# Nobody Ever Got Rich Saving Tax **Channel:** Jack Henderson **Source:** https://www.youtube.com/watch?v=g16tUqE2n3s **Transcript page:** https://www.withtranscript.ai/video/g16tUqE2n3s ## Chapters - 0:00 — Tax Efficiency Versus Wealth Building - 5:43 — Structuring Property and Company Debt - 14:29 — First Homes, Equity, and Super Strategy - 25:15 — Starting a Business and Growing Income - 30:41 — Commercial Property, Renovations, and Lending ## Transcript **[0:00] Speaker A:** You pay tax once on that dollar. The growth on those assets is forever or however long you own it for. So many people are are trying to be efficient on something that is not going to make you rich. Be efficient on the thing that will make you wealthy, not the thing that won't make you wealthy. Who's gotten really rich by saving tax? No one. That's the reality. You cannot get wealthy by saving tax. You don't want to pay more than you have to. don't get me wrong. But you need to be worrying about how do I grow my asset base cuz the more money that you make and the larger your asset base is over a long period of time the taxes are it's a drop in the ocean in reality. **[0:36] Speaker B:** We've had soul trader business um we've got companies set up we've got trust set up but our biggest handcuffs I suppose is borrowing um because on paper we don't earn money **[0:49] Speaker A:** um **[0:50] Speaker B:** because you pay no profit in the business **[0:52] Speaker A:** uh or as little as we possibly can. We do. We do earn a bid. So, how do you get and I'm assuming you would have similar structure? **[1:00] Speaker B:** I pay a fuckload of tax. **[1:01] Speaker A:** Oh, how do you Yeah. How do your brokers and that that they can work with that. **[1:07] Speaker B:** Sure. So, so there's things that you can do assuming you didn't want to change anything and you wanted to pay minimal tax. There is different lending products out there like low dock and no doc loans where your accountant can essentially say yes you can afford to you know pay it or they declare how much money that you make and you don't have to support that with income documents. Here's what people miss about tax and property. So you're you operate in a PTY is that right? **[1:32] Speaker A:** Yes. **[1:33] Speaker B:** Cool. Did you get a hat? **[1:37] Speaker A:** We need everyone in hats. coming you. **[1:40] Speaker B:** Um, so this is you as a PTY and uh inside of a proprietary limited company that is the lowest tax rate environment that you can possibly be in being 25%. Okay, assuming you make less than $50 million in revenue or turnover less than 50 mil. Now let's say inside of that PTY as a business owner you make a million bucks of profit. Okay. Unfortunately, you're paying 250 of tax and you're left with 750. Okay. Now, this 250 tax is paid once, which is the year that you make the money in. Okay? So, unfortunately, you're going to have to pay that $250,000 worth of tax. But the million dollars of income now lasts you from a serviceability point of view for the next 12 months or to the following like assuming you made this last financial year. Banks probably will probably sorry wouldn't want to see your new financials until March or April of next year. **[2:36] Speaker B:** So you pay tax once, you've now got income to go and borrow x amount more dollars and then next year if you want you can pay no tax and write down every bit of profit. So it's about being strategic. It's about I mean I'm obsessed with growing so I want to pay more tax every single year because it means I've made more money. Okay. Um but if you are one of the people like oh paying tax you need to show profit one year no doubt you need to use that profit in that year. So assuming you've got let's say over here you've got some um you've got some investments and let's say in these investments you've got a million dollars of equity that you can use. Okay. Right now you might be showing no tax. So you can't use that million dollars or you're showing no income. **[3:18] Speaker B:** Sorry. You can't use that million dollar of equity. You can't access it because you can't service it. So next year you show more profit. You don't write down as much from an expense point of view. You go and access this a million dollars. You then go turn it into 6 million worth of real estate, say, and then the following year you don't need to worry about paying tax because you don't need a service anymore. As long as you pay the mortgages, then you don't show this the following year. **[3:39] Speaker A:** So you're happy to take the hit on the tax. the long-term value. **[3:43] Speaker B:** So, here's the thing. What do you think property is going to grow by over the next 20 years? Just a percentage. What do you think? **[3:49] Speaker A:** Yes. **[3:49] Speaker B:** 20 **[3:50] Speaker A:** 20%. **[3:51] Speaker B:** So, let's say it grows, let's assume it only grows at inflation, 3%. So, on $6 million of assets, it only grows in at at the level of inflation. So, you're making $180,000 a year in growth. Okay? You paid $250,000 worth of tax once. Within two years, you've made your money back. You haven't really because you're just keeping up with inflation. But that's the theory. You pay tax once on that dollar. The growth on those assets is forever or however long you own it for. So so many people are are trying to be efficient on something that is not going to make you rich. Be efficient on the thing that will make you wealthy, not the thing that won't make you wealthy. Who's gotten really rich by saving tax? No one. That's the reality. You cannot get wealthy by saving tax. You don't want to pay more than you have to. **[4:38] Speaker B:** don't get me wrong, but you need to be worrying about how do I grow my asset base because the more money that you make and the larger your asset base is over a long period of time, the taxes are it's a drop in the ocean in reality, but you don't have to pay it every year. The year that you want to borrow a lot of money, you probably want to show a good profit. The years that you don't want to borrow money, you don't have to show as much. Yeah. And remember, inside of a proprietary limited company, assuming you're doing less than 50 million of revenue, you pay 25% tax. Profit in your company, assuming you are the shareholders, like you're you don't have other shareholders in, assuming you're 100% of the company. The profit in the company is looked at the same as personal income. **[5:19] Speaker B:** So, if you make a million bucks in here and only pay 25% tax on it, so you're left with 750, or you push the million out to yourselves as individuals and you pay 47% tax, the bank looks at it the same. It's income. So, you want to be efficient. Um, so you don't want to push personal income out to you. **[5:35] Speaker A:** Cool. Make sense? **[5:37] Speaker B:** Cool. What are you thinking? **[5:40] Speaker A:** paying tax. **[5:43] Speaker B:** Yeah. I I um Yeah. I If you're buying residential property, once you've serviced the debt once, once you've shown servicing once, the banks don't come back and obviously ask you to show servicing again. If you're going into commercial, then sometimes you have to show servicing yearly or three years or five years. Like you can't just show servicing once and never show it again like you can with resi. In commercial, you have to continue to show the servicing. Yeah. Or they can lower your they put covenants on things etc. Yeah. Three ladies in a row. They're all the brave ones in the room. **[6:14] Speaker A:** Scared. **[6:14] Speaker B:** Round of applause. Very good. **[6:17] Speaker A:** Cool. Ask. You want a hat? **[6:19] Speaker B:** I'm good for the moment. **[6:20] Speaker A:** Okay. **[6:21] Speaker B:** I'll just get through this. So, we own a company. **[6:24] Speaker A:** Yeah. **[6:25] Speaker B:** Um, and we also own acreage on the Sunny Coast. We want to **[6:32] Speaker A:** buy more acreage on the Sunny Coast **[6:33] Speaker B:** to live in or as an investment **[6:36] Speaker A:** as an investment now. **[6:38] Speaker B:** Sure. **[6:39] Speaker A:** To do a wedding venue. **[6:40] Speaker B:** Oh. **[6:41] Speaker A:** To **[6:42] Speaker B:** move to later on. **[6:44] Speaker A:** Yeah. **[6:45] Speaker B:** So potentially it'll be your owner occupy property in the future. **[6:48] Speaker A:** Yeah. our property now, we would just keep it, rent it out, do whatever we do with it. **[6:52] Speaker B:** And then with the vision of buying another primary producing property and the the question I have is how would we buy that in a company because then when we move into it, it becomes **[7:04] Speaker A:** it's not your own occupier. Yeah. It's not your own. It depends. **[7:08] Speaker B:** So period of time, **[7:09] Speaker A:** how much money do you reckon it's going to generate as a wedding venue? **[7:12] Speaker B:** Well, I would hope well I'll have to check zoning. **[7:14] Speaker A:** Sure. But I would hope that you know in the first year you 250 $300,000. **[7:21] Speaker B:** So here's the thing. I mean the the real I'll draw I'll try and make this as simple as possible. So let's say that you've got uh you as an individual and a PTY. Okay. Um in this scenario you own the real estate yourself and in this scenario you own it inside of a a PTY. **[7:41] Speaker A:** Yep. **[7:41] Speaker B:** Okay. In this scenario, in the future when you move into it, from that point onwards, you would get a capital gains tax exemption. But until you move into it, there's no capital gains tax. Correct. So any growth you get from today until that point would be subject to tax. **[7:57] Speaker A:** Yep. **[7:57] Speaker B:** And that would be tax at the minimum 30% or the index of inflation which comes in from 1 July next year. Y **[8:03] Speaker A:** no discount anymore. **[8:05] Speaker B:** Y **[8:05] Speaker A:** in the proprietary limited you would just pay a flat 30% when you ever sell. If you ever sell. **[8:11] Speaker B:** Yep. Okay. Now, the other thing with a wedding venue is it will also be generating income. Y **[8:18] Speaker A:** hopefully a lot of it. Okay. Now, depending on how you have it structured, you either run the business as a company as well. So, the company that runs the wedding venue in this scenario, you'd have a **[8:31] Speaker B:** separate. Yeah. **[8:32] Speaker A:** Yeah. So, that you know, the company would rent it off you or the portion of the land **[8:37] Speaker B:** off you. Um, so then any money that's paid back to you would potentially be subject to personal income tax, **[8:45] Speaker A:** right? **[8:46] Speaker B:** Make sense? **[8:46] Speaker A:** Yep. **[8:46] Speaker B:** Because the rent's coming back to you. Now, rent may just be whatever the mortgage is, and there is no income because you're just paying back debt. **[8:52] Speaker A:** Um, but that would be something you'd need to think about where in this scenario, again, any rent, you'd probably have another company, which would be the operating company, which is how we have ours set up. We have the asset owning company and the company that operates the thing, and they obviously have money that goes between the two of them. Um this is the active trading business which is taxed at 25%. This is a PTY which is a passive entity which is taxed at 30% potentially. Um so there are there are it's not one or the other. It's not what is best and what is not best. It's like if you have a wedding venue on the property and it is generating income that portion of the land is not going to be exempt from capital gains tax. **[9:30] Speaker B:** No. **[9:30] Speaker A:** It will always be taxed on it because it's income generating. So, even if it is your own home, whatever the venue sits on, **[9:36] Speaker B:** I'm not sure how the property is set up or it's going to be set up, but **[9:40] Speaker A:** um it'll always be s subject to tax. **[9:42] Speaker B:** Y **[9:43] Speaker A:** um so um assume and how long is it before you're going to live there? You look relatively young. **[9:50] Speaker B:** Um probably within the next 10 years. **[9:53] Speaker A:** Okay. So, personally, I do it like this. I think it's a way better **[9:58] Speaker B:** way better option. **[9:59] Speaker A:** Yeah. And if it's doing really well, you probably will never sell it in the future anyway because it's generating income. **[10:04] Speaker B:** Yeah. We'd rather just **[10:05] Speaker A:** hold it. **[10:06] Speaker B:** Yeah. Yeah. Okay. **[10:08] Speaker A:** If it's going to be 10 years, you're going to have 10 years worth of growth, which will probably be the most substantial amount of growth as well, especially if you don't buy an established venue because you're going to reposition something like I spoke about earlier, which is take it from a farm or just a block of land to a wedding venue. And that's where you're going to get the biggest uplift. **[10:23] Speaker B:** And that's going to be during the period where it's an investment, **[10:25] Speaker A:** which will be subject to the tax once you move into it. Do you buy it through the company? Like do so when you go to get a loan **[10:33] Speaker B:** to buy Yeah. do you buy it through a company name? Is that **[10:38] Speaker A:** you can not saying you should **[10:40] Speaker B:** I can't advise you. **[10:41] Speaker A:** The bank is just the bank just **[10:42] Speaker B:** you still guarantee the loan as an individual or if you've got your own trading business but yeah like for mine mine are owns inside of their own proprietary limited. So you know Settlers Rest is Settlers Rest Property Proprietary Limited that's owns a real estate. **[10:54] Speaker A:** Yep. **[10:54] Speaker B:** And then we got Settlers Rest Trading which is a trading business. **[10:57] Speaker A:** Yep. and it's owned inside of an, you know, this would be a passive investment company. There's lots of little things you can do which is like the the company that owns the real estate also owns the name Settlers Rest. So you can license the name to the trading business and to make it a passive company an active trading company. So you decrease the tax rate from 30 to 25%. Yeah. **[11:19] Speaker B:** You need to have a percentage of income that is active. **[11:21] Speaker A:** Okay. **[11:21] Speaker B:** Which is the licensing fee. **[11:23] Speaker A:** Y Fair enough. **[11:24] Speaker B:** You can be very crafty and do things, you know. I can do that. **[11:27] Speaker A:** Cool. You need a good You need a good accountant. **[11:29] Speaker B:** Okay. Thank you. **[11:30] Speaker A:** Thank you. Oh, **[11:34] Speaker B:** legend. **[11:35] Speaker A:** Hey, how you doing? **[11:35] Speaker B:** Cool, mate. You want a hat? **[11:36] Speaker A:** Yeah, sure. **[11:37] Speaker B:** This whatever this is. **[11:42] Speaker A:** Oh, yes, man. **[11:43] Speaker B:** What do you got, **[11:44] Speaker A:** mate? Um, **[11:45] Speaker B:** depreciation daddy. Oh, negative. You're in. Good stuff. I **[11:47] Speaker A:** I'll take a depreciation daddy one if you got it. **[11:49] Speaker B:** I don't know if we have any. **[11:51] Speaker A:** U My question basically builds off the last two. So if you're purchasing property through a entity **[11:57] Speaker B:** um the pri proprietary limited y **[11:59] Speaker A:** how does the banks look at that because obviously you have to onboard cash out of your personal **[12:04] Speaker B:** to get money in the business and then how does the bank look at that serviceability and that sort of thing because you don't **[12:10] Speaker A:** servicing is still supported by you as an individual. So even though the asset is owned in an entity whether it's a trusted company you still support the servicing. So if you're an individual or if you run your own business you're still supporting the debt. **[12:21] Speaker B:** Yeah. All right. All right. So, yeah, they'll look at you personally. **[12:24] Speaker A:** Yeah. And then it depends on where the where would the money come from for the um the deposit? Would it be coming from **[12:31] Speaker B:** equity equity or selling **[12:32] Speaker A:** equity in your home or something? **[12:33] Speaker B:** Yeah. Yeah. **[12:34] Speaker A:** Yeah. So, a common strategy that we're seeing now, **[12:36] Speaker B:** let's say this is your owner occupy property and let's say that you release 500 grand of equity. Okay. And that 500 grand is going to be deposit stamp duty costs for whatever happens in here. So what we're seeing is you're an individual shareholder of that proprietary limited company. As an individual, this is your money. This money then gets lent into the company as a shareholder loan. So whether this company buys real estate, opens up a kebab shop, does whatever, doesn't matter. You're lending money into a company. **[13:12] Speaker A:** So that's debt the proprietary hold. **[13:14] Speaker B:** This is debt. It's not debt in the company, though. It's a loan in from you. And you know obviously get advice from your accountant but from what we've seen you don't have to on pass the interest either. Okay because ideally you want this company to be as profitable as it can. So one day it then pays you back a dividend and that's how you can essentially get negative gearing in market which doesn't allow negative gearing because this interest which is your money personally has say 30 grand a year of interest attached to it. That can be a personal deduction. You use it inside of the company to go buy the property and then as the entity starts to self-service and pay down the debt, you can then start paying out dividends to yourself and that's how you get negative gear. **[13:54] Speaker A:** Yeah, makes sense. **[13:55] Speaker B:** Makes sense. **[13:56] Speaker A:** Similarly to paying your 250 bucks a week in your investment property to cover the interest, just hold that **[14:03] Speaker B:** essentially. Yeah. So, so but the thing that people the the the the challenge now you have with investing in real estate is if you just use this 500 grand as an equity release to go and invest in a property personally, this 500 grand wouldn't be deductible. You wouldn't be able to deduct the interest against your personal income. **[14:17] Speaker A:** By using this strategy, assuming you get the right advice, it can be. **[14:21] Speaker B:** So, you get a $30,000 interest deduction assuming you're on 47% tax rate. You know, you get 15 of that back or close enough to it. **[14:28] Speaker A:** Awesome. Thank you. **[14:29] Speaker B:** Awesome, bro. Good **[14:33] Speaker B:** Hello. **[14:34] Speaker A:** Hey. How you going, Jack? **[14:35] Speaker B:** Good. Good. **[14:36] Speaker A:** Good. Um, I've got a question about I'm 25. Both me and my partner are 25. **[14:42] Speaker B:** Well done. Young people. Congratulations. I love seeing young people. **[14:45] Speaker A:** Um, we haven't got any mark uh like properties yet or anything, and we want to just get into the market. **[14:50] Speaker B:** Yeah. **[14:51] Speaker A:** Um, I got two kind of like two parts to this question. One, I've seen a video that you've done about obviously you're better off owning half of nothing, half of something than all of nothing. Um, would you recommend us trying to go in separately and buy our own property separately and then combine that later down the track? **[15:10] Speaker B:** The only concern I have with doing that is our income. We would obviously have a much better income and yeah, that's how I would answer the question. **[15:19] Speaker A:** If you earn both really strong incomes, yes, I would say do that. **[15:22] Speaker B:** Yeah. Well, if we're kind of like on that borderline better No. **[15:25] Speaker A:** No. Okay. **[15:26] Speaker B:** Been together a couple years. **[15:27] Speaker A:** Yeah. If you're not married, then it's okay. If you're married, the government doesn't really like you doing it separately, obviously. **[15:31] Speaker B:** Yeah. Yeah. **[15:32] Speaker A:** Um but if you're not married and you're just partners, then absolutely you can do it separately. **[15:35] Speaker B:** Do it separately. **[15:36] Speaker A:** Um but then your income is going to be the is going to be the restriction. So I'm assuming **[15:40] Speaker B:** I don't know how much you earn, 70, 80, 90 grand, 100 grand a year, whatever it is. **[15:44] Speaker A:** You can generally borrow about five times that in debt. So if you earn 100 grand a year, you can borrow 500 grand, you know. **[15:49] Speaker B:** So if it's two of us, 200 grand, then you're looking at **[15:52] Speaker A:** Yeah. If you earn 200 grand combined, you're probably going to be closer to a million bucks for borrowing capacity. **[15:56] Speaker B:** Okay. Yeah. And then depending on the state, assuming you're going to buy in Brisbane. **[15:59] Speaker A:** Yeah, we're both from Gold Coast, but and we're looking at Queensland **[16:02] Speaker B:** in the Goldie. So, you know, you would be 5% deposit ideally, you know, you're not paying stamp duty and you ideally want to stay under the caps. **[16:09] Speaker A:** Yep. Cuz that was the next thing I was going to ask is like we've got about like six figures between the two of us save for deposit. Would you recommend then doing first home buyer and then do improvements and then go through your Yam strategy afterwards and then that way you leverage that? **[16:24] Speaker B:** For sure. Um **[16:25] Speaker A:** I when you're a first home buyer, I guess this is relevant for even you know people who have kids. I'm a big advocate for using the first home buyer incentives because once you've used them once they ain't giving them back to you, right? **[16:35] Speaker B:** Well, that's why I know like if you buy separately then you can both leverage that too. It's just whether you want **[16:40] Speaker A:** is the biggest part. If you both earn really strong incomes and you can borrow a lot of money from the bank, then you would do that. But if you can't and you're limited by purchase price, probably makes sense to combine it. **[16:49] Speaker B:** Yep. Okay. Perfect. And then yeah, if let's say you've got 100 grand of cash and you only need 40 of it to buy the property, you've now got 60 left over. That's good because it gives you a buffer so you don't have to be stressed as about like I can't pay for things. **[17:00] Speaker A:** And um and ideally you can add some value to the property as well. **[17:03] Speaker B:** Okay. So then yeah, while you're living it for the first 12 months, you add the value and then you can go on to like handy on a nail and stuff like that. **[17:11] Speaker A:** I'm not. Um but yes, if you like if you are handy, you essentially are just using the time that you already have y **[17:18] Speaker B:** to, you know, add value to something on the weekends and **[17:20] Speaker A:** Y. **[17:20] Speaker B:** Yeah, that's what I would do. **[17:22] Speaker A:** Okay. **[17:22] Speaker B:** We see we see it all the time with first-time home buyers. Even with clients that come to us that are first- time home buyers, we still advise them to use the incentives. **[17:28] Speaker A:** Yep. **[17:28] Speaker B:** And then from there, then leverage with your um **[17:32] Speaker A:** Yeah. the equity. Obviously, you're going to have to wait until you're at an 80% loan to value ratio. Y **[17:37] Speaker B:** cuz if you refinance before you're at an 80% loan to value ratio, you're then going to be subject to lenders mortgage insurance which you don't pay on the way in exemption. **[17:46] Speaker A:** But that's what you should do, I think. Yeah, you would use your first home incentives, go buy a property together. Ideally, you can rent some bedrooms out as well. So then like it'll be similar to living at home. **[17:54] Speaker B:** Yeah. **[17:55] Speaker A:** Rent it out to some tradies and then get some like contra work, you know, they can **[17:59] Speaker B:** and then you're off to the races. **[18:00] Speaker A:** Okay. **[18:01] Speaker B:** How refreshing is it to hear a young person not winge and moan about Well done. hell. **[18:10] Speaker A:** It's good. **[18:10] Speaker B:** Thank you so much. **[18:11] Speaker A:** Is there any other any other part of the question? **[18:13] Speaker B:** No, I think that's that's kind of all I wanted for now. **[18:15] Speaker A:** You want to take a hat back to scone? **[18:16] Speaker B:** I mean, if you've got one, I'm not saying no. **[18:18] Speaker A:** Is there another hat? Yeah, man. Give me your hat. Good, man. **[18:20] Speaker B:** Thank you so much. **[18:22] Speaker A:** No worries. Well done. Um, **[18:25] Speaker B:** I've currently got about 900,000 in equity in my house, and I've got two investment properties, but the bank seems to think I can't borrow enough to buy another one. **[18:35] Speaker A:** Yes. How much debt have you got on your owner occupy property? **[18:38] Speaker B:** Um, the only debt on it is a 250,000 redraw, which I used for one of my investments. That's all claimable. **[18:44] Speaker A:** So, you've only got $250,000 of debt owing on it. **[18:47] Speaker B:** Yeah. **[18:48] Speaker A:** And that's drawn down. Yeah. **[18:49] Speaker B:** Yeah. So, it's worth about 1.2. That's why I still got 900,000 equity. **[18:52] Speaker A:** And what uh what are the investments worth? **[18:55] Speaker B:** Um about 1 and 1.2. **[18:58] Speaker A:** 1.2 combined. And what's sorry combined? Um 2.2. **[19:01] Speaker B:** Okay, cool. 2.2. **[19:03] Speaker A:** So I've got 1 against them. **[19:05] Speaker B:** 1.9 million in total across everything. **[19:08] Speaker A:** Okay. 1.9 million including this 250. **[19:10] Speaker B:** Yeah. **[19:10] Speaker A:** Cool. **[19:11] Speaker B:** Yeah. So I hold 1.9's tax deductible. Okay. **[19:14] Speaker A:** So yeah, the bank won't let lend me more money. Well, not enough to buy. **[19:17] Speaker B:** What do you combined? And you got like 350 400 grand combined income. **[19:20] Speaker A:** No, no, no. Um about 170 $170. And they've lent you $1.9 million. **[19:26] Speaker B:** Yeah. Well, it's not how much you earn, it's what you spend on it. **[19:30] Speaker A:** But is that is that is that in your personal name? **[19:32] Speaker B:** Yeah. Yep. Yep. I'm just a **[19:34] Speaker A:** You are well and truly above the servicing cap on your current income now, assuming rates. **[19:38] Speaker B:** Yeah. So, yeah, I earn about 105 and my wife's on 70,000. She's just **[19:42] Speaker A:** So, 175 combined. that. **[19:44] Speaker B:** And then we got the rental income on top, **[19:46] Speaker A:** of course. But what are they rented for? like **[19:48] Speaker B:** a fair bit cuz they're both dual income. I'm getting about 2,400 I think a week **[19:53] Speaker A:** for each of them or combined? **[19:54] Speaker B:** Combined. **[19:54] Speaker A:** Oh, cool. So, you got 100 120 grand of rental income plus your 170 300 grand. I was pretty close. **[19:59] Speaker B:** Yeah. **[19:59] Speaker A:** Yeah. Yeah. **[20:00] Speaker B:** So, yeah. So, they won't lend me another million or whatever to buy another house. So, I'm thinking about doing Yeah. **[20:06] Speaker A:** Like another mill, mate. **[20:08] Speaker B:** Should be all right. Um, so I'm thinking about doing an equity redraw of about 250,000 and buying ETFs instead. **[20:14] Speaker A:** Yep. **[20:14] Speaker B:** That way I'm diversifying a bit. I've done shares since about 2008. **[20:18] Speaker A:** How old are you? **[20:19] Speaker B:** Uh 42. Yeah. Trail running keeps me looking young. **[20:23] Speaker A:** That's good. **[20:24] Speaker B:** Um so yeah, diversifying a bit going in bit more into shares instead of property. Do you think **[20:32] Speaker A:** I think it's an and not an or thing. It's not like property or shares or property or what? It's an end. You do both together. So if you've got, you know, is this costing you anything to own? **[20:42] Speaker B:** Yeah, about 450 bucks a week at the moment. Cool. So, it's costing you 20 grand, 20 22,000 a year before tax. **[20:49] Speaker A:** You probably get negative gearing on it because you've owned them for a little while. So, yeah. Cool. Like, you're in a great position. Yeah. If you can then use some equity to go on debt recycle and do some share investing. Amazing. I can't tell you to do that. Obviously, I'm not licensed to do anything actually, believe it or not. **[21:02] Speaker B:** Yeah. **[21:04] Speaker A:** I just own the companies. It's easier. **[21:06] Speaker B:** So, it's not a crazy idea though, is it? Because it's hard to get a crazy idea. What I would tell what I would tell you to do is probably get some really good advice from a financial advisor who is paid a fixed fee, not a percentage of assets under management or some up thing. And explore superanuation. That's what I would do. Explore how you can maximize your super. Maybe catch up contributions and things. **[21:26] Speaker A:** Yeah. The thing with super is though I can't get that till I'm 60 and I don't want to wait till I'm 60. So I want to **[21:31] Speaker B:** You may not have to work till you're 60. So here's what people miss, right? Actually, I should be able to do it on this page. You've got a home that's worth 1.2. 2 and you got these investments. Okay. When do you want to stop working? **[21:42] Speaker A:** Um 55 at the latest. So now you **[21:45] Speaker B:** 42. **[21:46] Speaker A:** 42. So you got 13 years. **[21:47] Speaker B:** Yeah. **[21:47] Speaker A:** Okay. So let's assume over the next 13 years these properties become debtree. That's what you should work towards. Have them debt free. **[21:55] Speaker B:** Yeah. Well, I thought about that. Do I pay down the debt? Would I use that excess cash flow to reinvest into other things that going to grow quicker? **[22:01] Speaker A:** Yeah. Well, at the moment, you would get a guaranteed return of say 6 and a half 7% for every dollar you decrease. **[22:07] Speaker B:** Yep. because that's the interest you're saving versus potential upside of the share market. knows what it is. But long-term S&P has done what? 10% 11%. Yeah. **[22:15] Speaker A:** So, the way that I would think about it is forget about the shares and stuff like that. This will eventually give you the income not to work. Maybe not these assets themselves, but the equity that will come out of these assets. Okay. Let's say that is at Let's say that is at 55. Okay? So, this is you at 55. This will give you the income. You can't access your super until you're 60. You don't need all the money at 60. So what happens is you just need the money from 55 to last you until you're 60 and then 60 kicks in because here's what people forget. Any dollar of income you earn personally at this age will be subject to personal income tax. Do we think that's going to be higher or lower than it is right now? **[22:52] Speaker B:** Most likely. All right. Where at 60 and again this is not advice. This is just a statement of fact. Under the current superanuation rules, you will draw down a pension from your super fund that is tax-free. So more the more wealth you build in your personal name, the more personal income tax you're going to be subject to. You don't need to build 100% of your wealth here to last you forever. You just need enough wealth between 55 and 60 to get you to super. And then that's taxfree assuming you have less than $3 million of net assets in there per person. **[23:24] Speaker A:** Yeah. **[23:25] Speaker B:** Okay. So that's why I said you should go speak to an adviser and understand this because every dollar of in every dollar of wealth you build personally over and above what you need, you are going to be paying more tax than what you need to on it. **[23:36] Speaker A:** So I would run some projections and go $2.2 million over 13 years. Let's just assume it doubles once. So that's worth 4.4 and you're debtree. And we'll assume it's going to give you 5%. So there's 220 grand worth of income. You probably pay a blended tax rate of about 30% on that. Okay? If that's enough income for you to retire, you might downsize your house as well. So you might have some cash there left over. That's enough to get you from 5 years to there. And you could even eat eat into the capital if you really wanted to to live a better life. You got $4.4 million of capital. You could maybe live off the income and draw down a little bit on the capital and then when you get to here you want to have as much money in there as you can so it's taxfree. **[24:11] Speaker B:** Make sense? **[24:12] Speaker A:** Yeah. Yep. And then with the super **[24:13] Speaker B:** Makes sense. I'm not listening to you. **[24:14] Speaker A:** Yeah. No, no, that makes sense. And then just one extra little bit with um my wife's seven years younger than me so we should be loading up my super proposal her so we can access it earlier **[24:24] Speaker B:** probably **[24:25] Speaker A:** would be yeah **[24:25] Speaker B:** yeah you could look at a SMSF I don't know but go and speak to someone who's an expert in that stuff **[24:30] Speaker A:** cuz lots of people don't look at it until **[24:33] Speaker B:** you're in your 50s and then you go oh what's this super thing **[24:36] Speaker A:** for example you might are you maximizing your contributions at the moment like **[24:40] Speaker B:** not maximizing but I'm doing 250 a week **[24:43] Speaker A:** 250 a week is what 12 grand a year Yeah. **[24:45] Speaker B:** On top of your current contribution. **[24:47] Speaker A:** Yeah. Yeah. So, I'm getting close to it cuz I think you're about 30 **[24:49] Speaker B:** 32 and a half,000. Y um **[24:52] Speaker A:** in another year I'll probably put up. **[24:53] Speaker B:** So, that's another thing. That's a tax arbitrage, right? Instead of paying Well, how much do you earn? You said **[24:58] Speaker A:** 105. **[24:59] Speaker B:** Yeah. So, you're paying roughly 30% blended. **[25:00] Speaker A:** 30%. Yeah. **[25:01] Speaker B:** Yep. So, **[25:02] Speaker A:** you pay 15% going into super. That's a guaranteed 15% return. **[25:06] Speaker B:** Yep. **[25:07] Speaker A:** By just contributing into double between. **[25:09] Speaker B:** Now, that's not advice. **[25:11] Speaker A:** That's just a statement of fact. Go and get advice. **[25:15] Speaker A:** No worries. Thank you. **[25:16] Speaker B:** That's how I think about it, bro. Good stuff. **[25:19] Speaker A:** Good day, Jack. **[25:19] Speaker B:** Like Elvis walking up to the **[25:22] Speaker A:** Hey, uh, thanks so much for today. Really getting a lot out of it. Um, **[25:26] Speaker B:** my question is probably around self-growth. Um, self. Yeah. So, a little bit of context. So, my wife and I, Nicole, **[25:34] Speaker A:** um, we've got the portfolio, we've done the structures, we've done the advanced uh, advanced lending, we've done, you know, we've got the accountants, we've got the people. um where obviously high interest rates. We're kind of um serviceability is actually not really a factor for us. We are high income earners. However, cash flow is holding us back. Um **[25:57] Speaker B:** isn't it crazy that you can earn lots of money, not have a serviceability issue, but you feel cash flow poor. Very common. **[26:02] Speaker A:** So, like the banks will continue to lend to us, but we actually have to say no because cash flow is now a problem. **[26:09] Speaker B:** Obviously, the market's turned. um things are a bit slower so we're having to account for that. I've gone back through **[26:15] Speaker A:** uh I'm an Air Force pilot. My wife is a Quantis pilot. **[26:18] Speaker B:** All right. **[26:18] Speaker A:** Um and so I guess you know I've gone back through pretty aggressively looked at reducing costs uh you know look to refinance where we can uh to reduce you know interest rates lower LTVs. I've gone and done a couple of rens to try and force equity force rents up. I've effectively done everything I can **[26:40] Speaker B:** to minimize your cost **[26:42] Speaker A:** to minim. **[26:43] Speaker B:** So, what do you want to know? How do you make more money? I **[26:45] Speaker A:** I'm the problem. I need to earn more money. **[26:47] Speaker B:** Yeah. **[26:47] Speaker A:** The only way I see doing that is I need to get off a pay as you go income and I need to go into business. And so now I'm drastically trying to increase my education around that space. So, **[26:59] Speaker B:** what would you do? Uh, I'm kind of building towards consulting back to the Air Force in particular, I guess. Uh, **[27:08] Speaker A:** do you fly like F35s or something? **[27:10] Speaker B:** No, I'm not a fast jet pilot. Uh, **[27:12] Speaker A:** do they get paid way more than the other pilots? **[27:14] Speaker B:** No, they don't actually. Uh, and they work a lot harder, so their hourly rate is actually less than mine. So, um, **[27:21] Speaker A:** Okay. **[27:21] Speaker B:** So, I guess obviously you've you've built a business, you've talked to a lot of people. Mh. **[27:26] Speaker A:** Um, you've gone and invested a lot of money in your own education. **[27:30] Speaker B:** What advice would you have, I guess, for someone like myself looking to start a business **[27:35] Speaker A:** to grow? **[27:36] Speaker B:** Yeah. You just start. **[27:37] Speaker A:** Yeah. **[27:37] Speaker B:** Yeah. Yeah. **[27:38] Speaker A:** Yeah. **[27:39] Speaker B:** That's the best thing to do. You just start it and then you work it out. I'm not kidding. **[27:43] Speaker A:** The longer you wait, **[27:45] Speaker B:** the harder it is. You get in your head. Ah, it's not the right time. It's not this. It's not that. Just start and then you slowly work it out. **[27:52] Speaker A:** Business is hard. It's very, very hard. Very easy to look at someone like me and go, "Oh, you, you know, big business, growing really quick, made money." It's not easy. **[28:04] Speaker B:** Very, very hard. There's lots of stressful times. And you know how you like feel cash flow poor now? **[28:09] Speaker A:** Yeah. Yeah. When you run a business. Yeah. It's hard, man. But there's there is an unlimited amount of growth with a job. You are capped, unfortunately. **[28:20] Speaker B:** Yeah. So you either got to go into sales where you sort of you know have a more unlimited thing but you start to limit it to an extent or you need to start a business but it's not like you're going to start how much do you earn as a salary? **[28:31] Speaker A:** Uh 240. Yeah. **[28:33] Speaker B:** You first use the business you'll probably earn negative 240 **[28:37] Speaker A:** and you've got to grow and grow and grow and it's very hard and there's lots of times where you be like a what do I do? What do I do? But you just got to find your model and then go hard. Yeah mate. Our industry at the moment most people are on their knees. Every second day, someone wants a job with me. **[28:53] Speaker B:** Tell them to get **[28:56] Speaker A:** Awesome. **[28:56] Speaker B:** Should get on the rocket ship to begin with, huh? **[28:58] Speaker A:** I love it. **[28:59] Speaker B:** Yeah, but that the reality is like you need to pivot. You need to constantly you know, cuz the first thing you do, you probably think it's the right thing, then you go and talk to the the customers of the world and you go, "Oh, maybe I need to change something." You know, and then you you'll get it working a little bit and then something will change. So, **[29:13] Speaker A:** back on that, wouldn't you sell an asset that's costing a bit much just **[29:16] Speaker B:** I wouldn't sell. Who's ever heard someone be happy they've sold a property 20 years ago? No one. Now, if you were like legitimately hemorrhaging and you were going to go broke, probably sell. But it's much easier to work out how to make more money to hold your assets that will be worth a lot more in the future, **[29:34] Speaker A:** then do that. There was a lady at one of the other events who said, I asked a question at the start around like, oh, has anyone, you know, not made money in property? And she put her hand up. She owned property. She goes, oh, we sold at the wrong time. It was in the Gold Coast um during the GFC just before the GFC. I wish we never sold. There's lots of those stories. **[29:50] Speaker B:** So, you ideally don't want to sell assets. **[29:51] Speaker A:** Yeah. **[29:52] Speaker B:** But my advice is start. Make sure you've got enough runway so you're not super stressed **[29:57] Speaker A:** and expect to work two to three times more than you work right now **[30:01] Speaker B:** for less money. **[30:04] Speaker A:** I'm not kidding. **[30:06] Speaker B:** Awesome. No, I appreciate it. Thank you. **[30:07] Speaker A:** Yeah, that's it, bro. And then just hustle, hustle, hustle, hustle, and and just Yeah. Out hustle everyone. Right now for me, it is the best time ever. Okay. Everyone else is very scared in our space, but everyone's going broke or losing their businesses and I'm just going to suck up all this market share. It's true. Like these are the markets where you do that. All these people disappear and all these that used to put on me and say blah blah blah blah blah, they're gone. They're at Walworth hacking shelves, you know. Not saying there's anything wrong with that, but yeah, bad markets are a good time to take, you know, a market share and and uh and grow. **[30:41] Speaker A:** And then when the good markets come, it's game over. Cool. **[30:47] Speaker B:** Hello. **[30:47] Speaker A:** Hello. **[30:48] Speaker B:** What's the question? **[30:49] Speaker A:** Um, so with the property, uh, you were saying ideally you need about 200,000 in equity or cash and then, um, **[30:58] Speaker B:** have an income of, you know, 200,000 to be roughly roughly. So, I don't have that **[31:06] Speaker A:** quite. **[31:07] Speaker B:** Um, my question, I think, is I do have a substantial superanuation. Um, is it inappropriate to go to commercial before taking the residential path? Um, so that **[31:19] Speaker A:** substantial how much? **[31:21] Speaker B:** Um, $600,000. **[31:23] Speaker A:** Cool. Yeah. I can't tell you what to do with super. I'm not a financial planner. **[31:27] Speaker B:** So, if assuming you got the advice, a commercial could be right for you. We can buy you a commercial asset. Absolutely. Is 600,000 enough to buy a commercial asset regardless if it's in super? Just **[31:36] Speaker A:** would it be something to think about while I move to um increasing my **[31:41] Speaker B:** current wage? **[31:42] Speaker A:** Potentially. Yeah, potentially. Again, you don't need 200,000. **[31:46] Speaker B:** Okay. **[31:47] Speaker A:** Do you have no debt? **[31:48] Speaker B:** I'm just got So, I have my house, but I have a mortgage. I have some equity in the house. **[31:53] Speaker A:** Um I **[31:56] Speaker B:** Yeah, I have like I get paid well. **[31:58] Speaker A:** Servicing is the hardest part in the current environment. It's like how much the banks will lend you for how much money you earn. It's pretty wild. Um, but yes, it can work. Not saying you should do it, but it can work. And uh, if you buy the right commercial asset, it can be very rewarding. If you buy the wrong one, it can be detrimental. Um, and it's the way that you can still get a little bit of leveraged where it's been taken away from residential. **[32:20] Speaker B:** But you need to get advice around it and make sure it's the right thing to do and blah blah blah. **[32:24] Speaker A:** Yeah. So, it doesn't matter if you don't quite have that. **[32:26] Speaker B:** No, because Supra is completely different in how it's calculated to your individual name. So just in terms of your um personal though like the 200 you don't have to actually have that. It's just a guide and so you could still go down that path of **[32:37] Speaker A:** you could assuming it's right. Yeah. Um because the way the servicing is calculated in super is essentially contributions. Y **[32:43] Speaker B:** have you got a partner? It's just you. **[32:44] Speaker A:** It's me. **[32:45] Speaker B:** Cool. So your individual contributions plus the rental income from the asset will give you how much you can borrow **[32:50] Speaker A:** and that you know based on how much cash you have you might be able to get a bit more debt and **[32:54] Speaker B:** you've got some leverage. **[32:55] Speaker A:** Okay. **[32:56] Speaker B:** Yeah. **[32:57] Speaker A:** Thanks. **[32:57] Speaker B:** Sound good? Thank you. **[32:59] Speaker A:** Yeah, Jack. Hello, mate. **[33:00] Speaker B:** How are you? **[33:01] Speaker A:** I'm good. **[33:01] Speaker B:** That's the way. Um, so a couple of months ago, I bought my first property and then **[33:08] Speaker A:** I don't know what to do next. So, **[33:11] Speaker B:** I got this thing and **[33:13] Speaker A:** well, **[33:13] Speaker B:** yeah. **[33:14] Speaker A:** Um, so yeah, either A renovate the existing property cuz needs a little bit of work, **[33:20] Speaker B:** b try to buy a commercial asset that my business operates out of, **[33:24] Speaker A:** or C, **[33:26] Speaker B:** um, **[33:27] Speaker A:** need a plan, huh? You're one of those people who needs a plan. Are you coming to the the two-day? You probably should. **[33:32] Speaker B:** That was my ne that was my next question. If if I can acquire your full services. **[33:36] Speaker A:** Mhm. **[33:37] Speaker B:** Um do you have **[33:38] Speaker A:** if you want someone to do it for you, then yeah, full service is way better for it's way more expensive. **[33:42] Speaker B:** Yeah. How much cash do you need to get the full service? **[33:45] Speaker A:** Uh for same it's like you generally and it's like you need this much cash regardless to buy an asset today you're spending anywhere from 800 to12 for a good resi asset. So you need $2 to $300,000 for a 20% deposit stamp duty and like that. **[33:58] Speaker B:** Um, now what you should do, sure you can do commercial, but to buy a good commercial asset, you generally need 30% plus costs, so 35% and you know, we're generally spending many millions of dollars on commercial assets. So you need big chunks of capital. So that's why we start with resi to begin with. That gives us our capital base and then eventually you've got enough equity and income's going to grow because you got a business and then you go into commercial. **[34:21] Speaker A:** Yeah. Because I just took my first year of business financials to my broker and they said, "Yeah, I can borrow about 1.5 in a company." **[34:29] Speaker B:** Yep. **[34:30] Speaker A:** Cool. Would 1.5 be enough to buy an asset that you can operate out of? **[34:35] Speaker B:** Maybe. **[34:36] Speaker A:** Yeah, you can buy like a probably a little industrial shed or something like that. **[34:39] Speaker B:** Um, **[34:40] Speaker A:** I personally, if I was in your shoes, not saying you should do this, but I would probably keep buying. What do you do? Are you trady or something? **[34:45] Speaker B:** Uh, electrician. **[34:46] Speaker A:** Yeah, you look like a tradey. Good **[34:48] Speaker B:** It's good. Hey, electricians are going to print cash over the next 20 years. Um, so I would probably buy more resi assets. Yeah, because it'll allow you to do much more down the track. Once you go into commercial, it's very, very hard to use equity to buy another one because they don't grow like resi assets. They're very much tied to income. Income's tied to inflation, assuming inflation is say 3%. That's sort of what you're going to be limited by from a growth point of view. **[35:13] Speaker A:** Yeah. So, it's harder to grow from that point of view where you res the asset, you add some value to it, boom, you can create 100, 200, 300,000 worth of equity, roll that into the next deal, do it again, roll it into the next deal. Very hard to do with commercial. **[35:23] Speaker B:** Sweet. **[35:24] Speaker A:** Make sense? Cool, mate. Good **[35:26] Speaker B:** Hey, legend. **[35:27] Speaker A:** Good day. How you going? **[35:28] Speaker B:** I'm good, man. **[35:29] Speaker A:** Um, I just had a question about different types of property. **[35:32] Speaker B:** Sure. something like buying something and doing Airbnb or buying let's say rural well more rural and putting like container homes on it for you know couple nights. **[35:43] Speaker A:** Yeah. So buying rural property putting containers home homes on it and like that theory sounds amazing in reality very expensive to do. **[35:50] Speaker B:** Yeah. **[35:51] Speaker A:** Yeah. So rural property loan to value ratios are much lower. They won't lend you 80% on most rural property. It's generally 70 or 60%. **[35:58] Speaker B:** Um then you need the money to be able to do all the work. **[36:02] Speaker A:** Yeah. The one thing I saw as well is like it's a lot of council problems **[36:06] Speaker B:** potentially. Yeah. People love winging about me. me. Every second day I got a email from the council. Um, so yes, there is. You got to get the right approvals and all the And even when you got approvals, people still winge about **[36:16] Speaker A:** Yeah. **[36:16] Speaker B:** So, and then with Airbnb, you've then got limitations to how many days you can Airbnb it. Right. So, in a lot of states now, you 50% occupancy max. So, you can only have it occupied for 180 days a year. **[36:27] Speaker A:** Yeah. Right. Um, so yes, they can work, but generally it's not the thing that's going to make you a lot of dope. I have Airbnb properties. I have the property that you generate income on, and the ones that have made me the most amount of money are the simplest ones. **[36:40] Speaker B:** Yeah. Right. **[36:40] Speaker A:** Yeah. I have Airbnb properties because I use them personally. Yeah. **[36:43] Speaker B:** Not because Airbnb is better. **[36:45] Speaker A:** Okay. All right. **[36:46] Speaker B:** So, anything that I use, I Airbnb when I'm not there, people stay there. And when I'm there, I get to use it. And I'm not paying for something 100% of the time when I'm not using it 100% of the time. **[36:54] Speaker A:** Yeah, that was the mindset. But I think that's a little further down the road. **[36:58] Speaker B:** Yeah. What you need capital to do any of this stuff. Anything that is exciting generally requires money. And to get the money, you need to start basic. **[37:05] Speaker A:** Yeah. **[37:05] Speaker B:** Yeah. **[37:06] Speaker A:** Okay. So, just stay stick with the basic stuff and in 10 years time you'll be fine and you can do that **[37:12] Speaker B:** Cool. **[37:13] Speaker A:** Lucky last. Um, got a quick question. So, I bought a house a couple of years ago and then now I got about $400,000 worth of equity just about sitting in it. Yep. **[37:22] Speaker B:** I'm just wondering what sort of renovations sort out the best value cuz I'm a chippy by trade. I can probably do it myself. So, I'm just thinking **[37:28] Speaker A:** that's a good thing. I'm a chippy by trade. I can probably do it myself. What's your hourly rate if you were a subie? **[37:33] Speaker B:** I'm subbing at the moment. I charge about 95 an hour. **[37:36] Speaker A:** Cool. **[37:37] Speaker B:** Keep doing that. **[37:38] Speaker A:** Hey, yeah, **[37:39] Speaker B:** don't worry about doing yourself unless you're doing it after hours or in times that you wouldn't work. All right. **[37:44] Speaker A:** Lots of people try and save a dollar. I'll do it myself. But then by doing that they're not working and actually making money which would be more valuable than the work that you're trying to do. **[37:52] Speaker B:** Um there is an unlimited amount of money that you can make in the world. Believe it or not, there is a limited amount of money you can save. So always focus on the making, not the saving. So if you're a trader, go and build your business. You'll make way more than putting in new windows in a shack somewhere. Okay. Um the other thing is the renovations. It's it's, you know, there's no hard and fast rule. It depends on the property where it is and all the rest of it. But for the most part, if you got 400,000 worth of equity, are you saying renovate that property or find another one to renovate? **[38:19] Speaker A:** Either or. I can either renovate that one, get a bit more equity up on that one. And **[38:23] Speaker B:** well, you don't need more equity. You've got it there. So, you probably should use it. **[38:26] Speaker A:** Generally, we'll go back and and and do the acceleration part once we're either add our servicey servicing capacity or we've bought enough assets, then we'll go back to them and add value. **[38:34] Speaker B:** Yeah. **[38:35] Speaker A:** So, I would I would use the equity, go buy another property, and then down the track, you can go and renovate it and add value to it if it makes sense or use someone else. And then also one more quick question. Other than the banks, what are other lending options that we probably have? I'm not too sure. **[38:48] Speaker B:** Other than the banks, **[38:49] Speaker A:** yeah, **[38:49] Speaker B:** you got a dodgy cousin or something that's got some **[38:52] Speaker A:** rich jungle. **[38:54] Speaker B:** You got banks, you got non-banks, you got private credit, but all of those ones, you would never use those for long-term financing. It's just for short-term So, you would just use banks. **[39:02] Speaker A:** Banks. Y. **[39:03] Speaker B:** Why? What makes you ask that question? **[39:04] Speaker A:** Uh, just like **[39:05] Speaker B:** you can't get money from them. **[39:07] Speaker A:** Uh, cuz I was doing a bit of dodgy for No, cuz I I I lost my job then I was I quit my job to do my own sort of business, but for the first six months I was just doing cashy. So **[39:19] Speaker B:** Oh, so you're not showing a lot of income in your business. **[39:21] Speaker A:** Yeah. So you got to that's what you got to work on as well. **[39:24] Speaker B:** Run the money through your business, pay the tax, get the servicing. **[39:27] Speaker A:** Yeah. **[39:27] Speaker B:** Yeah. **[39:28] Speaker A:** Cool. There's always a reason people ask questions, right? So like other than banks, but on on on that for someone like you who might like this year might not have the servicing, you could use a non-bank lender and use a low do product for example, assuming it's right for you, get the right advice to get the finance. You'll pay a slightly higher interest rate in the short term. And then once you've got profit in your company, you just refinance that loan back to a major. Yeah, I've done that before. I've had two years in business, don't have the servicing, use non-banks, have a good year in business, refinance all the debt back to majors. That's the game.