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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Sprache: Englisch
**Winner of the Personal Finance and Investment Book of the Year at the Australian Business Book Awards 2022** Conquer the challenges faced as a woman pursuing financial independence and prosperity In The Female Investor: Creating Wealth, Security, and Freedom through Property, celebrated property and finance experts Nicola McDougall and Kate Hill deliver a practical and approachable guide for women of all ages as they navigate the world of property investing. You'll learn how to build equity and wealth in the property market and achieve financial independence, all while overcoming the gender-based salary deficit and balancing the demands of family and work. You'll discover invaluable advice on: * How to get started with property investing, regardless of what stage of life you're in * How to protect your assets in the event of a relationship breakdown and handle "the talk" with your partner when you decide it's time to join financial forces * New strategies and trends for achieving financial independence, like rentvesting and co-buying The Female Investor is an essential read for young women just starting out in the workforce, long-time professionals returning to work after caring for a child, and any other woman trying their best to overcome the financial disadvantages faced by women everywhere. It also belongs in the libraries of anyone else who seeks to support the women in their lives.
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Seitenzahl: 265
Veröffentlichungsjahr: 2022
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Table of Contents
COVER
TITLE PAGE
COPYRIGHT
DEDICATION
ABOUT THE AUTHORS
INTRODUCTION: WHY YOU MUST ACT – NOW!
THE FACTS
HOW CAN PROPERTY HELP?
WHY DOES IT MATTER?
WHAT WILL YOU LEARN?
CHAPTER 1: WHO CAN HELP
YOUR EXPERT TEAM
CHAPTER 2: HOW TO SAVE
SAVING A DEPOSIT
5 SIMPLE STEPS TO SAVE A DEPOSIT
THE LOWDOWN ON LOANS
I CAN BORROW HOW MUCH?
WHAT'S WITH ALL THE ACRONYMS?
UNDERSTANDING MORTGAGE REPAYMENTS
CHAPTER 3: WHEN TO BUY
IT'S NOT ALL ROSES AND FLUFFY BUNNIES
THE GOOD BITS
THE BAD BITS
UNDERSTANDING MARKET CYCLES
MARKET CYCLES
WHY DOWNTURNS CAN BE GOOD AND BUBBLES CAN BE BAD
WHY YOU MUST RESIST FOMO
CHAPTER 4: WHERE TO BUY
RESEARCH, THEN RESEARCH SOME MORE
UNDERSTANDING PROPERTY DATA
CHOOSE YOUR EXPERTS WISELY
THE PRINCIPLES OF SUPPLY AND DEMAND
AREA SELECTION
LOCATION MATTERS
IS CITY OR COUNTRY BEST?
5 AREA‐SELECTION FUNDAMENTALS
THE EXPERT'S GUIDE TO LOCATION
6 LOCATION METRICS TO UNDERSTAND
BORDERLESS INVESTING
CHAPTER 5: WHAT TO BUY
5 SUBURB LOCATION METRICS TO UNDERSTAND
NEIGHBOURHOOD NITTY‐GRITTY
DWELLING TYPE PROS AND CONS
PROPERTY PECULIARS
BUT HOW DO YOU FIND OUT ABOUT ALL THIS STUFF?
CHAPTER 6: HOW TO BUY
DOES THE BUY‐IN PRICE MATTER?
WHAT ARE RECENT SALES OF SIMILAR PROPERTIES?
HOW ARE PROPERTIES BEING SOLD?
HOW MANY PROPERTIES ARE FOR SALE?
WHAT PRICE ARE YOU GOING TO OFFER?
DOES THE SELLER HAVE SPECIAL CONDITIONS?
HOW DO YOU PREPARE YOUR OFFER?
YOUR OFFER WAS ACCEPTED — NOW WHAT?
CHAPTER 7: LANDLADY KNOW‐HOW
6 REASONS WHY YOU SHOULDN'T BE A PRIVATE LANDLADY
WHY GOOD PROPERTY MANAGERS ARE ROCK STARS
SECURING A QUALITY TENANT
DURING THE TENANCY
AT THE END OF THE TENANCY
HOW TO FIND A GOOD PROPERTY MANAGER
HOW TO BE A GOOD LANDLADY
CHAPTER 8: HOW TO HOLD
MAKING PEACE WITH INVESTING
WHAT TO DO WHEN THE SHIT HITS THE FAN
BEING READY — FOR ANYTHING
HOLDING AND THEN HOLDING SOME MORE
PROPERTY MANAGERS — AGAIN
WHY INSURANCE IS NON‐NEGOTIABLE
CHAPTER 9: HOW TO IMPROVE
BUDGET BLOWOUTS
WHAT DO TENANTS WANT?
IT DOESN'T MATTER WHAT YOU LIKE
4 SIMPLE COSMETIC RENOVATIONS
MORE SERIOUS RENOS
SMALL PROPERTY DEVELOPMENT
CHAPTER 10: HOW TO GROW
PROTECTING YOUR ASSETS
THE POWER OF TWO
OWNERSHIP STRUCTURES
HOW TO EXTRACT EQUITY
CHAPTER 11: WHEN TO SELL
LONG‐TERM STRATEGY
WHEN IS IT TIME TO SELL?
SOME FINAL WORDS FROM NICOLA AND KATE
INDEX
END USER LICENSE AGREEMENT
Guide
COVER
TABLE OF CONTENTS
TITLE PAGE
COPYRIGT
DEDICATIONS
ABOUT THE AUTHORS
INTRODUCTION
BEGIN READING
SOME FINAL WORDS FROM NICOLA AND KATE
INDEX
WILEY END USER LICENSE AGREEMENT
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THE FEMALE INVESTOR
CREATING WEALTH, SECURITY AND FREEDOM THROUGH PROPERTY
NICOLA McDOUGALL AND KATE HILL
First published in 2022 by John Wiley & Sons Australia, Ltd
42 McDougall St, Milton Qld 4064Office also in Melbourne
© John Wiley & Sons Australia, Ltd 2022
The moral rights of the authors have been asserted
ISBN: 978‐0‐730‐39863‐9
All rights reserved. Except as permitted under the Australian Copyright Act 1968 (for example, a fair dealing for the purposes of study, research, criticism or review), no part of this book may be reproduced, stored in a retrieval system, communicated or transmitted in any form or by any means without prior written permission. All inquiries should be made to the publisher at the address above.
Cover design by Wiley
DisclaimerThe material in this publication is of the nature of general comment only, and does not represent professional advice. It is not intended to provide specific guidance for particular circumstances and it should not be relied on as the basis for any decision to take action or not take action on any matter which it covers. Readers should obtain professional advice where appropriate, before making any such decision. To the maximum extent permitted by law, the authors and publisher disclaim all responsibility and liability to any person, arising directly or indirectly from any person taking or not taking action based on the information in this publication.
Nicola — For my mum, Adrienne, and my stepmum, Vickie, for teaching me courage and kindness; for my dad, Ian, who taught me many things, including about money; and for Josh and Nichole, who gave me love and hope.
Kate — for my partner in life, Jon, without whose unfailing love and support I would not be the person or investor I am today; for all the totally awesome clients over the years, both male and female, who continue to inspire me, who bring me joy, and who contribute to our giant investing family every day.
ABOUT THE AUTHORS
Nicola McDougall is a successful property investor, business owner, chairperson of the Property Investment Professionals of Australia, and an award‐winning journalist. She is also the former editor of Australian Property Investor magazine and the co‐founder of Bricks & Mortar Media. She has been involved in property research, analysis and reporting since 2006.
Kate Hill is an award‐winning property mentor, qualified property investment adviser and buyer's agent. She has many years’ first‐hand experience researching real estate and making hundreds of successful property purchases for her clients. Many of Kate's fabulous female clients are living proof that women of all ages, backgrounds and circumstances can invest in property successfully.
INTRODUCTION: WHY YOU MUST ACT – NOW!
Hands up if you know a woman who is struggling financially to make ends meet. Maybe she is concerned about her financial future, or whether she's ever going to be able to afford to buy a property to call home. Perhaps she is nearing retirement and worrying about affording a home of her own.
She could be your sister, daughter, mother, aunty, mother‐in‐law, grandmother, cousin, or even a close female friend.
Perhaps she is single or in a relationship. She could also be divorced or even widowed. She may be in her 20s or her 60s — unfortunately, her age doesn't necessarily mean she will be financially secure.
We know plenty of women like this and we're sure you do, too.
Their situations — and their reasons why — vary widely because each of us is an individual who will experience challenges unique to us during the course of our life.
Sometimes they may not technically be struggling financially, but they worry about how they are going to retain their financial independence throughout their lives, or perhaps they're concerned about how they're going to fund their retirement — even if it's decades away.
Alas, their concerns are valid, because it's a fact that women generally remain less financially secure than men.
First up, there is the income pay gap between men and women, which stubbornly appears to not be changing significantly.
Then there is the stark difference in superannuation balances between men and women, which starts when workers are only in their 20s and never recovers.
And there are the increasing numbers of women who wind up homeless after a relationship breakdown or in retirement, because they were never able to create their own independent wealth or buy a home of their own.
Let's face it, half of all marriages still end in divorce and many women remain the primary caregivers of children — even more so during a pandemic, as it turned out.
And that means that if a women's ‘forever' union ends in tatters, she's likely to be futilely playing financial catch‐up for the rest of her working life.
Many women are worried about their lack of superannuation and about having to work until they are 80 instead of retiring. In fact, many women are forced to re‐enter the workforce in their twilight years because they can't afford to live without doing so.
A recent retirement‐income review repeatedly highlighted the inequitable outcomes for women, with women generally retiring with far fewer funds than men and also often living in poverty. What sort of end of life is that for anyone?
We want to be clear: this book is not anti‐love, anti‐marriage or anti‐joint bank accounts.
The Female Investor is a book to help women stake their claim on the property market so they have the assets to improve their financial futures — regardless of whether they choose to partner up or not; whether they are single, married, divorced or widowed.
But it's not a book to teach women how to become property squillionaires. Rather, it's a guide that will teach you about the importance of maximising your income sooner, so you have more choices later on.
Even though the salary gap remains, the number of women investing in property is rising — but more still could be done to secure your personal financial future.
Fundamentally, this book is about women being clued up, taking charge and being proactive with their finances via strategic property investment — at any age.
The truth is that most women have experienced a world in which they were not encouraged to take care of themselves financially.
We want to help change that because it potentially leads to dependency upon a spouse, another family member, continued employment late in life or even the government for financial support.
So, The Female Investor is a rallying cry from women to women — from us to you — to motivate women of all ages to get educated, take charge of your own financial future, and become proactive enough to stake your claim on the property market — now!
THE FACTS
Here are some cold hard facts about the financial outcomes for women and men in our part of the world.
While most of these figures are drawn from Australian research, the situation is similar in most countries around the world — and the reality is that women are more likely than not to be financially inequitable with their male partners from the beginning of their relationships.
The lack of financial literacy for young children and teenagers is one reason for this imbalance, but one scary fact is that the financial outcomes for women and men in retirement start to solidify at the beginning of our working lives.
According to the Australian Government's Women's economic security in retirement insight paper (2020), even when women are in their late 20s, their superannuation balances are lower than men's.
The research found that women are on the back foot financially from the beginning of their careers and if they decide to have children, the gap just gets wider and wider, and it will keep growing throughout their lives.
By the time a woman retires in Australia, according to the insight paper, her average superannuation account balance is 17.4 per cent lower than a man's, which reflects the average superannuation account balances of $277 880 for women and $336 360 for men.
Even with Australia's superannuation scheme, which started in 1992, many women in Australia still retire without any funds whatsoever. Sadly, about one third of women wind up with no superannuation at all when they retire.
Superannuation was designed to help more people become financially independent in retirement, but most women and men still rely on the age pension as their primary source of income during that stage of their lives. According to the insight report, in 2017–18 about 70 per cent of women compared to 63 per cent of men relied on government pensions and allowances — these allowances could include payments such as an energy or essential‐medical‐equipment supplement, remote‐area or carers allowance, or other benefit payments to help fund health and medical care.
Do you know how much the age pension is in Australia? In 2021, the maximum rate for a single person is less than $500 per week, including all potential allowances, which is hardly enough to live the life you've long dreamed about, is it?
For anyone under the age of about 50, retirement seems like a long way away, so we don't give it much thought, do we?
Of course everyone should enjoy their life rather than squirrel away every spare dollar for a stage of life that is decades in the future, but you can't ignore the truth forever.
This means that unless you prepare for retirement when you are youngish, including purchasing a strategically selected property (or perhaps two or three), then the outcome for you may be spending your twilight years in poverty. Here are some stark statistics from government research:
Women are more likely than men to re‐enter the workforce following retirement, often due to financial constraints.
Women are twice as likely as men to sell their house and move to lower‐cost accommodation because of tight financial circumstances in retirement.
The Women's economic security in retirement insight paper also reported more elderly women than men are living in poverty in Australia. Therefore, women are far more likely to face higher financial insecurity in retirement than men.
HOW CAN PROPERTY HELP?
One way that you can help to prevent this dire situation happening to you, as well as ensure you remain financially independent during your life, is to create wealth, security, and freedom through property.
We have written this book as a guide to help women understand how they can make their income work harder throughout their working lives, using property ownership as the vehicle.
While The Female Investor has been written with property investors — or landladies as we like to call them — predominantly in mind, you can apply this information to the purchase of any property, including your home.
WHY THE TERM ‘LANDLADIES'?
The real‐estate sector is riddled with over‐the‐top male references. So, we like to balance these out by taking back the term ‘landladies' for female property investors.
We want every property you purchase to help you achieve superior capital growth over the medium to long term, as well as to assist with your future financial situation.
By understanding the key concepts, you will learn how to buy real estate with an investment mindset. This can help to maximise your returns as well as reduce the risks and kibosh your chances of buying a property lemon!
We believe that if, whatever your age, you understand property investment strategies thoroughly, you will be able to make more informed decisions to improve your financial outcomes in life. On top of that, you will be less likely to be stung by a property spruiker because you are educated (probably more than the spruiker!) about what makes an excellent property investment — and what does not.
WHY DOES IT MATTER?
Did you know that, according to the Grattan Institute's report Money in Retirement — more than enough, Australians who rent in the private market are more likely to suffer financial stress than homeowners, or renters in public housing? And this problem will get worse: on current trends, home ownership for over‐65s will decline from 76 per cent today to 57 per cent by 2056.
Remember those paltry pension rates we mentioned before? Well, $500 per week probably doesn't seem so bad when most of us believe that we will have our home paid off by retirement. That is, if we even own a home.
Clearly, the scenario becomes much more difficult when a single woman is trying to pay rent out of her pension, even if the government throws her some ‘rent assistance' to ease the financial burden.
There is no question that women have been forging their own paths for more than half a century now, with career progression, motherhood and independent wealth creation all worthy goals for each of us.
But, somewhere along the way, home ownership rates have started to slip, with high property prices likely to be one of the reasons why. However, as you will learn in The Female Investor, even women on modest incomes can (and should) purchase property — and preferably when they are single and in their 20s … but much more on that later.
According to the Women's economic security in retirement insight paper (2020), the largest asset held by Australians in retirement has traditionally been property. However, the number of Australians, including retirees, who own their home has been decreasing.
Across the age groups 15 years and over, the proportion of individuals who owned their home and were not paying a mortgage was 30 per cent in 2015–16, which was down from 35 per cent in 2003–04. Similarly, the insight paper found that 76 per cent of individuals aged 65 years and over were homeowners and not paying off a mortgage in 2015–16, which was down from 79 per cent in 2003–04.
These percentages probably don't look too bad at a glance, but when you turn them around the other way, this means that nearly a quarter of all Australians are either renting or paying off a mortgage after they turn 65 years of age — up from 21 per cent about 12 years before. Could you imagine having to do that with little to no superannuation, plus living week to week, barely surviving on the pension?
It's difficult to determine why so many people are still paying off a mortgage in retirement, but it's likely due to a lack of financial literacy to start off with. One way that you can prevent this situation becoming your story is by joining the property‐ownership ranks earlier, including adding one or two properties to your portfolio over the years — these can be sold to pay down mortgage debt or to create cash flow in retirement.
Together, we have decades of experience in the property investment sector, including both being successful property investors ourselves. Over the years, we've learned what works and what doesn't.
We've stuffed up and bought the wrong type of dwellings, or purchased in inferior locations and paid dearly for our boo‐boos. Nicola sometimes even calls her property investment strategy ‘scrappy' for the wheeling and dealing she has had to do to get the deal done. You can hopefully learn from our mistakes and never have to watch the value of your so‐called asset plummet. We have walked the talk, and we've experienced the ups and downs that can come with owning property for decades — we're still standing and we're still smiling!
We believe that if this book can motivate, encourage or nudge even one woman to invest in her first, second, or even her third, property then that is success to us.
Our wish is to create a whole community of women who are taking action to secure their own financial futures — and who will inspire the next generation along the way.
WHAT WILL YOU LEARN?
We're going to be honest with you throughout this book, which means that we won't be providing a step‐by‐step approach that you can simply follow then retire to the Bahamas!
Rather, you must consider everything you read in these pages as the start of your education on property investment strategy. You will learn what we believe you should do to improve your chances of maximising your returns and minimising the risks. But we don't believe there is a cookie‐cutter or one‐size‐fits‐all model that suits absolutely everyone.
In fact, creating wealth, security and freedom through property is all about creating a bespoke model that is the best fit for you as an individual. There is very little out there to educate women about the basics of property investment, written by women like us, who have been there and done that ourselves.
Over the next 11 chapters, we will guide you through the beginnings of your strategic‐property‐investment education. We have tried to provide as much detail as possible on the key elements required for you to become a successful investor of property. That said, there is not enough room to cover off on every single detail or possibility in great depth. However, you can learn heaps more via thefemaleinvestor.com.au and via our podcast, too!
We want all women, whether you are buying a home or an investment, to understand the fundamentals of property as an investment vehicle, so your funds and your real estate asset can work the very hardest for you over the years — whether you are living in it or renting it out.
So, let's get started, shall we?
CHAPTER 1WHO CAN HELP: Getting your team on board
Long before you even start looking at property porn (as we like to call it) online, you should make sure you have the right team of people in your corner.
Remember that you're probably about to spend hundreds of thousands of dollars on an income‐producing asset that will help set you up for life! Why wouldn't you seek out the opinion of some professionals who do this sort of stuff every day of every week?
YOUR EXPERT TEAM
Skimping on paying for expert advice is one of the biggest mistakes investors can make — female or male — no matter how experienced they think they are.
Yes, you'll pay for their services in the short term, but their advice can save you megabucks over the long term, and can also save you from making even more costly mistakes in the future. If someone is offering you their ‘advice' supposedly for free, you should run a country mile, because they are only interested in their wealth creation and not yours!
Here is an overview of who we think you may need on your expert team, depending on your individual requirements.
MORTGAGE BROKER
A mortgage broker is someone who liaises with you and the banks, or other lenders, to arrange a home loan for you.
Mortgage brokers are trained and qualified to provide you with mortgage‐broking advice. By law, they must act in your best interests when suggesting a loan and a loan structure for you. Generally, it doesn't cost you, the borrower, any money to consult with a mortgage broker and we believe the service they provide — and the headaches they can prevent — is often underrated.
All banks and lenders pay the broker a commission for ‘selling' their products. Some brokers get paid a standard fee regardless of what loan they recommend. Other brokers get a higher fee for offering certain loans.
Sometimes a broker will charge you a fee directly — instead of, or as well as, the lender's commission. If you're not sure whether you're getting a good deal, ask around or look online to see what other brokers charge, if anything.
A good mortgage broker works with you to understand your needs and goals. They will:
work out what you can afford to borrow
find options to suit your situation
talk to you about many different banks, lenders, and available loan products.
Conversely, if you go directly to the bank, that bank will only ever talk to you about their own loan products. Mortgage brokers are independent advisers, whereas the banks are not.
Getting a good recommendation is super important. Always check their qualifications and whether they belong to their industry body or association.
ACCOUNTANT
A great accountant will do a lot more than simply prepare your tax returns at the end of the financial year. Most people don't ask them enough questions before they do anything.
When you're buying investment properties, you'll need advice on:
what ownership structures to buy your investment property in
what marginal tax rate to apply to your cash‐flow calcs
what you can and cannot claim a tax deduction on.
You should talk to your accountant about tax planning, too— it's not just about the next six months, it's about the next five years and beyond. Are you about to get married? Are you about to go on maternity leave? Are you about to change jobs? The answers to all these questions will make a difference to your property ownership and the costs of holding the property.
Get their advice and input before you start buying. Don't present them with a property that you've bought, hoping for a retrospective solution, because a seemingly simple mistake can be costly to fix.
Ideally, your accountant should also be a property investment specialist. Again, check their qualifications and whether they belong to their industry body or association, including the Property Investment Professionals of Australia (PIPA).
FINANCIAL PLANNER/ADVISER
A financial planner or adviser will help you plan your financial goals.
They will:
conduct a financial health check on you
ask you about a million questions
come up with a plan to make your goals a reality
help you to understand what you need to put in place and what's involved in meeting your future goals
They can:
help with your household budgeting
set up a savings strategy
compile a comprehensive investment plan to ensure you're heading in the right direction
advise you on what types of insurance will protect you and your family.
They also have the capacity and licences to make investments for you, such as managed funds and superannuation advice.
At some stage, it's always advisable to engage with an independent, fee‐for‐service financial planner who can look at your situation holistically and advise you about estate and retirement planning.
Again, make sure you check their qualifications and whether they belong to their industry body or association. We can't stress enough how important this is!
BUYER'S AGENT
A buyer's agent is a licensed professional who works for you, the buyer, and acts on your behalf to search, evaluate and negotiate a property purchase. They don't sell real estate. They are engaged independently and paid by the buyer to independently act on their behalf.
The key difference between a selling agent and a buyer's agent is who they represent — by law, in Australia an agent cannot act for and accept a commission from both parties in the same property transaction. Some of the things that a buyer's agent can help with:
search for a property for you
evaluate and complete all the due diligence on the listings available for sale
negotiate the property purchase price and terms
oversee the contract of sale
assist throughout the settlement process
oversee and arrange due diligence such as building and pest inspections, and survey and engineering reports.
By using an experienced buyer's agent, you can:
gain an edge by having your own advocate who is representing your interests 100 per cent
save time spent searching for and analysing property
negotiate to obtain the best price and terms
source the correct property in the right location with better prospects for capital growth and/or rental yield
eliminate stress by having one representative looking after your needs, rather than dealing with several different selling agents.
If you're buying an investment property, then ideally you need a buyer's agent who is also a qualified property investment adviser and who has a thorough understanding of your investment goals, who can calculate cash flows for you, and assess your risks and needs. This is a critical part of the process. Again, check their bona fides before working with them.
QUALIFIED PROPERTY INVESTMENT ADVISER
A qualified property investment adviser (QPIA) performs a different role from that of a buyer's agent. Ideally, you want both of these skill sets rolled into one person.
Property is not an asset class recognised by the Australian Securities and Investments Commission, so, remarkably, the property investment industry remains unregulated in Australia. This means that anyone who feels like it can dish out property investment ‘advice' with pretty much zero qualifications or repercussions if that advice is, ahem, ‘dodgy'.
This sorry state of affairs has meant that the property investment space in Australia is riddled with spruikers who sell inferior property in underwhelming locations, with their only motivation being to line their own pockets, rather than work in the best interests of the people they're selling to.
All is not lost, though — you can seek out professionals who have gone to the trouble of getting themselves qualified, because they care about the financial outcomes and the financial futures of their clients, not just selling you a property on their books.
Go to the PIPA website and you'll find a growing list of QPIAs who have done just that. An ethical QPIA should take the time to:
understand your situation
conduct risk profiling on you
recommend a strategy that suits you.
A growing number of mortgage brokers, accountants and even conveyancers are QPIAs, too.
SALES AGENT
These people get a bit of a bad rap, like used‐car salespeople and journalists, and most of them really are decent and lovely people with a job to do. Are there some bad apples? Of course there are. Are some better than others? Sure, but you can say that about every industry.
When someone wants to sell a property that they own they will likely engage a selling agent to do that for them. A selling agent has a legal obligation to act in the best interests of the seller. This is called their fiduciary duty. The agent would generally:
advise the seller on what price the property might sell for based on recent comparable sales
advise on and then handle the sales and marketing strategy
negotiate with potential buyers
often (but not always) handle some of the post‐purchase process, such as issuing contracts of sale and liaising with the buyer's mortgage broker and conveyancer to ensure smooth settlement.
