oc | Monday 9th December

Letter to a friend

Hi my true friend,

It’s 4.00am in the morning and I’ve just been in next door to check on Mum. She buzzed me saying she fell over and needed a hand. She had knocked her head but was basically ok and I helped her up and back into bed. Mum is such a trooper at near 90, as is Dad. They’ve been living here 20 years now, I’m so glad they are close by.

How has your week been? My week’s been pretty good.

Daughter no. 1 left for overseas – dropped her at the airport at 3am. Daughter no. 2 had her Year 12 formal – we all took family photos at her mum’s home next door. Eldest child must be home although I haven’t seen him today – the fridge can’t be self-emptying can it?  He moved back in some months ago after a few years away so as he could do an apprenticeship (brilliant!).

Just remembered, where’s the nephew? He had asked to come down from the country and stay with a mate in the back room, but I haven’t sighted him yet. Relatives come to stay all the time – always good to see them.

I was thinking, our bank account, superannuation fund or stock portfolio just can’t match the flexibility and power of work this family home does.

I don’t want to get all misty-eyed here my friend but not only has it provided shelter, it has also been a financial mainstay (better than banks, super and stocks) covering up all my bad business decisions, the ones you told me not to do, but I did anyway (whoops); patching over those wider family disputes, paying the private school fees and giving us the freedom to travel to all corners of the globe individually and together.

After that trip to Kakadu – sorry you couldn’t come, I learnt the concept that a great family home also provides a sense of place by all in our family. A sense of where we belong in the community, the world, the universe. And as you know, it provided a sanctuary when I needed a place to curl up and feel safe.

A great family home provides a sense of place of where we belong in the community, the world, the universe.

Which makes things feel strange when more and more of our leaders are saying “we need to accept that a family home can’t be for all, that ownership for many of our children is a thing of the past.”

This just doesn’t feel right to me.

Is it better to own or rent the family home?

What do you think?

Were families better off in ancient times when they were nomadic or in the 19th century when almost none owned their land, but they lived in the one place? Were they better off in the 1970’s when more families than now owned their ¼ acre and that combined with fridges, tv and vacuum cleaners were advertised to housewives as the creators of happiness?

I feel renting just wouldn’t enable the same sense of connection and yet that is what society seems to be pushing onto our young people. And the tenancy laws – they can be kicked out at almost anytime – imagine if my parents had to go at almost 90 years of age because the landlord wanted to develop or something.

I’m trying to give the kids some advice on how to get started, how to buy a home. I know they want one, but they feel a bit embarrassed, a bit daunted that they will even be able to get a deposit and so they seem to be playing it down.

Anyway, you know how we used to read those Paul Clitheroe Books decades ago – well I went out and bought the modern Paul Clitheroe and his name is Scott somebody – The Barefoot Investor. He has a book about money – I read it and it made sense – seems a good start if I buy one for the whole family.

You’re better with money than I am and so I was wondering if you can you help me talk to the kids about how to be a bit money smart and save for a home.

Sorry, I’ve dragged on and I haven’t asked you how Kevin is going.

Warm regards,


My dearest friend,

Kevin is fine, thanks for asking. I think you are on the right track with trying to help the children think about money and home buying – the earlier the better. The money book guy is Scott Pape.   He seems a smart and decent chap.

I agree with you – for most of us, a good home is all you mentioned emotionally AND a key to wealth for the majority of us.

I’m not that good with words, so I will be brief about my experience and advice in home buying.

Here are my Golden Rules for Preparing to Buy Your First Home – give it to your children, give it to your friends;

Rule Number One:
You must want to buy a home – you can’t make anyone ( your partner or your child) do it.

Rule Number Two:
You need a mentor, somebody who will guide and listen. Yes, some can make it on their own but for most of us, we need to learn from somebody who has done it, who has paid off a home and who has his or her financial life well under control.

Rule Number Three:
You need How Skills.

How to think

  1. Be clear about what you want.
  2. Research how to do it
  3. Review regularly to see if it’s working and change if it’s not

Research how to do it – find books, watch youtube but also find a person to guide and inspire.

  1. Read Books
  2. Who has done what you want – who do you know who owns a home?
  3. Find a person who can guide you (will follow through.) As Tony Robbins says – success leaves clues. Listen to and copy the successful – providing they have done what you want to do and you can trust them

How to save

  1. Save a deposit by spending less than you earn
  2. Focus on why you are saving (rather than why you are not spending)

Rule Number Four:
Review regularly – with your mentor

Great ideas fall over when you fail to start or fail to finish.

Rule Number Five:
How to Spend (Yay) meaning what to buy 

  1. Buy only what you like (this is to your child remember)
  2. Buy only what you like with good P’s; the 3 P’s are Position, Property & Price. (Smiling emoji here) It’s about Growth, Cashflow and Risk.
    Position:          Within walking distance of a train station – 1km
    Property:        Land: 70-80% land content – meaning 70-80% of what you spend is in the land. Building as is – no major work needed
    Price:               Within 10- 20% of the average price for an area
  3. Buy – because rules don’t work if you keep putting it off or keep missing out and give up

Rule Number Six:
Don’t move often – it will cost you all your savings in transaction costs.

When you don’t move and you’ve bought well (Rule Number 5) then compounding values takes over and you begin to get rich by doing nothing, and my dear friend, you’re good at doing nothing.

Rule Number Seven:
Start and keep going.

Buying a home and property growth is not linear – there will be ups and downs just keep going and tweak along the way. Get into the property market, in a home and never get back out.

But you have to start and it’s cheaper to start early

Rule Number Eight (this one’s for you, not the kids):
Give Wisely

If you follow this rule then they are set for life (and so are you, because you love them).

  1. They will need your help – if you give it, then they will also learn how to give to others in the future, which is so important for their mental wellbeing. But giving is giving – try not to expect too much back outside any agreed interest – a Christmas card maybe or a love emoji on text for your birthday!
  2. Yes we all worry about divorce – it’s a balance between having some clear understandings in writing at the time of a loan versus complicated legal structures that create family friction (usually between your child’s spouse and you)
  3. Good Giving is not always saying yes to all requests

Addendum for parents;

a. For young people not being able to save is more about learning from their parents who didn’t save or are poor with money advice, more so than not wanting to save. Many young people don’t save because they don’t know the reasons why and the mechanics of how to, rather than they don’t want to.

b. Show them how you save and why you save, start them early and reward them for doing so.  For example, 10% of salary is a good starting point and early on matching them dollar for dollar until they get the hang of it.

c. Ask the question “How’s it going?”, reward with some concert tickets when a goal is achieved and…..  BUT if its not happening then back to rule numbers 2 and 3.

I hope this helps my friend – yes I totally believe in buying a good home as soon as you can and to not do so is, as they say in the classics – bullshit.

Warmest regards back to you my dearest friend,

Hawthorn East, 128 Harcourt Street Gina and Danielle – QRate today, click on photo for audio

Harcourt Hawthorn East 

 

Gina and Ada at 20 Glen Road Hawthorn - click on pic to view QRate - 653

Gina and Ada at 20 Glen Road – click on pic to view QRate – 653

Gina and Sally at 34 Barkly Avenue Armadale - click on pic to view QRate - 617

Gina and Sally at 34 Barkly Avenue – click on pic to view QRate – 617

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