0:00: I don't love property.

0:00: I'm moving out of property.

0:01: What's your impetus for moving out of property?

0:03: What's your reason?

0:03: Two reasons.

0:04: One is I'm demonetizing more things into Bitcoin.

0:08: And secondly, I'm getting prepared.

0:10: If and when I move out of Australia which could be ultimately end up at the moment, as, as I've discussed, moving to Dubai.

0:16: Yeah, and so what do you think, I'd be curious to know what you think about the property sector in general in Australia going forward now.

0:21: So I used to be a mortgage broker back in when in my twenties.

0:24: And even back then people were saying, there's a bubble coming, it's gonna bust, it'll it'll, you know, the market will come down.

0:29: It hasn't.

0:30: So does the, does the bubble, let's say, Lloyd, continue for a 40 year period?

0:36: Yeah, well, I, I, I do feel it's getting connotations of bubble now, only because there's no fundamentals attached to it.

0:43: So what's happening is to some properties they're getting, they're getting tarnished with a collectible brush.

0:50: It's turned into a collectible, a baseball card, because it used to be you could buy a property and know within a reason of the cash flow would return in rent, even resi, as to what it would dictate in return.

0:59: But now it's so disconnected from fundamentals, it's effectively showcasing pieces of bubbles.

1:04: Like it's just not worth what the income producing is.

1:07: So if you, if you discount cash flow back on an NPV mathematically, it's way bubbly.

1:12: However, What will probably also not happen is I can't see massive collapse, right, because of the, the demand.

1:19: well it can't collapse because the banks can't allow it to collapse.

1:23: Well, the government won't.

1:24: #2, the bank, the banks, they don't have a choice, but the government will bail the banks out.

1:28: But also, the demand is still here because of the immigration, so I don't see, but.

1:31: What I don't see is another 50 years of let's create another spousal income.

1:35: Where the fuck is that gonna come from?

1:36: And then where, where are the, like, we're gonna go to 50 year terms, possible that could happen.

1:40: Well, it doesn't matter whether it's 50 years or 30 years, you could just go into infinite.

1:44: So we turned into a leasehold economy, right, kind of like 99 year leases, which is what happened in parts of Europe.

1:50: but I don't see interest rates going to zero.

1:52: Again, alright, now hopefully I'm pretty sure like interest rates right now are completely over the top, right now, too high, they're too high.

2:04: I mean compared to other countries.

2:06: The average over the last 100 years or so is about 4.5% at the cash rate.

2:09: I'm comparing.

2:10: To other countries, for example, you, you can get a loan in there for 3%, right?

2:15: So 3% and we and we're getting, you know, hence why the banks in Australia are are one of the most profitable in the world.

2:21: They're profitable, they're solid, they're steady because they don't lend anything else.

2:24: They don't lend on businesses.

2:25: We're a very property centric country.

2:28: And I actually think while we were talking about geo, arbitrage, like moving away to, to, to have a lower cost of living, but be different tax legislation, etc.

2:39: I think what's happening is people are recognizing in Australia that property addiction has caused a lot of non-productivity.

2:45: So our GDP is way down per capita over the last 7 quarters, way down.

2:49: We're actually in a quiet recession.

2:51: And as you said, it's just pumped up so much, it's hurting business.

2:53: It's the thing that we love the most is now hurting us the most, right?

2:58: So I think there's nowhere almost for it to go, and I would actually applaud you for exiting the whole sector right now at the very, I, I think it's a smart decision.

3:05: Well, What's interesting though is there always has to be someone else to buy always has to be a buyer on the other side and guess what, there are commercial properties are they were sold within like 3 weeks, like 3 weeks.

3:19: Here's a contract, thanks very much.

3:21: And, and guess what?

3:22: I like, I think it was like 5, 5% yield.

3:26: Yeah, now that's on commercial, right?

3:28: Yeah, not bad for commercial, I suppose.

3:30: I think if you're gonna get into any type of property, and I wasn't I've often thought that and I, I know that Ben Graham told this to Warren Buffett when he was younger.

3:38: He said the best type of investing is when it's most businesslike.

3:42: But it's most businesslike.

3:44: And so when people are going into properties like what you did with commercial, it makes so much sense because it's, you're deriving the rental yield from the use of space from businesses, right?

3:53: And you've got multiple doors, so it's diversified income, and of course you do get the value of growth of the land from the demand and limited supply of land.

4:00: But I think that's the most effective way of investing in property.

4:02: When you start to get into resi in parts of Sydney that are collectibles because of the location, the prettiness of it, it starts to get away from fundamentals, then you've got more connotations of bubbly stuff.

4:11: Well, there's another reason why I'm I'm even getting out of property is because there's too much government control.

4:16: I mean, I would never, I would never ever, ever going to resi property.

4:22: You know you can't, you can't even if it's debt free.

4:24: It's a tax.

4:25: It's a constant tax.

4:26: Not only that, if someone wants to come in though, just on a practical level with their 3 dogs, I can't say no.

4:32: They've got to come in and, you know, I haven't have control over my own asset.

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5:29: Now, back to the episode.

5:31: Even when people say, Oh, property's a good hedge against inflation, now it is a good hedge when you've got debt over it, because the debt over time reduces with inflationary pressures.

5:39: However, the operating costs are inflationary too, so like all of a sudden, the property management's more.

5:44: And all of a sudden the corporate blah blah, so now like if I bought so to our earlier point I'd do rent, because if I was to buy where we live, and we live in a nice apartment, but if I was to buy that, I'm 300 in the whole fuck from the start a week just in body corporate fees.

6:01: Like, why would I even buy it?

6:03: Like why?

6:04: You know what I mean?

6:05: So I grew, I, it's which is which is interesting because that's why you're such an interesting case because you are against the grain.

6:13: Yeah, you, you, you, you know, and people would look at you and say, wow, you know, you, you're a multi-millionaire renting.

6:18: Yes, I had a I had a guy once in an event.

6:20: I was doing an event and I said that, and he goes, how much rent you pay?

6:23: And I told him he's like, he's just the sole $850 a week.

6:27: Oh, that's reasonable.

6:28: On the river.

6:29: Been there for 13 years.

6:31: No, Gold Coast Ranga River, Main river.

6:34: I often joke we have $6 million dollar views because the houses across the way are $6 million each.

6:39: What about the view tax that's on the Gold Coast doesn't well, you could say it doesn't impact us because we don't own, but then you don't know whether the landlord's gonna pass on the rental.

6:47: So, but one of the things I've noticed is because we run businesses from that too, we have a segment of that we can.

6:52: Deduct from home-based business expense on rental.

6:54: We don't have to factor in the body corporate fees.

6:56: I don't have to do any sinking fund, upkeep, special levies that happen in units, and I don't have to worry about actual view tax hitting me.

7:02: I can just perhaps if it gets too hard in my stride, I can look elsewhere.

7:05: So what I love, and what I find a great asset is optionality.

7:10: And, and you're right, like a lot of people don't have the skills or the, the deci or the, the nous or the desire to look for places to deploy capital to get higher rates of return, but I like the game.

7:22: And I think that's why I have realized that, oh, I'd much prefer to scale a business and make, you know, 1,000% ROI than.

7:28: This this comes back to sort of part of the argument before, which is why you're so skilled in this sector.

7:33: The average person in the street is not, does not have the same skills, smarts to go and do the research and what have you that that you do, yeah, or the desire, right?

7:44: And that's why superannuation.

7:46: It's just so easy for people.

7:47: Oh, I just, money just goes.

7:48: Well, they don't even know what it is.

7:49: If you ask someone regular person what superannuation, they think it's a soup of money that just starts twinkling to them when they hit 65.

7:55: That's what they think it is.

7:56: And the mistake that they've made is that they think that it's gonna somehow allow them a, a, a, a decent lifestyle.

8:02: I'm gonna go on holidays every year to, to France and Italy and what have you, and the fact of the matter is, even the industry super funds say, on a, on a, on a comfortable lifestyle, you'll be able to go on a holiday once every 7 years internationally.

8:16: Right.

8:16: So basically by the time you get 65, by the time you're 80, you'd probably like one holiday maybe.

8:22: That's what you're.

8:23: Yeah, the challenge with that too is because super funds charge a 1 to 1.5% fee every year, you're just getting destroyed by the fees.

8:29: and some of them go OK in terms of returns.

8:31: Some can get 10% a year in the last 5-10 years, but many can't because they're even 10% or a meeting the hurdle rate.

8:39: Well.

8:40: I, I've, I've seen reports of the hurdle rate really being closer to upwards of 15%.

8:47: well, no one's gonna get 15% compounded annually every single year for a long period of time.

8:50: Like Warren's at 19 and he's the best that ever who ever.

8:53: That's what you've got though, otherwise you're essentially going backwards.

8:56: Well, perhaps if we added in the pernicious inflation of 8 to 9% that happened in the last couple of years, I'd agree.

9:02: I don't think it's gonna continue like that, but irrespective, if the Superfund buys businesses.

9:08: Like Apple, like Gillette, like Coke, like like all these companies that have pricing power, meaning that inflation goes up, they just go up.

9:17: That's why like if you had a big Mac index, You know, you can have or a Whopper index, and I call it the maxi bond index here.

9:24: It's like anything you're pricing off fiat is gonna grow, isn't it?

9:28: Because the, the inflation wipes, like, it makes it more valuable inherently.

9:33: But we know Big Macs don't actually grow.

9:35: They've, in fact, they've actually shrunk.

9:37: But then the problem is now is, is bracket creep.

9:39: Totally.

9:40: Yeah, bracket creep, you just got paid more money.

9:43: I actually just paid more in tax, yeah, and I, and you know what, it really lends itself to why.

9:48: In my circle of friends, I've never had more conversations.

9:51: That's like, even when we walked in here this morning, the first conversation we had was like, What's the point?

9:57: Yeah, outside of, like I said to you, of, of family being here for me and my wife, Alicia, we've discussed it and not, I, I can't remember a time in my life when more people in my circle have actually said, I'm leaving.

10:08: Like, And, and also where I've actually, that makes absolute sense.

10:12: You know what I mean?

10:13: Like, so I think what's happening.

10:15: Yeah, and so what's happening is the Western developed worlds are importing undeveloped people and they're leaving the country to the developed world.

10:24: So it's this massive flip of what's happening, right?

10:27: It's like what?

10:28: And so all of a sudden you're getting a lot of digital nomads living in Vietnam cause pound for pound probably in Danang, it's the cheapest place to live.

10:33: Well, people are moving to where their money is treated best.

10:36: Well, certainly less tax.

10:38: And cost of living, right?

10:40: And more value.

10:41: So like, you know, when you go to a restaurant now in Australia, like I went to a restaurant the other day, and I, it was like I was doing them a favor, like, I'm doing, like, can I have a beer?

10:49: No smile, no give a.

10:51: They just, they just, no, they're they're fucking, they're just being spoiled.

10:56: No, it just, I totally agree with you.

10:58: I had this same conversation and when the, when the waitress came over and sort of dished out and didn't greet or anything, I looked at my wife and I said, We're leaving.

11:05: No, we're leaving the country.

11:07: I just said, babe, we understand, cause that's the best you can get.

11:11: You just, you need a body.

11:12: So we had to grade her based on the fact that actually she gave us menus.

11:15: OK, tick.

11:16: Yeah, that's good instead of a QR code, yeah, yeah, yeah, I know.

11:18: Yeah, it's so I've really contemplated it cause you've got an online business.

11:22: Yeah, we could, we could easily move easily.

11:25: And again, I used to live in Dubai, so it's, it's nothing new.

11:27: It's just we have had the discussion they're like, where would we move to?

11:30: So like, where would you move to?

11:32: It's a good question.

11:33: I, I, we haven't really nailed it, because again, what's stopping us as family, cause I think to myself too, like I'm happy to pay the extra gazillions in tax because I value the love of my family and tell me they're more than money.

11:44: OK, when does it get to the point where you say enough is enough?

11:47: And it might not be.

11:50: It could be digital ID.

11:52: Well, I think that type of poisoning would drive me more than money.

11:57: So like for example, I'm happy to lose millions in tax cause extra money's not gonna make me happier, right?

12:02: So I'm gonna like, well, I'm happy to be here.

12:05: But what you said before, if my freedoms, which is my highest value, obviously that's why I'm in business, is compromised, man.

12:12: I think half the population would leave, right?

12:14: Well, that's basically those Australians who live on X, that's basically where I see things going.

12:21: Hey, thanks for tuning into Crypto Collective.

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