What needs to happen in the economy to cause dwelling prices to fall significantly? According to Michael Yardney there are 8 things that would need to happen and you will hear us talk about all 8 today.

Ed Chan returns to answer a question from Carol about what entity she should use to buy a property.

I can tell you about an innovative new financial product that provides renters with an option to pay rental bonds off in instalments. It is called Bondsure. This is a win-win-win for landlords, property managers and tenants.

There is a time to buy and hold property for long-term results and there’s a time when it’s smart to fast track your investment plans. Knowing what to do at the right time is well covered in a book by Peter Mastroianni called “The Property Investor’s Buyers Guide”. We talk to Peter and focus on the accumulation phase of an investment strategy.

Our feature guest this week is successful investor and talented property industry entrepreneur Shannon Davis. Shannon tells us about his philosophy, how he started, why he wasn’t content to be an outsider but wanted to actively influence the industry. He has done that and a lot more as you will hear.

 
Transcripts:
Bondsure - a win-win-win - Michael Wood
Kevin:  Paying a bond can be an untimely nuisance for tenants, tying up money at the start of a rental period when many people would prefer to spend money on other things. Recouping bonds can also be a real nightmare for some tenants, when accidents or disputes over cleaning put bond in jeopardy. Well, today I can tell you about a new product called BondSure, which is the brainchild of Australian lawyer and insurance entrepreneur Michael Wood, who we tracked down. He’s currently in London.

Hi, Michael.

Michael:  Hi, Kevin.

Kevin:  Thank you for joining us. Michael, tell me about BondSure, and how does it work?

Michael:  Well, we’ve only just launched, so it’s new and certainly it’s novel. What we’ve done is we’ve linked the option of funding a rental bond – rather than paying it upfront – with the option of insuring that bond while that bond is sitting with the Residential Tenancy Authority. That insurance cover is for accidental property damage and increased cost of cleaning, two of the things that often arise during or at the end of a tenancy that can erode that bond. The third component of the product is tenant’s contents insurance.

Kevin:  We’ll talk about that separately in a moment, but I believe there are about 31% of renters Australia-wide, so this is obviously going to help a lot of them out – as I said in the intro there – particularly with coming up with some fairly hefty bonds. Is there a limit on the amount of the bond that is going to be offered?

Michael:  Yes, we offer it up to $5000. We do that because we’re wanting to cater for the areas like Sidney and Melbourne where the rent is slightly higher but also understanding that the average bond around Australia – the average rental because the bond is normally four weeks – is around $1500 to $1600.

Kevin:  Yes, average rent about $400 a week. Is this going to apply to all tenants? Will there be some form of credits they’ll need go through, Michael?

Michael:  Oh gosh, yes, most importantly. We thought about this because it’s important for the landlord to know that his position is much as it was, if not – we hope – somewhat better, because his concern is to ensure that that bond is lodged with the RTA so as to protect him with respect of any breach of the lease or any property damage to his fixtures and fittings. So it’s vital that the right tenants are taking out the BondSure product, and also it has to be emphasized that it is a fully ASIC-regulated product, and in that regard, there are responsible lending obligations.

There’s probably three key credit checks. The first one is an identity check – this is all quite simple – and then also a Veda Tenancy Blacklist check.