunshine Coast had a bit of a glitch in 2007, it peaked, the GFC then acted and the 2007 prices only made it back into 2017. So, the supply and demand right now on the Sunshine Coast though, is an incredible … It’s a really devastating place for affordability for young couples and people just renting. In 2010, there were 12,230 properties available on the market for purchasing, we’re down to 7,252.

                  There are 80 people turning up to open homes to purchase and to rent properties with rentals, going up 150 to $180 at any point in time. Notably in this article, by Alex Brewster in savings.com.au, the majority of the suburbs listed, all the suburbs listed are in established area. Not one mention of the huge estates that getting put out, out into the corridor down towards the South end of the Sunshine Coast. I actually didn’t invest here when I first moved here, I bought this home, but I didn’t put any property investing in. I started investing about four years ago because of those key metrics. And now we’re reaping those rewards, but I do not like buying in this marketplace. It’s a hot spot right now. And hot spots are not where you should be buying, warm spots is where you should be.

Adrian (12:54):

Yeah. We want warm spots. This is something I’m taking away. And just to wrap, let’s talk about property hot spots that some of the experts have their eyes on in 2021. And whether you’re looking at these as well, what have you got for us?

Ian Ugarte (13:05):

Yeah, look, it’s interesting that a lot of the other articles that are listed, touting a lot of Canberra, there’s Sydney when we’re talking about outskirts, but generally the regional one hour to two hours out of … Now COVID’s made a massive change in the marketplace. We’ve got potential now for the business owners that would never let their workers work from home, are all of a sudden saying, “Well, actually this is not too bad.” So, those employees are now saying, “Well, now I can actually afford to ring out one to two hours out of Sydney. I can have my home office.” What’s really, really important right now is that the spare bedroom, or the dining room table is not the office. There are people looking for homes that have a studio, or a granny flat, so they can have an established office from home. The change in the marketplace now is an incredible change and the regional areas are taking the most of that uplift. And that’s where you should be looking right now.

Adrian (13:57):

Nicely done. That is a great first episode, mate it so good to have you here on Ticker, part of our family. Enjoy your day. I’ll be watching this throughout the week and taking notes and we’ll see you again next week with Ticker Home once again. Okay.

Ian Ugarte (14:10):

Thanks Adrian, see you next week.

Adrian (14:12):

Good stuff Ticker Home, of course, presented by our partners at Small is the New Big, who are on a mission to create one million new homes, and affordable homes in the next 10 years and help Ozzy’s struggling with housing stress that we all feel. They provide unique property education programs, and services for socially conscious property investors. Together they’re changing the housing landscape in Australia, one co-living cashflow positive property at a time. Learn more at smallisthenewbig.com.au. Catch us soon.

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