Why Most Property Investors Get Stuck (And How To Avoid It)

In this episode, we officially introduce Ascent Property Finance and break down why finance strategy is one of the biggest factors holding property investors back from scaling their portfolio.

After years of helping investors build wealth through Taylored Property Wealth, one thing became clear…

It’s not just about buying the right property.
It’s about having the right finance structure behind it.

Casey sits down with Adrian Hanson, Head Mortgage Broker at Ascent Property Finance, to discuss:

🏡 Why strategic lending matters more than just getting a loan approved
📈 How investors preserve borrowing capacity to continue scaling
💰 The biggest mistakes borrowers make that stop them from growing
🧠 Transactional brokers vs strategic long-term finance planning
🔥 What separates everyday buyers from the top 1% of property investors in Australia

With over 7 years’ experience and a background in commercial banking managing a portfolio exceeding $150 million, Adrian brings a high-level, investor-focused approach to lending and portfolio growth.

If you’re serious about building long-term wealth through property, this episode is packed with valuable insights around leverage, structuring, growth mindset and forward planning.

If you’d like clarity on your current borrowing position and strategy moving forward, click the link below to book a call with Adrian and the Ascent team.

https://ascentpropertyfinance.com.au

Transcript

Welcome And The Big Announcement

SPEAKER_00 0:00

Welcome back to another episode of the Tailored Property Wealth podcast. My name is Casey Taylor, and on today's episode, we have Adrian joining us, and we are we have an exciting announcement on this episode today of the announcement of Ascent property finance. And Adrian is going to be the head broker for Ascent. We're going to be going through some things today on why we started Ascent, and we're also going to be talking about business owners and what they should be focusing on right now at this time of year in the lead up to the end of tax season. So welcome to the podcast.

SPEAKER_01 0:39

Thanks, Casey. Thanks for having me. It's great to be a part of it.

SPEAKER_00 0:42

Yeah. Flew in from Brizzy this morning.

SPEAKER_01 0:46

Yep. Yep. So a bit of a story to that this morning.

SPEAKER_00 0:50

We might not go into that one on air, but um apparently you have to register your car. Um so yeah, thanks thanks for jumping on. And obviously, we we've been working behind the scenes for a little bit of time to create Ascent Property Finance, which is going to be a mortgage-broking business. Yep. And we're going to be focusing on investor clients.

SPEAKER_02 1:17

Yep.

Adrian’s Banking Background And Shift

SPEAKER_00 1:18

Um, and we'll probably get into that a little bit today. Maybe we'll just kick things off with you telling us a little bit about yourself, your background, yep. Obviously, seven years experience in banking. Yep. Managing a hundred and fifty mil portfolio. Yep. Yep. Tell us kind of how you got into banking.

SPEAKER_01 1:37

Yeah. So I actually about seven years ago, I joined CBA just in a call center in the home lending space. Yeah. Um, and pretty much just started off with the basics. So just clients call in with their inquiries, I help them over the phone. Um, as time went on, started helping clients through the interest-only applications. And so the natural progression was to then become a home lender. Um, and I decided that I wanted to deal with more complex clients, more business clients. And so after about a year or so, I then made my way over to NAB as a business banking associate. So at that point, I decided that I wanted to continue learning, um, started doing an accounting's degree and essentially studied while I was working at NAB for about four or five years. And so through that career at NAB, I was a business banking associate. So I learned the intricacies of how things were set up, and then I moved um up to a small business banking role. And so I kind of built a portfolio and a bit of a client base there, working through a diversified uh clientele, all business clients, um, and then from there worked there for a couple of years, built up a portfolio, and then moved back down to Brizzy and looked after a health portfolio. So only medical clients, um, and essentially the portfolio was around 160 mil.

SPEAKER_03 3:04

Yeah.

Business Owners And Lifestyle Creep

SPEAKER_01 3:04

So we honestly dealt with clients who who were just buying a practice, or essentially, you know, they had seven, eight, nine, ten practices. Yeah. So it was a two big dogs. Yeah, so quite a diverse range of clientele from I guess the start, but then also the end as well. And so during that experience in the bank and dealing with business customers, and I know we'll touch on that before in a bit, but essentially there was a very common theme that would come through was that a lot of clients were pushing all of their money back into the business. Yeah. And then at the end of their career, they had nothing to show for it because they are the business and they couldn't sell the business for what they wanted.

SPEAKER_03 3:44

Yeah.

SPEAKER_01 3:45

So over the last 18 months, I had a very I moved off into the broker world and had a big focus on investor clients. And so with my business banking career and the investor knowledge, um pretty much put those two together. And now I'm I'm helping a lot of business clients build wealth in their business, but also outside of the business.

SPEAKER_00 4:07

Yeah. And I think going back to starting at those basics, right? And we were talking about off air about this today. Yep. You just build up a lot of skills and you you build up being able to talk with various different people, right? Yeah. And then obviously now going down that path, you've got that experience. Yep. Um, and it's obviously something business owners and property investors that we're really going to be helping and focusing build their wealth. And it's it's such a good point. I see this, I see this in my own kind of family, right?

SPEAKER_02 4:41

Yep.

SPEAKER_00 4:42

Some of my family had a business, didn't really invest outside that business. And it's like, while you're generating good income, you need to invest it outside of the business in other assets, yeah. So that you're not pigeonholed, or once you do retire, you got something to show for it. 100%, 100%. Do you think uh some of those business owners or clients because they're generating a lot of income, they're also just burning a lot of income in it in expenses?

SPEAKER_01 5:11

Yeah, 100%. So even a lot of individuals, as their wealth grows, their expenses grow as well. So their lifestyle grows, you know, you you've got someone that earns 50k and then they increase their income to 100k, their lifestyle increases with that income growth. So you'll find that, you know, if they're not strategic about it, they'll end up just spending all their money on expenses and lifestyle, and they're in the exact same position as if they were making 50k. So you see it all the time.

SPEAKER_00 5:40

Yeah. Even someone I just caught up with today for a strategy session fully know that they've got this discretionary there where they can rein that back in, but still don't know if they can afford the property route. But it's like just sacrificing a little bit there, reining some of that in, putting it into an asset that's going to perform for you outside of your income or your business. Yeah.

SPEAKER_01 6:02

Um and I guess that's another thing that a lot of people don't actually talk about is you can use investment as a vehicle to pay for expenses. Yeah. So something that comes up with you know, school fees and private education, right? Is that you know it can be 20 to 30k a year over five years, 150 grand. Yeah. How are you going to pay that over the next five years?

SPEAKER_00 6:23

Yeah.

SPEAKER_01 6:23

You can use investing as a vehicle to pay for those kind of expenses.

SPEAKER_00 6:26

Yeah. 100%.

SPEAKER_01 6:28

I feel like that that doesn't get touched on very much at all. And you know, everybody's talking about building passive income, but you know, sometimes there's other expenses that are coming up, and people don't know how to pay for them and they haven't even thought about investing for that purpose.

SPEAKER_00 6:46

They think it's this big scary thing, right, with these additional repayments. Yeah. But then you go out and purchase an asset two, three, four years ago. Yeah. Some of the areas we've done. It's done 300k, right? And you can pull that equity and you can put it towards some of these things to have have a better future for you and your family. So it's a it's a great thing to touch on for sure. And I think it just it sometimes adds a level of responsibility. So you can't just be spending money recklessly, right? And it's like, well, okay, there's going to be just a little bit that we've got to put towards this. Yeah. But it's working for us in the background. Yeah. We don't have to go to work 40, 50 hours a week to be able to generate that.

SPEAKER_01 7:27

And once you've got that commitment, you've then got that, you know, responsibility to make that commitment as well. Yeah. So, you know, your your spending habits kind of align to your new commitments, which I was talking to someone about it yesterday as well. You know, they've got a lot of discretionary expenses, but you know, once they've got this new commitment in place, they don't have a choice to go, you know, buy, you know, takeaway every single night, right? Yeah. So they just it is. The bougie restaurant. Yeah, exactly right. Yeah. So it's just obviously once they've got a new commitment, their lifestyle changes again.

Complex Deals And Broker Mindset

SPEAKER_00 8:03

So yeah. Yeah. Yeah, it's it's super important. What's a complex scenario that you've handled that's something that you've enjoyed being able to look outside the box to get something done?

SPEAKER_01 8:15

Yep. So I mean, uh, there's probably quite a few that I could probably touch on at the moment. Um, I mean, you know, I've I do enjoy quite complex business owners. Yeah. Um, like I can remember probably a couple of years ago when I was working in ABB, I think I had a financial pack of about 250 pages. And so I literally had to draw out the family tree, and it was literally just following the income to each entity. Yeah. And that was that was a bit of a that was a uh that was a bit of a a fun one. Um but honestly just going above and beyond for the customers, to be honest, um like being able to show income is one thing, and then obviously telling the banks how to service it is you know it's just a story that comes along with it, and you know, the more complex it gets for these business customers, the harder it is to kind of illustrate that picture, and yeah, that that's quite enjoyable to me.

SPEAKER_00 9:15

So yeah. Yeah, awesome. Um what do you like to do outside of broking?

SPEAKER_01 9:22

So I enjoy a bit of camping, a bit of fishing. Um bit of how good of a fisherman are you?

SPEAKER_00 9:29

We spoke about this today as well.

SPEAKER_01 9:33

So not a great fisher. Um I was saying to Casey, if I knew where the fish were, I think I'd be a bit better. But I need a sounder first, and then we'll determine how good of a fisher fisherman I am. Yeah. Um and then outside of that, I'm a bit of a health nut, so enjoy a lot of running on the weekend. Um that's my sh social outlet. So every Saturday morning I'll be out running with mates, um, getting a coffee, and then just pretty much starting the day. Um, and then just gym. So again, another an outlet outside of work. So yeah. And then just spending time with my partner's always good as well.

Borrower Mistakes And Investor Education

SPEAKER_00 10:11

So yeah, for sure. Um what do you think is one of the biggest mistakes that you see borrowers make when you're talking to people and they've structured finance? Um there's probably one I can think of that we worked on recently. Yep. Where they went straight to A and Z and the structure was terrible. Yep.

SPEAKER_01 10:35

Um I think there's a few things really. Um one thing is obviously making sure that your finance is structured correctly and you're doing it the right way, and it's not going to, you know, inhibit you going forward for the next beef. Um and then also just in action, right? I I mean, I came to you two years ago, right? And you know, wanted to buy another property, and I thought, look, I'm gonna be conservative, and you know, my income structure is changing, so I want to keep a bit of a buffer. And it, you know, if I went and and purchased a property at that time, we'd be having a different different conversation today, right? So inaction is a massive thing.

SPEAKER_03 11:16

Yeah.

SPEAKER_01 11:16

Um, and then just understanding, and I feel I think education for our clients is so important.

SPEAKER_03 11:23

Yeah.

SPEAKER_01 11:24

So like I talked to a lot of people, and I had one last week who had someone set up, you know, a a property, an investment property in the SMSF and told them they could live in it. So, which was just mind-boggling, right? Uh, that's disgusting to be quite honest. Um, but I I think education and the client understanding how everything runs, so it's not just me saying we should do this, we should do that. They need to be involved in the whole process and they need to understand how everything runs so that they feel comfortable as right. Because at the end of the day, everybody has their own risk profile.

SPEAKER_03 12:02

Yep.

SPEAKER_01 12:02

And that education piece is gonna come into it, that risk profile. Yeah. So for me, like personally, you know, debt's a number on a page. Yeah. I can get comfortable with that. But you know, Susie down the road, they might see millions of dollars on their bank app, and that's gonna, you know, that's not gonna sit right with them. Yeah. So it's just about, you know, that risk profile and getting comfortable, and the education piece is just massive for clients.

SPEAKER_00 12:28

So yeah, that the action piece is probably one of the biggest ones, right? Like there's someone that I spoke to a couple of years ago, hasn't taken action, missed out on like 300k growth on what they could have afforded back then, looking to do something now and still not sure whether to take action. It's like they could be gearing up for at least property number two right now and continuing to build that well. So it's a it's a big one. There's a lot of brokers out there that one don't have the strategy piece, don't have the structure piece, don't have the service piece, the communication piece. Yeah. Um from a communication piece, what do you think what qualities does a good quality mortgage broker with strong communication have?

SPEAKER_01 13:19

Well, I I talk to a lot of clients, and you know, one thing that kind of comes back quite often is just not getting a response. So, you know, being able to communicate effectively, um, but just in a pro like a prompt manner, right? So that that at the very least, getting back to clients is the main thing. Yeah. Um and just keeping them involved every step of the way so that they know what's going on.

SPEAKER_03 13:42

Yeah.

SPEAKER_01 13:43

Um honestly, that's you know even if you don't have, you know, an answer to what's going on, at least an update at the very least, um, it's massive. So, you know, when I am talking to referral partners, that's probably one of the main things that I talk to them about is look, need communication because you know, I I've talked to a lot of people, and you know, people just disappear, they don't get back to you. So yeah, just just prompt and timely communication with updates and whatnot.

SPEAKER_00 14:11

Yeah. You don't want the broker that just goes missing or which unfortunately happens a little bit.

SPEAKER_02 14:19

Yeah.

Strategic Broker Versus Rate Shopper

SPEAKER_00 14:21

I guess there's a lot of different mortgage brokers out there, right? There's quality, there's not quality. Yeah. It's a low entry to get into mortgage broking as well. And that's why sometimes that quality isn't there, right? Yeah. What's the difference between a good quality broker and a not good quality broker? And that's kind of from like a transactional broker versus strategic broker that's thinking not just about this transaction, but the following transactions.

SPEAKER_01 14:46

Yeah, correct. And so look, what you're seeing at the moment is, you know, there's I I guess a bit of a division in the broker land, right? So you'll have brokers who are just chasing a rate in a product, but there's not much strategy behind it. There's nothing any like there's no niche or there's no industry, right? Yeah. So you'll find that a lot of those clients aren't going to be so sticky to you because they're going to be shopping for a rate, you know, next month. Yeah. So you'll find that, you know, a lot of brokers are just chasing a rate in a product.

SPEAKER_03 15:19

Yeah.

SPEAKER_01 15:19

And with that, the client may as well just go to the bank. Yeah. Because at the end of the day, that's that's all they need. So whereas, you know, there's a lot more brokers who are niching down, you know, we're doing investment, there's commercial brokers, um, there's there's brokers in pretty much every industry, right? Yeah. So the more niche you get, the more, I guess, client following you get in that industry. And so from our point of view, you know, we're focusing on the strategy uh for our clients and making sure that the structure's right. Yeah. So that's our kind of focus. And, you know, again, if you're just looking for a rate and a product, it's not really what we're talking about. Honestly, we don't even talk about rate and product until the end of the conversation. So it's not even something that actually gets brought up very early on.

SPEAKER_00 16:06

So and that's the the positive with brokers in general, right? We've got a panel of lenders that we can go to.

SPEAKER_02 16:12

Yep.

SPEAKER_00 16:12

And it's like, well, based on your individual situation, what doors can we open up based on policy, based on different bits and pieces? Yep. And then with those options, then it's like, well, maybe we can look at what is the most well, what is the lowest rate based on these options. But it's like, yeah, if if you're just going out looking for the lowest rate in the marketplace, like that's not very strategic at all. No. And it's like, how does this purchase you're making today get you to number two, three, four in the future? Yeah, correct. And that's where it comes back to balancing with the property strategy, purchasing that right asset that can help you keep growing. So if you don't get the performance of the property at the same time, like the finance piece doesn't matter massively as well.

SPEAKER_01 16:55

Yeah, correct. Um they work hand in hand, right? So if you know one's not performing, then it's going to impact the other.

Why Ascent Exists For Investors

SPEAKER_00 17:01

So and that probably leads in very nicely to, I guess, just a little bit more on Ascent why we've created this business. And it's really to help property investors get to that top 1% of property investors, right? More we'll touch on that a little bit today, but I guess we've started this for that structure piece, right? To really help clients with the structure. It's not just going to be purchasing in your personal name forever because that's going to get you stuck. Yep. A structure piece could be looking at self-managed super fund, it could be looking at company and trust structures. Yep. Um, so that's some of that piece with the structure, but uh I guess something as well, and we've just touched on this now, is that service piece and providing that higher level of service. Yep. Being boutique, uh guiding the client through that process, making it seamless, letting them know what those next steps are, so they don't have to think about it heaps throughout that process. Um which is going to be just super, super important to her to that part of it. Um those top 1% of property investors, right? So to be in the top 1% of property investors, you need to have six or more properties.

SPEAKER_02 18:25

Yep.

SMSF Lending Basics And Reality Check

SPEAKER_00 18:26

To be able to do that, like we said, you can't just do personal lending, right? Correct. That's not that's not the way to do it. Those kind of investors are going to be increasing their income, purchasing in those company trusts, self-managed superfund. Yep. Are you able to touch on maybe I guess just a couple of those structures? Yep. Um where how you can purchase in a self-managed superfund, for example, from a lending perspective and how that doesn't affect your personal kind of structure?

SPEAKER_01 18:56

Yeah, definitely. So there's, I guess, multiple vehicles that you can invest in at the moment as far as structure goes. So as you said, you've got your company, you've got your trust, and then you've got your self-managed super fund. So as far as a self-managed superfund goes, essentially, you know, everybody's going to have a superannuation, industry superannuation. Um, and essentially people are able to use those funds and go leverage and purchase property. So what that's that's one of the main benefits of property is the leverage effect. So with those funds, you can leverage into property, whereas if you've just got you know a balance in an industry super fund, you can't use those funds and leverage into more shares. So having that leverage effect to purchase an asset of say 600 and you get 10% on 600 is better than 10% on 60k, right? So having that leverage effect and being able to grow your assets is one of the main benefits of that. And so to give you a bit of an idea, uh in about 2018-2019, all of the big four banks got out of self-managed super fund lending. And so over the last six years, even when I was at NAB, we had clients who were pretty much made to leave the big banks because they didn't want the auditing, they didn't want the cost associated with it. It was just too expensive for the banks to run. And so what that left was your second tiers, your third tiers, and your non-bank tier lenders picking up the slack and doing these self-managed superfund loans. And so what that leaves us is a process that's quite clunky, it's more expensive because there's more risk associated with it, it's got more fees associated with auditing. And so we've got these lenders who essentially are picking up the slack, but it's just a clunky process because they don't have any competition, they don't need any competition because those are the banks that are only ever going to do it, really. Yeah. So we're kind of in this in this world where we just use those banks and get on with life. Um, the reality is that they're usually more of a set and forget with those lenders. You're not actively trying to refinance them unless they're essentially charging you more than an arm and a leg.

SPEAKER_03 21:11

Yeah.

SPEAKER_01 21:12

So pretty much a set and forget, let it do its thing. Um and again, it's just more about the leverage effect, which you can't get in your industry superfund.

SPEAKER_00 21:21

Yeah. And how just quickly, we won't go into massive depth, but I guess from from a servicing point of view, how how is that kind of calculated? How is that factored as part of that entity when we go to purchase a property?

SPEAKER_01 21:34

Yeah, of course. So in your SMSF, essentially it's taking the um super guarantee income from when you pay your super, um, when you essentially from your job, right? Yep. And then the rental income that you're getting from the property. Yep. So it's the partners of the super fund and then the rental income in the super fund as well. And so there's sense uh there's essentially a serviceability buffer on The rates just like the normal banks, but that loan in that SMSF isn't going to impact your personal situation.

SPEAKER_03 22:07

Yep.

SPEAKER_01 22:08

So and then if you're a business owner, you can either be paying yourself super, or there are ways where we can say, you know, you're going to pay super over the next year or two and your accountant signs it off.

SPEAKER_03 22:21

Yep.

SPEAKER_01 22:22

So there's a few different ways where you can make it work, especially if you're a business owner. Um it's a bit more black and white when you're just P A Y G.

SPEAKER_00 22:30

Yeah. And what do you reckon the rough minimum balance is that you need to have in your super? Because people think I speak to people, fuck, can I do something now? Yep. Um so what's that rough balance?

SPEAKER_01 22:42

Personally, and this might be a bit of a uh maybe a hot topic, but I would say minimum 200k.

SPEAKER_03 22:48

Yeah.

SPEAKER_01 22:49

At the bare at the very basics. Yeah. Because that kind of that gets you into a pretty entry-level asset. Yeah. Um, but it also gets you into a position where you know it's going to be washing its face with your guarantee contributions and the rental income. Yeah. Because you don't want to be putting a massive amount of funds into the SMSF just for it to run itself. So that's my take on it.

SPEAKER_00 23:16

Yeah. I agree. That's kind of what we look for when we're looking at an asset. Yeah. It depends, like some people go in far lower entry level with different assets and they might use less, right?

SPEAKER_01 23:28

Yeah. Yeah. And it all comes down to their personal strategy. Yeah. Like I've had clients come to me who have purchased, you know, or opened an SMSF and they might only have 100k and they want to go purchase an asset.

SPEAKER_03 23:41

Yeah.

SPEAKER_01 23:41

And, you know, obviously that's quite a low barrier, but um, you know, they've put themselves into this situation and this is what they want to do. Yeah. Um, and then you just try and help them the best way that you can.

SPEAKER_00 23:53

So yeah. And I guess from from my perspective, talking to people, it's like some people that are mid-30s, they've probably been working solidly, had strong income for 10 years, they've got really solid balances. Yeah. And they might have just bought one property in their personal name, whatever it is, and they don't realize they can start to incorporate that if they want property as that vehicle.

SPEAKER_01 24:17

Yeah, 100%. And I think um the reality is it's not like you're going to go purchase your first property in your SMSF, right? Yeah. Usually it's a personal play first, you get comfortable with the overall commitment.

SPEAKER_03 24:31

Yeah.

SPEAKER_01 24:32

Once you're comfortable with that commitment and the way that it operates, and you might buy one, two, three, and you really enjoy property investing and you understand how it all works, that's when you're probably looking at your SMSF rather than your first property, just because it's just a different environment. And, you know, look, at the end of the day, it is your nest egg. You know, you have been working X amount of years to grow that super balance. So you just got to kind of, you know, it's not for the first-time investor, so to speak. So yeah, 100%.

Rentvesting And Buying For Growth

SPEAKER_00 25:04

Um cool. So back to 1% of property investors. Yep. A lot of investors that are wanting to build, get to that level, they're not buying in their own backyard, right? So they're rent vesting, they're purchasing nationwide, and that's simply so they can get that strongest growth in the country over the next five years, for example. Yep. Um, from your perspective, do you think there's more people rent vesting now?

SPEAKER_01 25:31

I think slowly that lifestyle change is happening. Yeah. Um, you know, for Sydney example, like buying a property as a first home buyer. Yeah, it's I'd say it's almost unattainable. Um, unless you're, you know, you have a large gift for your parents or you've got a large savings deposit. Yeah. To be able to afford a place in Sydney, very, very difficult. Yeah. And at the end of the day, it's a lifestyle choice as well. Like I'm personally rent vesting. Yeah. Um, I enjoy the flexibility to be able to live anywhere I want.

SPEAKER_03 26:09

Yeah.

SPEAKER_01 26:10

Live in potentially a better place than I would be buying at the moment.

SPEAKER_03 26:13

Yep.

SPEAKER_01 26:13

And then investing all around the country in growth locations. Because just because you're living in one location doesn't mean that it's going to grow. Yeah. So, you know, a lot of people, for example, Victoria, right? Over the last 10 to 15 years, they've been burnt massively where, you know, potentially they purchased a place to live in 10 years ago. Yeah. At the moment, it's the same price, or potentially it's less. Yeah. So it's created quite a good market to get into.

SPEAKER_00 26:44

Yeah, 100%. Yeah. And people just think, oh, I'll just do it because it's safer. I know the area. And it's like it's actually not that safe if it's not going to get the performance. Or exactly.

SPEAKER_01 26:55

Yeah.

SPEAKER_00 26:55

You might get 50% in five years, or you can get 150%. Like do the math.

SPEAKER_01 27:01

And the reality is, right, is that your first home's never going to be a forever home. Yeah. And I think people get so tied emotionally that they want a place, they want to call it theirs, they want to live in it. And I understand it. Yeah. But also at the end of the day, you're going to be upgrading in, say, three, four years when your family grows, you want more space, and you're just hanging on the fact that that property's grown. Yeah. And there could have been a better location where would have gotten a lot more growth.

SPEAKER_00 27:30

Yeah. Which will set you up into a better asset that you can live in personally yourself later on, right? Correct. Yeah. It's look, it's just society and that delayed gratification a little bit as well. Yeah. Um high quality team is such an important one. Obviously, we're talking about that broker piece today and that quality broker.

SPEAKER_02 27:48

Yep.

LMI And Using Leverage Sooner

SPEAKER_00 27:48

Um, but it's also having like the accountant, it's having the conveyancer in each state that you're securing in the pest and building inspector. So that's another important one. And some people want to go and do some of these things themselves, right? Yeah. And it ultimately costs them. So that quality team around you is going to be imperative to move forward. Another one you might be able to touch on this a little bit is looking at using lenders' mortgage insurance.

SPEAKER_02 28:17

Yep.

SPEAKER_00 28:18

One to get into the marketplace sooner. Yep. Two, it could be, well, I can leverage equity and get one purchase. Yep. Or they might have strong income. That's not the problem, but it's the equity position. Yep. We pay LMI, we could split it into a couple of deposits and get a couple of assets. Um what are your thoughts on LMI from that 100%?

SPEAKER_01 28:37

If you're, you know, strapped for equity or you're strapped for cash and you want to get in, I would 100% every day of the week pay lenders mortgage insurance, get into two quality assets instead of one.

SPEAKER_03 28:50

Yeah.

SPEAKER_01 28:51

Because at the end of the day, there are actually lenders at the moment as well who are doing 90% and not paying LMI. So there are options there, but you'll usually find that their policy is quite restrictive on what they can do.

SPEAKER_03 29:04

Yeah.

SPEAKER_01 29:05

So from the investor point of view, you'd be much better off getting into two quality assets rather than the one. Um and it's just an opportunity cost at the end of the day. Yes, you know, there might be a 15k um LMI fee that gets capitalized into the loan. But, you know, rather than saving an additional 50 to 60 grand or whatever it is over the next year or two, you're gonna be you're gonna be making that in property growth if you're buying in the right location, right? 100%. So it's an opportunity cost and it's just obviously the return on investment, you just have to weigh it all up for it to make it work. Yeah, but nine times out of ten, if you're buying in the right location, it makes sense. It makes sense. And you just again the leverage effect if you can get into two quality assets rather than one, yeah, just makes sense.

SPEAKER_00 29:56

I like for my first two deposits, I went in with five percent deposits.

SPEAKER_02 30:01

Yep.

SPEAKER_00 30:01

My second one I paid like 19k MI, which was massive. Yeah, but then it did 130 grand in the first 12 months. Exactly. I could pull equity and use some of that to go into another asset. So makes a lot of sense. Another one we kind of touched on this with debt. The game to get to six or more, you have to get into fucking debt and a lot of debt, right? So but it's understanding getting into good debt to use that compounding effect, to use that leverage effect to be able to build that larger wealth base. Yep. Um so that's one that as an investor you need to focus on, right? If you want to get to six or more properties and change your future.

SPEAKER_01 30:44

And even for the you know, the first-time investor, understanding good debt and bad debt is really important, right, as well. Yeah. So obviously your home loan is bad debt, your credit cards, your personal loans, all bad debt, none of it's tax deductible. Yeah. Whereas your good debt, like investment debt, commercial debt, it's all tax deductible.

SPEAKER_03 31:02

Yeah.

SPEAKER_01 31:02

So essentially what we try and focus on is how do we start maximizing the good debt and minimizing the bad debt.

SPEAKER_03 31:10

Yeah.

SPEAKER_01 31:11

And, you know, as a a lot of first-time investors, they don't actually understand that. Yeah. And so again, that education piece, and you know, all the way to, you know, your top six, uh, your investors who own more than six properties, it's again good for them to understand how it all works as well, just going back to basics.

Good Debt Bad Debt And Planning Ahead

SPEAKER_00 31:29

So 100%. And you could be let's call it two million debt right now. It sounds like a massive amount. Yep. You leverage to 80% of your overall asset base. Yep. But then five, ten years' time, even interest only, you haven't paid a cent of debt down, that property value increases. You've got two million debt, but your LVR might have gone from 80 to 50 or 40%. Yeah. So yes, you're in two million debt still. Yeah. But in comparison to your overall asset base, your net wealth base has increased. Yep. So that debt's a lot less than it was. Inflation devalues our debt. So once you really understand that, exactly, debt is a lot less scary.

SPEAKER_02 32:11

Yep.

SPEAKER_00 32:12

Uh forward planning for the next move. We touched on this again, but some brokers, some people, I just want to get this purchase done. I want to buy my own backyard. Yep. But that strategy piece with this purchase now for the next purchase in 12, 18 months time is important. Yeah. Um, do you have any tips around that from a structure or a finance piece when you're going to purchase the asset now?

SPEAKER_01 32:37

Yeah, 100%. So obviously, from a structure point of view, we want to make sure that we understand, you know, what your 12 to 24 months looks like. Yep. And then obviously, based on that, we need to make sure that you've obviously got the service ability to do what you want. Yeah. And this, you know, this initial purchase isn't going to affect the next one. So something that we see potentially is we've got a client who's purchasing an owner. We don't want that to limit their investment journey or potentially the other way around as well. Yeah. So we're just always thinking, you know, two steps ahead to make sure that we're not going to restrict our clients going forward and what they want to achieve. And then I guess from an income point of view as well, it's you know, catching up with our clients, especially the business clients, to make sure that we're showing the income that needs to be shown to be able to do that. So I think we'll probably touch on that shortly. Um and then obviously for you know POYG clients, it's all about you know trying to get that new job promotion, trying to increase your your you know your income, and then potentially looking at you know getting a job elsewhere and whatnot. So you know it's OT. Exactly. Like there's so many different ways that you can kind of you know increase your income as far as POYG, but it's obviously again delayed gratification, you've got to put the hard yards in now to get it later. So 100%.

End Of Financial Year Business Owner Tips

SPEAKER_00 34:02

Last one I want to touch on before we move into a couple other things, yeah. Which we've kind of touched on is not just focusing on the lowest rate in the marketplace. Yep. It's really irrelevant, right? Yeah. It's like, well, how do we get that next purchase going? Yeah. How do we find a solution to get that next one done? Yep. Unfortunately, that means most likely, especially once you get into six properties, you're not the lowest risk to any lender, right? Yeah. So naturally you're not going to get the lowest rate in the marketplace. Yeah. Some of the interest rates I've stomached over the last couple of years are high. It had um it had stressed people out. But then off the back of that, the capital growth I've been able to get, it's helped me get into more properties. Correct. Um really is helpful. All right. Tips for business owners at this time of year. Yep. Obviously, at the time we're recording, we're at the start of May. Yep. We're in the last quarter of the financial year. Yep. What are some things they should be focusing on right now?

SPEAKER_01 35:02

Yep. So, I mean, we touched on this before, and we also touched on this with Ian as well. It's, you know, coming together, reviewing, you know, your management figures for, you know, the last nine, 10, 11 months, right?

SPEAKER_03 35:15

Yep.

SPEAKER_01 35:15

Then working out what are you looking at doing for the next 12 to 24 months.

SPEAKER_03 35:21

Yeah.

SPEAKER_01 35:21

So, you know, our clients would prefer to be able to go buy this property, but they might pay pay a little more tax. Yeah. So it's all about being able to show you know the income that we need to be able to do what we want.

SPEAKER_03 35:33

Yep.

SPEAKER_01 35:34

Because at the end of the day, if you pump all your personal expenses through your business, you go to the bank and they're going to tell you to fuck off.

SPEAKER_03 35:42

Yeah.

SPEAKER_01 35:43

Um, it's all about, you know, we need to be strategic on, you know, we need to be strategic on what we're doing. Yep. And we need to work with your accountants as well to kind of come to, you know, a bit of a conclusion on where it needs to be.

SPEAKER_00 35:58

It needs to be a mutual strategy, I think. Correct. Because their goal is like, I want to reduce your tax as much as possible. Yeah. But on the flip side, if you want to build a big portfolio, it's too counter-intuitive to you.

SPEAKER_01 36:09

Correct. So they're they're obviously they go through their degree at uni and it's all about tax minimization.

SPEAKER_03 36:16

Yeah.

SPEAKER_01 36:16

So and then obviously they do a lot of strategic um planning and whatnot. So we just need to make sure that we're all aligned so that we're able to assist our customer from a servicing basis, and then obviously they'll have that tax minimization piece as well.

SPEAKER_00 36:31

Yeah. It's like if you go to your broker and you made$12.22 last year, you're not going to be able to borrow much if your goals to purchase property, right?

SPEAKER_01 36:41

Exactly right.

SPEAKER_00 36:42

Um and I see that a lot with business owners. Yep. They're kind of at the point it's like, fuck, I want to do something, I want to start to invest. Yep. But then they realise, well, for the last couple of years, all I've been focused on is reducing that tax. Yeah. Um just kills them, right? Yeah, 100% options.

SPEAKER_01 36:59

Yeah. And you'll see like a lot of one-man bands as well. They'll be talking about their income as if, you know, their gross income might be 200k, and that's what they're telling you that they make. But in reality, they're just pumping everything through that ABN and that business, and they've got very little to show for it. So obviously the banks build their buffers in as far as expenses. So even if you pump your personal expenses through the business, the banks don't care. Yeah. So they've got their minimum level of living expenses that they have to use. So even if you've got 10 grand going through your business for transport, they can't reduce that into the personal living expenses.

SPEAKER_03 37:40

Yeah.

SPEAKER_01 37:41

So it's kind of they're double dipping there, but that's just the reality of it because you're wanting to pay less tax.

SPEAKER_00 37:47

Again, it's find that solution on how the banks are going to look at those things. And I think it's the same, it's like the same principles as that lender's mortgage insurance we just spoke about, right? Yes, it's a cost. Yep. Tax is a cost. Yep. You've got to pay it. Correct. But on the flip side, if outside of that you can build two, three, four mil of asset base and over 10, 15 years that doubles. Yeah. Well, that little bit of tax you're paying is a very good return on investment, right? Exactly. Um, unfortunately, it's just the cost of doing business to be able to do that. Yep. Um, so I think that's great. Anything else to touch on, you think, with the the business owner side of things?

SPEAKER_01 38:24

I think just yeah, as we're coming up to the end of the financial year, yeah. Make sure that you book in with your broker, make sure you book in with your accountant. Yep. Sit down, go through your management financials, understand what you're wanting to do, and then go from there.

SPEAKER_00 38:41

Yeah. It's just getting clear with the strategy.

SPEAKER_01 38:43

Yeah, 100%. And having the right team around you as well.

How To Work With Us Next

SPEAKER_00 38:46

The team's got to talk as well, right? Correct. Like it's good to have the team, but if they're all focusing on different goals and there's no synergy, what's the point of having good the good team? Yeah, exactly right. So, yeah. Cool. That probably rounds things up for now. It's just uh obviously a little bit of unpacking, introduction to you, Adrian, um, what we're going to be looking to achieve with Ascent Property Finance. If you guys watch this, you want to catch up, have a have a session with Adrian and unpack things. You need some assistance with finance, you can you can go to the website ascentpropertyfinance.com.au, go to the Instagram page, Ascent Property Finance. You can book in a chat with Adrian and he can catch up and go through finance with you. Hope you've enjoyed this episode and we'll see you on the next one. Thanks for coming on.

SPEAKER_01 39:42

Thanks, Casey.