A duck and a dream

I had the pleasure of watching arguably the world’s best magician David Copperfield live in Melbourne recently. The magic itself was awesome...

17 reasons you should always carry a book with you

1. As someone who used to spend a lot of time waiting for real estate clients to show up – I know that clients / appointments / people in general are often late...

Reality Television your way to Success

I think I’m one of the only “motivational speakers” (not that I call myself that) who will openly admit that I watch television. I watch bad television too… even… dare I say it… reality television.

Where is the love?!

One of my businesses, Elephant Property, works in the notoriously under appreciated category of residential property management. The old adage in property management...

The power of the word

I’m quite distraught. I was eating my personal trainer approved afternoon snack of 12 almonds (my suggestion of 12 Tim Tams: not approved)...

Thursday, December 19, 2013

Proof of the Proof


A girlfriend, very fabulous, very creative, asked me to proof a crowd funding idea she has for a business this week. She always has a fun spin on things and never likes to be called the CEO of a company.

So she’d made up a name that had a play on her business name in the job title. Only…. I had to let her know, upon proofing her presentation, that her choice of unique job title was also slang for a lewd sexual act. Oops!

Just goes to show, a simple proof read by someone with fresh eyes can pay huge dividends.

And clearly I need to take my own advice after recently sending my clients a card telling them of our recent award success that "None of it happens with you" clearly missing the word "out". Oh dear!



By Kirsty Dunphey with No comments

Thursday, December 12, 2013

Get Your Golden Rule Straight



I opened up the Hobart Mercury Property Guide recently and sat down to enjoy a luxuriating read only to be struck down moments later with a sense of irate anger.

I usually enjoy reading the “property expert” pieces in various news publications. As a real estate business owner (www.elephantproperty.com.au) and avid property investor I figure you can never be exposed to too much information about your passion or your career.

Only the article I read about the “golden rule of investing in property” printed on the inside of the cover was shameful.  This article (pictured) was written by Andrew Winter @andrewtwinter “FOXTEL TV's Selling Houses Australia - Presenter and Property Expert. NewsLtd Property Writer”. It’s my opinion that articles like this are part of the reason that people buy investment properties without doing enough research and that is what limits a lot of people to just one investment property. Anecdotal figures told to me say more than 80% of investors stop at one property. If I look at my history in real estate (almost 20 years) the stats on the investors I’ve dealt with over the years would back that up.

Now shameful is a pretty strong word – so let’s drill down on what I found so abhorrent. Firstly – Winter states that your golden rule in real estate should be don’t buy the home unless the rent equates to at least 1 per cent of the purchase price – an example he gives is $400 per week rent on a $400,000 purchase. Now simple maths aside (1% of $400,000 is $4,000 not $400) I don’t disagree with this as a general guiding principal to START with.

But then Winter goes on to say that “at $425 - $450 per week you should be very excited and buy the property immediately. Even higher? Well, book the holiday to Europe.” Utter nonsense. He does state that it’s a “rough guide”, but to advocate going out and buying a property “immediately” when it’s showing a return of less than 6% without even mentioning other factors such as buying costs, vacancy rates in the area, maintenance, property management costs and the borrower’s repayment abilities is what gets people in over their heads and leads to them making uniformed decisions.

The crux of the lunacy in this article for me was when Winter described himself as “old-fashioned” and wanting investments with a “positive cash flow”.  You know what– me too! Only I want it to be an actual positive cash flow.  Let’s take a property that Winter would is recommending we, the reader, buy immediately - one returning $425 per week on a $400,000 purchase.


Let’s look at an absolute best-case scenario:
·      -  Annual rent would be $22,100 (not taking into consideration any time for vacancy – which of course isn’t that realistic).
·      - Let’s say you manage it yourself (I wouldn’t recommend it – but hey, I’m a real estate agent) so you’ve got no management fees – but you’re going to have council rates, water, land tax - $3,500 at a bare minimum (probably more.)
·      - Let’s say you have the only investment property in the world that requires no maintenance (again, completely unlikely – but we’re looking at a best case scenario) – but you’re likely going to have smoke alarm compliance costs and other unavoidable expenses – let’s do a very conservative $500 estimate.
·      - Say you got a 4.5% loan, you’re on interest repayments only and you had 20% cash deposit as well as being able to fund all your initial costs such as stamp duty, conveyancing, building inspections etc. You’re going to be outlaying $18,000 on interest (not to mention other associated banking costs).

And this super property that you should buy immediately – how positively geared is it given all the above near impossible “best case” scenarios? It’s earning you the princely sum of $100 per year. Now sure – you’ll likely have some depreciation benefits to consider in there based on what type of property you purchase – but more likely than not, you’ll also have costs to engage a professional property manager (who will likely more than earn their fee), you’ll have maintenance issues that pop up (yes, even in a brand new property), you’ll borrow more than 80% and shock horror – that property might sit vacant a few days every now and then. That $100 isn’t going to go too far. You could look towards capital growth – something all investors desire, but it’s not cash flow.

Now – I don’t want to sound like a negative nancy. I love property investment. It is one of my true passions in life. But it isn’t a board game of monopoly. It takes actual understanding of the concepts at play. Mess it up and you won’t lose a tiny red plastic hotel – you could lose anything from a lot of sleep to a lot of your financial freedom or more.

Want to start investing in property? Here are my tips:

Whether the property you buy is negatively or positively geared – look for all the areas in which it’s potentially going to cost you money. Work out a worst case scenario (including one where your personal circumstances change – unexpected baby, loss of job, illness) and consider all the potential expenses.

Speak to a successful, real world investor. If my experience in real estate has taught me anything it’s that you probably already know one. It could be your builder, the school teacher down the road or your uncle. Do not only talk to people who have had one crack at investing, had a bad run and given it up.

And finally - don’t rely on “golden rules” presented by “experts”. Do your own research, work out your financial goals and what works for you. And if you really, really want an expert – I’d recommend Jan Somers (check out any of her books in your library or at any good bookstore). 

By Kirsty Dunphey with No comments

Thursday, December 5, 2013

Perfect is overrated


One of the greatest highlights of my life was walking out of a train station about 13 years ago. It was a cool day in January on my first ever trip overseas and the train station was in Rome. It was Colosseum station to be exact.  As I walked out of the station, the crumbling façade of one of the world’s most beautiful and iconic buildings hit me straight in the face. It was an epic moment in my life. The Colosseum is not perfect in it’s preservation, we all know that, but it is still somehow absolute perfection.

On the same trip myself and thousands of others that hour alone flocked to see the leaning tower of Pisa, famed for its imperfection.

Venice, the most romantic city in the world is slowly but surely sinking further and further down into the ocean – that’s hardly perfect, but if you’ve ever been there you’ll hardly take that away as your strongest memory.

And Florence, ahh Florence, my favourite Italian city. The home of Michaelangelo’s statue of David.  And as ripped as his abs look – I doubt any man these days sculpted as such in all his glory would be happy to say it describes perfection. (Of course I’m talking about his disproportioned hands here).

By Kirsty Dunphey with No comments

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