Perth is Cooked: Where to Buy Next With Terry Ryder

Summary:
Join property expert Terry Ryder and host Tyron Hyde as they discuss the current housing crisis in Australia and propose solutions to address the issue. They delve into the impact of government policies, the shortage of rental properties, and the need to incentivise mum and dad investors. Terry shares his top real estate tip, highlighting a city with a strong economy and affordable housing. Tune in to this conversation for valuable insights and advice on property investment.

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Tyron Hyde is the CEO of Washington Brown Quantity Surveyors

Chapters

• 1:28 Terry Ryder Intro
• 2:18 The Housing Crisis
• 8:13 Terry & Ty's Housing Crisis Solutions
• 15:36 Melbourne Market Vs Perth
• 19:13 Q1: Best Invesment
• 21:17 Q2: Worst Investment
• 23:44 Q3: Most Valuable Investment Advice
• 24:42 Q4: Ideal Portfolio Mix
• 28:26 Q5: Investing $20K at 20
• 32:24 Q6: Investing $500K at 50
• 33:09 Q7: Advice to 20yr-old self
• 34:58 Q8: Legacy
• 36:57 Q9: Definition of Success
• 38:11 Q10: Minimising Loss
• 40:01 Bonus Q: Terry's Top Real Estate Pick

Transcript

[TRANSCRIPT]

0:00:00 - (Tyron Hyde): What happens when hot spotting guru Terry Ryder joins me for a yarn? Terry, how did we get in this mess?

(Terry Ryder): Ten or more years of bad policy by politicians.

(Tyron Hyde): We solved the housing crisis.

(Terry Ryder): You've got to take all the taxes out of the system.

(Tyron Hyde): I would have a moratorium for three to five years that anyone that rents out their room, it won't affect their capital gains free implications when they sell that principal place of residence.

(Terry Ryder): You've got to incentivise mum and dad investors. They've been demonised.

(Tyron Hyde): This is going to be controversial.

(Terry Ryder): Honestly, is there a single politician in the country that has a clue?

 (Tyron Hyde): Plus, find out which capital city is Terry's top real estate tip.

(Terry Ryder): It's the high-tech innovation capital of Australia. It's got a big educational economy, it's got a big military economy. It's a great lifestyle city and it's affordable.

0:00:43 - (Tyron Hyde): It's an action-packed episode of Ten with Ty. 

Hi, I'm Tyrone Hyde, the CEO of Washington Brown, the property and depreciation expert. Now, I'm a qualified quantity surveyor and also a best-selling author who's helped hundreds of thousands of property investors over the years pay less tax through depreciation. I'm also an avid investor, which is why I created the podcast series Ten with Ty, where I ask the smartest people I know the same ten questions to unlock the keys to their success and hopefully leave a playbook for my family and your family too, about investing.

0:01:18 - (Tyron Hyde): Now, this podcast is general in nature and not specific to your financial circumstances. We always recommend you sit down with an accountant or financial planner before making any investment decisions. Now let's get on with the show. 

Hello. Welcome to Ten with Ty. Today, I'm super excited. I've got Terry Ryder, CEO of Hotspotting here, general property guru. He's written four books, he's an ex-AFR property editor and he's a property mentor. Welcome to Ten with Ty.

0:01:50 - (Terry Ryder): Terry, welcome to you. Welcome to the conversation. It's always good to talk to you about anything but particularly about real estate.

0:01:59 - (Tyron Hyde): Now, Terry, you and I have done many webinars and podcasts over the years, but I've got a new concept podcast for us two grumpy old men talking about property shit. How do you think that would go, Terry?

0:02:11 - (Terry Ryder): Look, I can't think of anything more entertaining and informative than that.

0:02:16 - (Tyron Hyde): Very good, very good. Now, Terry, I get grumpy when people of our vintage say things like, oh, when I was 20, you know, it was harder. Interest rates were at 17%. But I've just done the maths.

(Tyron Hyde): In 1989, the median price of property was $175,000 and the average wage was about $25,000. So about six and a half times earnings. Today in Sydney it's $1.6 million and the average wage is about $80,000, so about 20 times earnings. But it gets worse. Back in 1989, stamp duty was 3.5% of the purchase price. Today it's about five and a half percent in Sydney. Terry, how did we get in this mess?

0:02:59 - (Terry Ryder): Ten or more years of bad policy by politicians, I mean the people who stand up in front of the cameras and say they're really, really concerned about housing affordability and young people's ability to get into housing. Other people have created the problem. They've increased the cost of new housing massively. Did you know it costs almost half a million dollars to build the average new home? And so that's just that the housing cost, doesn't include the land cost.

(Terry Ryder): It's increased 53% in the last three years. And that's primarily through government policies changing the regulations to make things safer or more environmentally friendly. Whatever the reason, they keep changing the rules. Adds to the cost of housing, makes investor property ownership more and more onerous. So more and more people are dropping out. And that kind of explains why we have a shortage of everything in real estate right now. We've got a shortage of rental properties. It's a crisis.

0:03:57 - (Terry Ryder): We're not building enough new homes because it's too expensive and we've got shortages of everything that goes into building new homes and we've got a shortage of properties available for sale. So when you've got high demand, as we have right now, and shortages of everything that matters, that's a recipe for increasing prices and rents.

0:04:16 - (Tyron Hyde): I was just looking at the ABS stats for the amount of dwelling commencements, not approvals, commencements, which is probably more important. In March of 2021, it was about 20,000 for the month. Today. Last month was 12,000, so it's actually nearly half. So I don't think it's going to get any better.

0:04:31 - (Terry Ryder): Yeah, well, the figures from organizations like the Housing Industry Association indicate that our current level of production of new dwellings, approvals and commencements is the lowest in, I think, twelve years. Now. This is happening at a time where the federal government says we're going to be building new housing at record levels. We've never built 1.2 million new homes in a five-year period ever in the history of the nation.

0:04:56 - (Terry Ryder): They want to do it now at a time when builders are going broke every day, and I do mean every day, the cost escalations mean you can't build homes affordably. The shortages of material, shortage of trades people, the big infrastructure, the big headline grabbing infrastructure projects that governments have announced are sucking all the tradespeople out of the home building industry. So we've got all these problems in an industry which cannot possibly meet that target of $1.2 million and maybe I'll do half that in the next five years, but they're certainly not going to go close to the target. It was just a press conference opportunity by politicians and I often think that the source of so many of our problems in Australia is they never think beyond the press conference.

0:05:40 - (Tyron Hyde): I had a meeting with a major developer in Sydney the other way and he said to me, if you think we've got a housing problem now, you wait six months because they're literally not tendering on jobs. They know that the builders, well, the traders, they've been squashed. Right. So he's just going to wait for six months. Hopefully the building costs will come down. But he can't start. I know many developers just are going out of the industry because it's too hard to work.

0:06:03 - (Terry Ryder): Yeah, well, I know a developer who has been one of the major developers in Queensland for decades. He's been in the industry since the 1980s and he's been very successful. But it's a very big company which typically builds high-rise apartment buildings saying, look, we cannot, because the way the numbers stack up, the cost escalations, etc, we cannot build a project now unless we can sell the apartments for more than a million dollars each. So it's got a big prime location, top quality luxury apartments. Nothing else stacks up financially for developers like that.

0:06:39 - (Tyron Hyde): And one of the problems with that is that you need pre-approved or pre-sales to get the development funded. Right, because banks generally want you to have the big four anyway, generally want you to have a number of pre-sales and, you know, if you can't get it, those pre-sales, they just can't get off the ground.

0:06:55 - (Terry Ryder): Yeah, well, that's another example of the really bad governance that's caused this problem. About five, six years ago they decided to pretended to address the affordability issue by squashing foreign investors. They had an inquiry and decided to scapegoat foreign investors, for causing bad affordability. So they didn't ban foreign investment, they just slugged them with all these new and increased taxes and that sort of wiped out foreign investment in Australian real estate now, just in the last month or so that have announced further increases in taxes on foreign investors.

0:07:28 - (Terry Ryder): Now, foreign investors buying off-the-plan apartments is one of the things we need to happen so builders can get their pre-approvals and get financed. Wiping out foreign investors is one of the reasons we have a shortage of dwellings in Australia at the moment, and particularly why we have a shortage of rental properties. Because it was politically convenient to scapegoat foreign investors who were never the problem. They were actually part of the solution. They've wiped them out. It just added to this problem, this accumulation of policies, APRA changes to lending rules, etc. They've all accumulated over the last 5-10 years to a situation where we have this massive shortage of everything and there's no easy fix to it.

0:08:13 - (Tyron Hyde): Let's be some grumpy old man and let's solve some of the problems. Terry, let's play a game. We've got three things that we would do right now to address this problem. The housing supply issue, etc. Let's go in turn. I'll say, Terry, you go one. We won't comment on each other's idea. You ready to play that game, Terry?

I am ready to play that game.

0:08:33 - (Tyron Hyde): What would be the number one thing you do right now, Terry, to address the housing problem in Australi?

0:08:38 - (Terry Ryder): You've got to take all the taxes out of the system. In Sydney, 50% of the cost of a house and land package is taxes, government taxes, fees and charges at all three levels of government. You've got to defuse that if you want to have affordable housing and a decent supply of housing in this country.

0:08:54 - (Tyron Hyde): Great. I would. You know that according to ABS, there's 13 million vacant rooms in Australia, right? Not houses, vacant rooms. And one of the detriments of why people don't rent out those houses is because it could affect your capital gains tax implication when you sell the principal place of residence. I would have a moratorium for three to five years that anyone that rents out their room, it won't affect their capital gains free implications when they sell that principal place of residence. I'd even go one step further. Pensioners can do that forever. Your go.

0:09:28 - (Terry Ryder): Look, we've got to do something about the whole issue of red tape. You know, delays, regulations, adding to the costs of creating new dwellings. That's a big part of it. It's not just the input costs, it's not just the taxes. It's the red tape. That's a huge part of the problem.

0:09:47 - (Tyron Hyde): All right. My go. So the Greens have, one of their policies is that all public land should be developed for public and social housing. I agree with that. But they also have a policy where 30% of private land sales to be developed should be. What's the word I'm looking for? Mandated. That it has to be for public and social land as well. I tend to disagree with that. I think it's a bit Putin-ish, but I think it should be encouraged. So I'll give you an example. Let's say developers got a block approved for three stories. If he can get that approval to six, he must give away one floor as social housing to the government for free. He would get the additional two floors if he was to give away one floor, and he gets to keep the profit of the two floors, but he has to build it all. So his donation is construction. That would make, would encourage him to have some more social and affordable housing. Okay.

0:10:38 - (Terry Ryder): Whether or not people would be willing to do that is another matter. Look, we've got stop adding to the costs of constructing new dwellings. Every time a state government passes new regulations about the design of houses, they make it more costly. And it's been going on for a long time. But particularly in the last three years, as I said earlier, the cost of building the standard dwelling a house in Australia has increased from 320,000 to over 490,000 in three years, as a 53% increase in just three years. And that's not including the cost of the land. You know, people like the Greens talk about, you know, affordable housing. You cannot build affordable housing because no matter what your intention is, the structure is still going to cost what it costs. And the cost of building that typical house in Australia is now almost half a million dollars.

0:11:41 - (Tyron Hyde): Yeah, well, as a quality surveyor, I know I said I wouldn't comment on it, but as a quality surveyor, there's a thing called the Building Price Index, which is different to the Consumer Price Index. And since the AIQS started tracking that, the Building Price Index has never gone down in history. And I can't see it happening anytime soon.

0:11:58 - (Terry Ryder): No, it's quite the opposite is happening just at the moment. And they've got to address that. Honestly, is there a single politician in the country that has a clue? I don't think so. Look, you know, we monitor media with what we do because we're basically researchers and we're scouring media and online sources of scraps of information that form what we do. And so we're looking at what's in media every single day right across the country. And I've not seen a single politician, or journalist, for that matter, actually ask the question, how did we get in this mess? How did we get to this point in time? Because, you know, vacancies below 1% is unprecedented. I've been doing this for over 40 years, and I've never seen vacancies so low in so many places. But no one seems to be even asking the question, how did we get here? Because if you don't understand that, you can't fix it.

0:12:52 - (Tyron Hyde): I think the Minn's government's plan of having, you know, approvals around trains, trains, hubs, etcetera, is a good idea. But I thought of that about 15 years ago, and I'm not in that role, but I thought it was a bit of a no-brainer. You go to Tokyo and you see that after every station.

0:13:07 - (Terry Ryder): Yeah, we've got politicians seeking press conference opportunities, you know, a publicity splash. But it's not necessarily motivated by desire to come up with real solutions. I think politics have this vague notion that what we need to do is be building more houses. But, you know, it's not really as simple as that. You know, one of the things we have to do is incentivice people to become landlords. We've got to incentivice mum and dad investors. That's where 91.4% of the homes people rent in Australia come from. From ordinary investors, not government, not big companies, just mum and dad investors. And they've been, over the last 5-10 years, been massively disincentivised. They've been demonized, they've been scapegoated, as, you know, the problem, when in fact they're the solution. And it's the constantly passing of regulations that favour massively tenants over landlords, and the increasing of taxes on investors. That is the huge part of the reason why we have this incredible rental shortage. And it's just getting worse and worse, and we'll probably continue to, because there's no solutions being presented.

0:14:15 - (Tyron Hyde): That's a good segue to my final idea on what we could do, Terry. Now, this is going to be controversial, because I'm going to suggest that instead of having a building allowance rate, where you claim the depreciation on the building over a 40-year period at 2.5%, increase it to 4%. So to make it more attractive to investors to invest, hopefully the developers will be able to get more off-the-plan sales, which will enable them to get funding to develop, and the government claws it back when they sell the property anyway. So to make it look more attractive now when we need it to look more attractive.

0:14:46 - (Terry Ryder): Well, the problem is, you know, there's been various talk fests called by state governments in various jurisdictions around the country, and they invite all the usual suspects, but I don't. Have you ever been invited to one of these talk fests?

0:14:56 - (Tyron Hyde): First time I got invited once they changed the tax before the Treasury Department got me in to give me advice, but they'd already changed the law. And I was just having "industry consultation". They'd already changed the law, Terry.

0:15:08 - (Terry Ryder): But they never invite the real stakeholders. The people who actually have the solutions are never invited to these talk fests. They'll be people from the Social Security end of town and someone representing the developers, the Property Council, everyone just goes in and argues their vested interest, but there's no real solutions being presented because the people who have the answers aren't being invited and aren't being listened to.

0:15:33 - (Tyron Hyde): Yep. Well, let's move on. That was interesting. I was on a forum the other day, a Facebook forum, wasting my life away. And I. This particular forum, they're very pro-Perth. And I said, I think Perth looks cooked, right? And jeez, did I cop it. And they said, why? I said, look, all I see in my Facebook feed are people having the next hotspot and it happens to be in Perth, download this report. And by the way, we happen to have a house and land development for sale there as well. And if all I see is buy, buy, buy, in Perth. As you know, I like to do the opposite of what everyone else is doing. I wouldn't buy in Perth. So I thought it was cooked. And then you. I saw an article the other day that you've released a report that you suggest Melbourne is better than Perth at the moment. And I'd say, why, Terry, with all those taxes down in Victoria?

0:16:20 - (Terry Ryder): Yeah, well, a very good question. We're actually doing a webinar and we're saying why Melbourne makes more sense than Perth. Look, what you've just referred to is what I call the loudest noise in real estate is always the voice of vested interest. The people that are advocating the Perth boom's going to go on and on buy in Perth, you'll make a million dollars. You look at who they are and they're all people who stand to gain massively if that is true.

0:16:48 - (Terry Ryder): So it's always really important to choose who you listen to when it comes to advice and real estate, people with a vested interest. You need to be a little bit cautious about accepting their advice right now. You said it's cooked. I think. I think you're right. Our research indicates that after three years of very strong growth, Perth has peaked or past its peak. People are still piling in there because that's what investors do. They're herd animals.

0:17:17 - (Terry Ryder): Three years ago, when we started recommending Perth, no one was interested because its track record over the previous ten years was hopeless. In fact, most suburbs in Perth had a negative and a minus in front of their capital growth figure for the previous ten years. So people were saying, why are you recommending Perth. It's hopeless. We said, well, it's about to change. Now's the time to get in there before prices rise. No one wanted to buy there now, when the market is cooked and it's reached its peak, and after three years of solid growth, now everybody wants to buy there and it's just the antithesis of smart investing. That's why we think Melbourne makes more sense, because Melbourne is kind of positioned where Perth was three years ago.

0:17:56 - (Terry Ryder): Melbourne hasn't had any price growth the last couple of years, but we look at the underlying factors, which are forward indicators of price growth. Incredibly strong economy, the strongest population growth anywhere in Australia, based on the latest figures from the ABS. A big uplift in sales activity recently is always a precursor to price growth, but it hasn't had any price growth since about 2021. So everything's building for the Melbourne market particularly. They have a period of growth and it's kind of positioned where Perth was. And people are saying about Melbourne now what people were saying about Perth three years ago, why would you want to buy there now? The big detriment about Melbourne is, of course, the attitude of the idiots who run the state government who have got a lot of anti-investor policies, and that naturally will deter people.

But for those who can get over that hump of, you know, the. The taxes and the general let's slam investors attitude of the state government for God knows what reason. Cause it's just gonna make the rental shortage worse. If you can get over all that, you can buy pretty well in Melbourne and other parts of Victoria right now. And there's gonna be some capital growth, we think.

0:19:14 - (Tyron Hyde): Do you own an investment property? Washington Brown has helped over 250,000 property investors pay less tax with the depreciation schedule. Visit washingtonbrown.com.au to pay less tax today. All right, let's get on with Ten with Ty. All right, are you ready to play Ten with Ty, Terry?

0:19:37 - (Terry Ryder): I was born ready Tyron.

0:19:41 - (Tyron Hyde): He's funny, isn't he? 
Terry, what has been your best investment?

0:19:45 - (Terry Ryder): I reckon that was my first one because it got me started and it taught me that ugly real estate grows in value because I bought the ugliest house I could possibly imagine. It cost me $25,000. This was in the 1980s, so it was a long time ago. It seemed like a lot of money at the time, but it was an ugly house in a down-market suburb, but it grew in value. I mean, two years later I sold it for 40,000, which is a pretty big capital growth rate. And I thought I was a genius and then bought something better. But that first purchase taught me that ugly real estate does grow in value because people are always looking for something that's affordable, located close to things that are desirable. It was close to a train station, it was close to shopping, close to schools, but it was ugly. But it doesn't matter.

0:20:29 - (Tyron Hyde): Fantastic. I thought you were going to say starting Hotspotting would have been one of your best investments.

0:20:35 - (Terry Ryder): Well, actually, if you ask me what my second best investment was, I might have said that. In answer to some other question, I would say that investing in yourself is one of the best investments you can do. I think people should do that. I know successful people are always the readers, they're always doing courses, they have mentors. Even really super successful people still have mentors because they're always trying to be better. And I think that's a great attitude. Invest in yourself is a good answer to that question as well.

0:21:09 - (Tyron Hyde): That's been the overarching theme in this podcast, actually. I think Dale Beaumont said he spent $750,000 on self-education. 

Terry, number two, what has been your worst investment?

0:21:20 - (Terry Ryder): Honestly, I put my savings at the time into shares in a property company in 1987. The next day was Black Friday and the share market collapsed and that company disappeared and I lost all my savings. And what I like about real estate is it never does that. I mean, probably prices do fall at times, but they don't collapse to nothing overnight the way our share markets can do. That was my worst investment.

What it taught me, though, it did teach me a very valuable lesson, which has served me well over the years. And that is you really need to know a lot about what you're putting your money into. And I knew nothing about shares. I just got caught up in the frenzy at the time, as you know, similar to people piling into Perth without thinking about what they're doing, not doing proper due diligence it's a very similar syndrome. I got caught up in the share market frenzy in the late eighties, and I lost all my savings because I didn't know anything about it. So I led to invest in what I know well. And that's real estate.

0:22:20 - (Tyron Hyde): Yeah. Well, that's why this podcast started. My father lost all his money in early superannuation in the late eighties at a company called Estate Mortgage. Do you remember then?

Oh, yes, yes. Legendary disaster.

0:22:32 - (Tyron Hyde): Yeah. Yep. So he, he did it. He. They advertised I was safe as houses, but really, and they were investing in bricks and mortar, but really they're putting into mezzanine funding. And when for developers, and then when interest rates went to 17%, all the house cards fell down and lost pretty much everything. 

You mentor a lot of people. What mistakes do you see people making? What are the worst mistakes that other people make?

0:22:53 - (Terry Ryder): With property investment? It's, it's. Look, there's a whole range of them, but the biggest one is a lack of willingness to invest in information and advice. So many people want to do property investment on the cheap. They'll borrow money and buy the big, you know, do the big spend, which is buying the piece of real estate, but they won't spend relatively small sums of money on good advice, you know, a good accountant, you know, paying for a depreciation report.

(Tyron Hyde): Good answer.

0:23:22 - (Terry Ryder): Getting advice from a specialist property lawyer or an accountant on the right entity to buy in. Mentors, buyer's agents. These are relatively small investments to make sure that the big sum of money you spend is spent in the right way. And most people aren't willing to do that. And that's the worst kind of false economy, I think.

0:23:43 - (Tyron Hyde): Fantastic. Question number three, Terry. What's been the most valuable investment advice you've ever received?

0:23:50 - (Terry Ryder): Well, it harks back to a very recent comment in this conversation. Invest in yourself. And as you said, it's a recurring theme in this podcast. But all the really successful people that I know personally are people who are constantly investing in themselves. They're readers, they're podcast attendees, they go to seminars, and they quite often spend a lot of money on mentors, even though they mentor people themselves. And I do that. I meant to people, but I have mentors and my mentors have mentors. So you invest in yourself, follow your passion, you'll be successful, and then you invest the profits in real estate.

0:24:30 - (Tyron Hyde): I'm in a business program called Business Blueprint with Dale Beaumnt. Don't have if you know it. They recommend being in that program for one or two years, I'm up to my 12th year, can't get rid of me. 

All right, question number four, Terry, what's your ideal portfolio? Mix of shares and property, commercial property, etc.

0:24:47 - (Terry Ryder): Well, for me it's all real estate because that's what I know. And I learned that lesson back in the bad days of the 1980s. Don't invest in things you don't understand. I just don't have the time to become really educated about other things. So for me the ideal investment portfolio is, well, I suppose it's not just real estate, it's my business 1st, first and foremost, because that's probably my most valuable asset, that's my superannuation. And so that's an important investment. Beyond that it's real estate and within that it's having a portfolio with diversity. That's really important, I think, to have geographical diversity and also diversity of property types that you buy, as always, amazes me when I do mentoring sessions with people. How many people own five or six properties and they're all in the one city or they're all the one type of property?

They don't have any diversity and they're very vulnerable to, because we don't have one holistic market in Australia. You know, right now we've got some markets booming, but other markets like say, Hobart and Darwin, Canberra are actually going backwards. So all your properties are in places like that. You've got a pretty set portfolio. So diversity is the really important thing. So you have some in cities, some in regions sprinkled around the country, reduces your land tax, amongst other reasons.

And they have some that are like set and forget, some that are value adding opportunities, some that are redevelopment opportunities. So, you know, I learn about real estate by having a mix of types as well as geographical diversity.

0:26:21 - (Tyron Hyde): Land tax is a huge issue. If you've got all in one state, you're going to be paying a lot of land tax.

0:26:26 - (Terry Ryder): Yeah, if they're all in Victoria right now where they dropped the threshold to pretty much nothing. Yeah, I was kind of bit of a shock when I got a land tax bill from the state government of Victoria, where I hadn't before, simply because they just lowered the threshold. Another, another example of their hell-bent, trying very hard to discourage investment in Victoria for some reason.

0:26:50 - (Tyron Hyde): Yep. From your experience, this wasn't one of my questions. But what's performed better over your data tracking life, regional areas or capital cities? I know there's lots of, you'll go say which region, but if you just average it all out to regional areas, versus capital cities. What's performed better over the last, say, 30 years?

0:27:10 - (Terry Ryder): Well, I can't tell you over the whole period that I've been around because it's been a very long time. And, you know, the sort of data that we have available now didn't exist back when I started, but in the last five years, definitely the regions have outperformed the capital cities. But the latest evidence is that that's starting to now change. So I think probably when, five years from now, when we look back, we'll say the past five years, the biggest cities have outperformed. But certainly the previous five years, it's been the regional areas, and it's been really that big trend we call the exodus to affordable lifestyle. People moving to the regions, the smaller cities seeking lifestyle and affordability enabled by technology, people able to work remotely. 

You've done it. I'm doing it, pretty much everybody I know, the modern business, everyone's working from home kind of thing. And technology has allowed that to happen. And that's precipitated this big trend of people moving to lifestyle areas, to cheaper, more affordable regional areas. But I think that movement's still happening. But it's peaked, and we've now got the bigger cities starting to perform, boosted by migration from overseas. Sydney and Melbourne have been hugely pumped up by that recently.

0:28:25 - (Tyron Hyde): Yep. Fantastic. All right, question number five, Terry.  How would you invest $20,000 as a 20-year-old?

0:28:30 - (Terry Ryder): I would invest it in a good buyer's agent, a mentor, a good accountant, a lawyer, good research, information, a mortgage broker, and maybe even a quantity surveyor. Now, I put that money into advice and information because I've got this fundamental belief, and I think everyone should have this fundamental belief, that you build your team before you build your portfolio. It's so, so important. You want to rush out and buy a piece of real estate using that money as a bit of seed capital, you're likely to make mistakes. And I have a podcast and ask people about the mistakes they made when they were young. And everybody, all these very successful people that I interview, including yourself recently, early on, made some very serious errors because they didn't know enough so that $20,000 most profitably could be put into advice and information so that your first big move into real estate will be a smart one. And out of that success will roll the second, the third and the fourth ones.

0:29:32 - (Tyron Hyde): Now, okay, I agree with you on buye'rs agency. I think they can be very useful. But how would you choose which buyer's agent, wouldn't you choose which area you wanted to buy in first and then choose the buyer's agency? 

So what you could do is buy some of your reports, buy some SQM reports by listening to Peter Koulizos have a bit of a heat map of Australia. Go. Okay. All three reckon Cairns is good and then find a buyer's agency in Cairns. Otherwise, if you just find the buyer's agency first, aren't you gonna just end up where they have a specialisation?

0:30:02 - (Terry Ryder): Well, it depends which buyer's agent you get. And I'd always urge people to get a recommendation from people who have had experience with professionals. Don't just pick one out of the phone book, talk to people you know and say, you know, who would you recommend? But some very good buyer's agents operate nationally. They might be based in Sydney, but they have either offices in the major cities around Australia or they have contacts that they can use or you can do it the way that you, you recommended.

0:30:30 - (Terry Ryder): I think before you get to the point of having a buyer's agent, you want to have the mentor person, you want to have the research report. So, you know, that's something we provide a lot of people before they buy that they'll just have just a one-off strategy session and we talk to them for 45 minutes about what they're trying to achieve and, and then, you know what, they already own all their background information. And then from that evolve an idea. Well, it makes seems to me that you should be targeting, say, regional Queenslanders. You're looking for affordability, you're looking for high rental yields and you're looking for potential capital growth. And regional Queensland has lots of centres that can offer that. So then we start talking about location and we'll send them a report at the end of the discussion to support what we've been talking about. That's a good starting point. And then you can maybe look for the buyer's agent to help you find.

You might find a specialist in that area or you might find a national operator that can help you with that as well.

0:31:26 - (Tyron Hyde): Yeah, I really think it's important to get a recommendation for someone's actually used that buyer's agency before. Seems to me they are breeding a bit like rabbits at the moment and a lot of the skill set seems to be their social media skills rather than having to, having themselves created a big portfolio.

0:31:41 - (Terry Ryder): A lot of them have a skill set of zero, quite frankly, Tyron, honestly, they are breeding like rabbits and they don't necessarily, a lot of them have anything to offer. It's very, very. I think it's dangerous for the industry that you know, all you need to call yourself a buyer's agent is a pulse, basically, and a website. Well not even that. So people need to be careful that they get a recommendation about a buyer's agent that's got experience and knowledge and something to offer. I mean, you might be spending $10,000 or $15,000 with them and if all they're going to do is go online and search for properties for sale. You can do that yourself. You want somebody who's got real expertise, so you need to be careful about who you choose.

0:32:24 - (Tyron Hyde): Excellent. Ten with Ty is brought to you by Washington Brown, the property depreciation expert.
 
All right, Terry, question number six. You've just turned 50. You've got no money, but your parents passed away, sadly, and you've just inherited $500,000. How would you invest that money today?

0:32:43 - (Terry Ryder): Well, I think 500,000, that's a nice. I mean, you could leverage that into two or three really good properties with high rental yields. I mean, if you're over 50, then you're probably thinking about retirement. And so you could certainly, you wouldn't want to just go out and buy one property for cash. It leverages into maybe three properties which have high rental yields, and it can help set yourself up to fund your retirement.

0:33:08 - (Tyron Hyde): Fantastic. All right, question number seven. If you go back in time, Terry, and get that DeLorean, see yourself, what would you tell your 20-year-old self about investing?

0:33:17 - (Terry Ryder): And three words, never ever sell, Terry. That's four words. If I knew then what I know now, I'd still own some of the things I bought back in the eighties. I've mentioned the first property I bought for 25,000, but the second one is more pertinent to the discussion. I was in Brisbane. I was actually an inner-city suburban. It was a very humble house, but sitting on a hill with views up the Brisbane River. It cost me $50,000, and I sold it a couple of years later for 110,000. I thought I was a genius. But the land alone today would be worth well over a million dollars.

0:33:50 - (Tyron Hyde): Yeah, right.

0:33:52 - (Terry Ryder): And if I'd understood the importance of buying good real estate and keeping it, accumulate, build a portfolio, I would still own it, and I'd be much wealthier today than I actually am.

0:34:05 - (Tyron Hyde): So when you sold, were you trading up? Were you putting those properties....

0:34:09 - (Terry Ryder): I wad selling to buy better. And, you know, the whole mentality and culture around property investment didn't really exist then the way it does now. And I think more people today would understand that, you know, you start young, buy something you can afford. If you buy wisely, it'll grow in value and give you equity and buy more and more. But you keep that real estate that you buy and build a portfolio rather than trading, because when you buy and sell, you're losing a lot of your profits in those costs. Capital gains tax, no legal fees, stamp duty and all of that. I'd love to have understood when I was in my twenties that never ever sell was the way to go.

0:34:54 - (Tyron Hyde): Well, hopefully someone, a 20-year-old's listening to this and taking that advice. 

Question number eight, Terry, what legacy do you want to leave? Your family or your community?

0:35:03 - (Terry Ryder): Yeah, for my kids. I've got a couple of girls who are in their mid-twenties. And what I always said to them is that, follow your passion. I think that's the secret to a successful life, not try to become wealthy or do what's sensible, identify your passion and make that your career. And people who do that very often are very successful. A travel ethic. I certainly gave them that because since they were little, we were going to Europe and other parts of the world, and they just spent so much of their time. I mean, their concept, their future isn't Australia, it's the world. And I think that's great to have that. But I'd also teach them about property investment, that start early and accumulate. You can do that and still, you know, still travel and have a successful career. You know, if you're going to be renting, you might as well be putting that rent money into property you own yourself. And sometimes it's, you know, equal cost or even cheaper owning than probably, not in Sydney so much, but in other parts of the country.

0:36:09 - (Terry Ryder): So those are the sorts of an understanding of the importance of shelter as one of the basic needs and how important it is for the community, for the country, via our politicians, to do it better, because we've craved a situation where it's incredibly expensive to build and create new dwellings and there's a shortage and there's no fix in sight, and it's just become a huge, huge problem. You know, we literally do have people out there sleeping in cars, living in tents in every town and seeing the country has that, and it shouldn't happen in a country with the wealth and wisdom of Australia. Maybe not so much wisdom as wealth.

0:36:53 - (Tyron Hyde): I think you're leaving a pretty good legacy for the property industry, Terry. 

What does success look like to you? Terry?

0:37:00 - (Terry Ryder): Actually, it looks pretty much like what I'm actually doing in 2024. I think a little bit like yourself because I know a little bit about your lifestyle, but for me it's like, owning my own business, working from home in a lifestyle town that I love and don't plan to ever leave, contributing to the success of my business with maybe less time than I have in the past because I've worked very hard to get to this point, putting in a few hours, but, you know, still being part of the business, giving myself more time for family, for travel and for writing.

I published four books in the past and the last one was a long time ago. I want to get back to that. I want to write books on not just real estate topics, but a whole range of things that I'm interested in, not novels. I don't want to write novels. I want to write non-fiction. I want to research a subject and write a really interesting book about it. So I'm doing most of that already. So in those terms, my terms, I'm successful.

0:37:59 - (Tyron Hyde): Fantastic, love it. Look forward to reading that book. 

Question number ten, the crux of this matter. Now, as you know, my father lost all his money, as I said before. So this is what this podcast is about. Now, Warren Buffett is quoted as saying, rule number one, never lose money. Rule number two, never forget rule number one. Terry, how do we never forget rule number one?

0:38:20 - (Terry Ryder): You go about real estate investment the right way. If you buy the right real estate in the right place, paying a sensible price, in areas of credentials for long-term growth. You don't buy in high-risk areas like tourist towns and mining towns. You don't become a herd animal and pile into Perth when it's at the peak of its market. You know, you do research, you have mentors, you put money into information and advice and you buy sensibly.

And if you do that, you're not going to lose money in real estate. From time to time, very often, in fact, we have economists and others with doomsday protection. Our prices are going to fall 15-20%. When Covid struck, one of the big banks had forecast a worst-case scenario, 33% drop in our property values. Didn't happen. Nothing like that has ever happened in Australia. We don't have the credentials for that. We have a very strong economy, we have high rates of employment, and we have a shortage of real estate. So real estate is a really safe thing. As long as you go about it sensibly, you're not going to lose money, and you're very likely to actually make money doing nothing, making money while you sleep, by just doing it sensibly.

0:39:31 - (Terry Ryder): And that's the key you've got to go about it the right way. And that means not being a herd animal. Now, the people who succeed in real estate are actually people who detach from the herd very often and run in the opposite direction. So rather than buying in Perth, which is cooked, as you put it, thinking about places like Melbourne, which are seriously undercooked.

0:39:54 - (Tyron Hyde): Yep, I love it. And also, I guess over-gearing is an issue people get in trouble with. But no, I tend to agree. That's a great answer, Terry. 

All right, Terry, my final thing, as I do this with every guest, I ask a surprise question about their specialised topic and guess what yours is going to be about, Terry? It's a bit of a no-brainer. We did a recent podcast together where I asked you to, as a mythical thing, I said, let's cut up all the capital cities in Australia, put it in a hat. I said, Terry, you're only allowed to choose one capital city as your favourite. Where would you invest right now? And you chose Adelaide.

0:40:28 - (Tyron Hyde): Now, I want to drill that down a bit further. What are some areas within Adelaide that I want to start looking at myself?

(Terry Ryder): Terry, what areas within Adelaide?

(Tyron Hyde): Yeah, suburbs or regions.

0:40:39 - (Terry Ryder): Well, again, the answer depends on you and how much you've got to spend. For example, one of the beautiful things about Adelaide is it's so affordable relative to the bigger cities. It's about roughly half the price of Sydney and it's very significantly cheaper than Melbourne or Brisbane. So, you know, you get a lot of bang for your buck in Adelaide. You get more real estate for a certain level of expenditure than you do in some of those bigger cities.

0:41:08 - (Terry Ryder): There are good buys all over Perth. If you're a million-dollar buyer, sorry, Adelaide. You can get some pretty great real estate. What you pay a million dollars for in Adelaide, you'd be spending over 2 million in Sydney and Melbourne, probably.

(Tyron Hyde): What about a cheap suburb?

0:41:25 - (Terry Ryder): Suburbs like the local government area of Salisbury in the north. So kind of a nice mix. Some of those northern suburbs of Adelaide are pretty rough, very down market and some people fear to tread there. But there's, within the city of Salisbury, there's suburbs like Salisbury itself and there's various other suburbs where Salisbury in the name where you, you know, you might be buying in the 400, 500,000.

Good solid real estate. It's not luxury, it's not spectacular, but I bought one myself three years ago for about $310,000. It's now worth maybe 550, three years later. The rents, the property I bought for 310,000, the rent's now 550 a week. So the rental return is great. Adelaide was providing that back then. Prices have moved a bit since then, but it's still got more to go because it's underpinned by the strongest economy in Australia. According to SEC, with the State of the States Peport, South Australia ranks number one.

0:42:28 - (Terry Ryder): Surprised a lot of people to know that. But Adelaide is a pumping place. You know, it's got this incredible innovation reputation. It's the high-tech innovation capital of Australia. It's got a big educational economy, it's got a big military economy, it's a great lifestyle city and it's affordable. So lots of good places to buy. I mean, one place I'd recommend you look, if you're wanting to buy there is the city of Onkaparinga, which is down in the south, includes bayside suburbs like Seaford, where the median price is still around about 500,000, which is pretty, pretty affordable for a bayside suburb, which has got a train station. You can take the train into central Adelaide, you can go in by the Southern Expressway, and not far from there is the McLaren Vale wine district. So it's got a lot of lifestyle down there in Onkaparinga. Bayside suburbs, wonderful wine district, which I visited about a year ago and had a lovely time, but really good, affordable real estate that's affordable to most people. So. And then if you got more money to spend, there's the suburbs that are close to the centre of Adelaide. But the place I really like for people who've got, you know, a million dollars to spend is the Adelaide Hills. I just think it's the most wonderful, like, hill change, 30 minutes from the centre of Adelaide, you've got this wonderful hills district with suburbs like Stirling and Hahndorf, gorgeous places, beautiful homes, and if you need to go to the city, you can be there in 30 minutes.

0:44:07 - (Terry Ryder): And within 20 or 30 minutes drive, you've got the Barossa valley, you've got McLaren Vale, you've got three actually great wine districts. I'm talking rather too much about wine. 

0:44:21 - (Tyron Hyde): Where could people go and find these reports on whether you will, whether Melbourne's better than Perth or the suburbs you've just recommended? Is there somewhere on your website they can go pay and download.
 
(Terry Ryder): hotspotting.com.au, and we have a range of services and products, but included you can just buy one-off reports. One of them is like our National Top Ten Best Buyers report. So there's our Ten Picks at any point in time, Best Places to Buy, different price ranges, so hopefully something for everybody in there. But you can buy a specialist report, Top Five Adelaide, Top Five Melbourne, Sydney.

0:44:56 - (Terry Ryder): Also regional markets. Not every because, you know, South Australia, for example, doesn't have enough substantial markets outside of Adelaide to have a top five regional South Australia. But we have those reports for New South Wales, Victoria, Queensland. We have reports that focus on properties with locations with above-average rental yields because that's very top of mind for people now that, now that interest rates are higher than they were a couple of years ago. So we have a Positive Cash Flow Hotspots report. We have a thing called The Pulse where we've got 50 locations where you can get above average rental yields in places that have actually credentials for growth as well. So there's a whole big range of reports that people can get.

0:45:41 - (Tyron Hyde): Well, I think that for investors, is a great way to start their investment journey or their skill set, or if they want to keep going on their investment journey, is to start on the Hotspotting website. Terry Ryder, I really enjoyed this chat. Thank you for being part of Ten with Ty.

0:45:54 - (Terry Ryder): Most welcome. Always love talking about real estate. The hard part is getting me to shut up.

0:46:00 - (Tyron Hyde): Thank you very much Terry, good on you. 

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