Will Interest Rates Continue to Rise? With Goose McGrath

EP 032: This week I had our property expert Goose McGrath on the podcast.

I like getting his perspective on things as he has a unique positioning.

He is a:
○ Business owner
○ Investor
○ Buyers Agent (he buys property for people)

I'm very mindful of where I get my information these days.

The mainstream media will write anything to get you to click
(regardless of how much they have to bend the truth)

Finding the source of truth can be incredibly difficult.

Anyhow,

Why is the property market important to Australian business owners?

Regardless if you invest in property or not…

I wanted to take a moment to express why it’s important for Australian business owners to keep informed on what's happening in the property market.

1) You live in a property
2) Your team lives in a property
3) Your business operates from a property
4) Companies you invest in operate from a property
5) The Australian businesses you do business with operate from a property
6) Your Australian clients / customers live in a property
7) It offers an opportunity to build wealth as an asset class

When you think about it, property touches our lives in so many ways.

It is not an area you can afford to be ignorant in.

Having strong knowledge of property is a huge advantage as a business owner and someone who wants to build their wealth!

Below are my takeaways and insights from the podcast with Goose.

In this week’s episode:
○ A different perspective on interest rates and inflation
○ Is the property market crashing?

Prefer to listen or watch?

You can hear Grant and I discuss these topics in more detail on the podcast
Click here to tune in: https://linktr.ee/businessandinvestingcom

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INSIGHT 1

A different perspective on interest rates

Straight out of the gate I asked Goose his views on interest rates.

What's happening with interest and inflation now?
Where do you think they will go next?

Here is his take:

○ Yes, interest rates have gone up.
○ Yes, they are likely to go up further.

He almost brushed it off as not a big deal.
(which was surprising)

He continued to share that…

○ The RBA does not want to crash the property market
○ Once inflation is under control they will likely start dropping rates again
○ Rents will continue to go up to counter the effect of rising interest rates

Property is a long game and we should not be put off by a little speed bump along the way.

Although I’m not too surprised, I know you might be.

Especially as this is a very different message than we see from the mainstream media.

It was interesting, as Goose made those points, it reminded me of a key lesson I learnt years ago:

Sometimes we just need to zoom out.

It’s easy to get suckered into short-term thinking.

Both in business and in wealth building I'm playing a long game.

Yes, there will be periods of time that are not ideal.

But, what I need to do is make sure I have enough buffers and risk mitigation in place to ride those times out and keep playing the long game.

As I know many people need to as well.

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INSIGHT 2

Is the property market crashing?

I have seen many economists and media outlets forecasting a 20%+ drop in the property market.

So, the next question I asked Goose.

Is the property market crashing?
Do you think it will drop 20% or more?

Here is his take on things:

Rising interest rates and inflation generally impact expensive property markets much more than more affordable property markets.

Melbourne, Sydney and Canberra have experienced slight drops in the recent months.

To put it in perspective they have dropped 1-2% in the last few months after going up 20% plus in the past year.

However, when you look at the rest of the country prices are still going up… and so are rents.

This type of environment could actually be a tailwind for more affordable areas.

As people get priced out of more expensive markets, the demand shifts to more affordable areas.

Many areas of the country will thrive while interest rates and inflation are going up!
(Read that again to make sure it sinks in.)

This type of environment is the very thing driving up some property markets.

Once Goose shared this, I realised that it was something I had not put a lot of thought into.

In general, I made the assumption that rising interest rates would not be good for property overall.

As, in my mind, it would lower the overall demand for property.

However when you think about it.
People still need a place to live.

The demand for housing hasn't changed.
It’s the type of housing that has!

It’s kinda like this…

Think of housing like food.

Someone who can't afford to eat at a fancy restaurant doesn't stop eating.

They instead spend money on food they can afford.

If food prices rise, it will just change the demand for certain types of food.
Which we can see in today's environment already.

Supply and demand wins again!

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UPCOMING

Be on the lookout…

Later this week we will be publishing an episode about building the ‘right’ network.

Specifically, one that aligns to your goals.

If you plan on being wealthy then I highly encourage you to spend more time with wealthy business owners.

A poor quality network is an anchor to achieving success at anything.

Anyhow, more on that later in the week.


Episode Highlights:
00:00 Welcome!
02:29 Why interest rates are going up
06:44 How interest rates affect loan affordability
14:18 Wealth creation in business and property when interest rates are high
20:52 What will happen to interest rates in the coming years?
25:17 Should interest rates be a deciding factor for business owners?
34:04 Sourcing true and accurate information

If you enjoyed this episode, be sure to subscribe, tune in and share this podcast!


Resources:
○ Business and Investing website: https://www.businessandinvesting.com/
○ Business and Investing partners: https://businessandinvesting.com/partners
○ The Investor Lab https://theinvestorlab.com.au/
○ Episode 007 How Borrowing Money is Different for Australian Business Owners with Aaron Whybrow https://youtu.be/Qtz20zTniiU

About the Guest:
Goose McGrath is the CEO of Dashdot, a property investment firm helping business owners build prolific, profitable property portfolios. They specialise in sourcing properties that are under market value, cashflow positive and have strong growth and value add potential.

Get a special discount from Dashdot when you get in touch with them through https://businessandinvesting.com/partners/dashdot/

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DISCLAIMER:
All information we share is NOT financial or investment advice and is purely intended for entertainment and educational purposes only. Always seek professional advice before acting on any financial decision.

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