Home' API Magazine : January 2015 Contents 10 n APIMAGAZINE.COM.AU n JANUARY 2015
NEWS AND VIEWS n In the Hot Seat
Why did you decide to become a
I loved being a listing and selling agent but
I did find it one-dimensional sometimes. I
was limited to selling only the stock that
the business had listed, and I was exposed
to investors all the time, yet I could see that
sometimes competitor listings were more
suited to them. After working as a broker
for four years when my daughter was born, I
realised that I could combine my cash flow
calculating, lending policy understanding and
analysis with my real estate ability to better
help investors. I am passionate about good
customer care also, so it’s been a match
made in heaven for me.
What makes a good investment property?
Only three things. Attractive and sustained
growth drivers, strong rental demand and
a good tenant pool. Investors who believe
the key strength of an investment property
is tax deductions are delusional. To claim
a tax deduction means that a loss has
been sustained. Losses are only worth
contemplating if capital growth prospects far
exceed the losses.
What’s the biggest mistake you’ve seen
Taking bad advice from well meaning people
who don’t know what they’re talking about,
or taking bad advice from spruikers who are
making a lot of money from the naïve buyer’s
decision to invest. My pet dreaded mistake
relates to overpaying for property off the
plan. Not only is it dangerous for the investor
in terms of negative equity and additional
out-of-pocket expenses, it can lead to lender
knockbacks in some cases.
What’s the best strategy, in your opinion?
Tailoring the property strategy to your
lifestyle, not retro-fitting your lifestyle to
a poor property choice. Cash flows need to
be well understood so that the investor can
select the best growth asset to match their
allowable out-of-pocket-shortfall. The best
property purchase is the one that the investor
can enjoy without the need to ever sell.
How is the market performing (in
Melbourne)? Can the boom keep up?
The market is performing well, particularly
taking into account the financial environment,
growth outlook and job market currently
being documented. The low interest rates
are fuelling price growth and as long as the
interest rates remain low, I see little reason
for the run we’re having to suddenly stop.
Seasonal fluctuation of the supply/demand
balance will alter the pace of growth, however
I believe the outlook remains positive for the
metro city inner- and middle-ring suburbs
into 2015 also.
Are people better off waiting now,
rather than trying to buy for ‘fear of
I don’t believe people should hold off. If a
buyer can afford to enter the market now, I
believe that the present is the best time of
all. Median prices over the past 40 years
show that property has continued to trend
upwards. Bumps and peaks will always be
evident in the history books, but a long-term
purchase strategy is proven in the history
books to be a sound one.
Which city do you think has the best
growth prospects and why?
Melbourne and Sydney are the two cities
that have the most confidence, as far as
consistent growth goes. Both are home to
high income-earning white-collar workers
and this won’t change. Brisbane has other
interesting drivers, but it’s fair to say that
Melbourne and Sydney are the epicentres of
high, long-term, consistent
What has personally been your best
My best investment property so far
has been a little house in Aspendale,
Victoria, on the beach. We lived in it
for a short time, but on reflection it
has been a fantastic growth and yield
asset because it’s so tightly held –
beachfront land availability is limited.
It’s desirable for tenants who will pay
for that lifestyle, and it was bought
so well. I paid $310,000 in December
2008 on Christmas Eve in the depth
of the GFC. It was brave but I could
afford it. It’s now worth $600,000 and
rents for $440 per week.
Where do you buy for yourself, personally?
I’m not allowed to buy any more property
now. My husband put a stop on me. Our 20
investment properties are peppered around
the country in Victoria, Tasmania, South
Australia and Queensland. Our most recent
purchase was our home in Yarraville, six
kilometres west of Melbourne’s CBD, and it’s
Do you think your clients should lock in
interest rates, and if so, why?
I believe people lock in for two reasons; to
beat the banks and to safeguard against
interest rate rises in a specific period. The
second reason is a sensible reason and if
any borrower is concerned about the future
impact on their lifestyle of NOT being fixed,
that in and of itself is a good reason to fix.
Borrowers need to be aware though that the
cost of breaking a fixed loan
can be horrendous, so
it’s best not to do it
n API CHATS TO BUYERS’ AGENT
AND PROPERTY EXPERT CATE
BAKOS ABOUT HOW TO FIND
THE GOLD NUGGETS AMONG
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