Shane Black, of Pearl Financial Group, is a qualified financial planner and Gen Y wealth specialist, dedicated to educating Gen Y on how to tackle the unique obstacles that they face in today’s challenging market. We were lucky enough to pick his brain on Gen Y’s boost into the property market, and how new builds might hold the key to their first home.
Q. When did you start taking a keen interest in Gen Y’s financial challenges?
I’ve always been interested in the financial challenges of Gen Y, since I’m Gen Y myself! The challenges that my clients face are challenges that I’ve faced myself. Whether that’s changing careers, building a business, starting a family, starting to invest or buying a first home, I’ve been there!
Q. Do you think the public portrayal of Gen Y plays a factor in these challenges?
There is definitely quite a bit of media coverage about Gen Y and the other generations’ perception of us, but I don’t think this plays a factor in the financial challenges that we face.
The reality is that the world is a very different place to the world that Gen X and the Baby Boomers grew up in, so we face some very unique challenges.
Q. What are some of the unique financial challenges that Gen Y face?
We are more connected than ever before; this is both a good and bad thing. Anything we’d like to know is at our fingertips (thanks to the internet), so we’re definitely not starved of information.
This access to information can also be a bad thing! Often when searching for financial information, we can be presented with conflicting information. How do we know what to follow? What is going to be best for us?
I genuinely believe that access to more information is not the answer – it’s having the discipline to implement some simple strategies and follow them through. One of my favourite quotes about this comes from a guy named Derek Sivers: “If more information was the answer, then we’d all be billionaires with perfect abs”.
Gen Y needs to know how to focus on the end goal – not the next step. If we know where we want to go, then reverse engineering the path to get there becomes easy and we know what information or advice to listen to – and more importantly – what to ignore.
Q. How do these challenges factor into Gen Y’s difficulty to get into the property market?
This overflow of information can result in something that I call “analysis paralysis”. There are two symptoms to this condition that mostly affects Gen Y. The first symptom usually results in the following words beings used – “I think I’ll just learn a bit more about the property market”. This results in no action being taken and months, or sometimes years, passing without any meaningful progress.
The second symptom involves speaking to multiple ‘experts’. This results in often conflicting advice, causing confusion and a feeling of not knowing which next step to take. Both symptoms result in the same thing – lots of learning new stuff, very little meaningful action or results.
Q. Are there ways to overcome these challenges?
Definitely. First, you need to think about what your end goal is. Are you looking to buy a property to raise a family in? Are you looking to build an investment property portfolio? Or are you just wanting to get onto the property ladder and turn the first property into an investment later? Each of these questions is going to result in different action needing to be taken, so it’s important that you start with the end in mind.
If you’re clear on your end goal, then you’re also going to be able to identify the right property to focus on. This will flow down to the actual financial considerations that will eventually come into play – i.e. how much deposit you need, how your finance will work, etc.
Q. Do you think New Builds hold potential for Gen Ys looking to get into the property market?
Most definitely. New builds can fit a number of strategies for Gen Ys looking to get into the property market. For example, if you intend to live in the property, there can be a grant payable to help with any associated costs (check with your relevant state, as every state is slightly different). This grant isn’t available if you buy an existing property, so it can be a nice little boost to get you into the property market sooner.
Also, if you intend to use your first property as an investment, then it’s possible that you may be able to access more tax benefits. This is since depreciation is only claimable if you are the original owner of a property.
The government changed the rules back in 2017 meaning that if you buy a second-hand investment property, you can no longer claim depreciation.
Q. Is a New Build a wise financial decision, or an older ‘fixer-upper’? What are the financial risks/advantages of both?
I personally never recommend a first-time home buyer buy an old ‘fixer-upper’… unless they have a big budget and lots of time. The reason being is that any renovations almost always take much longer than expected and cost a lot more than budgeted for. Gen Ys are usually quite busy, so it can be hard and very stressful to see a renovation project through…especially if it’s your first property.
A new build isn’t without its risks, though. It’s easy to get carried away with a new build and go over budget, so you need to keep tabs on what you’re spending and remain realistic.
Q. Do you have any helpful tips for a Gen Yer considering purchasing a New Build?
Be careful of who advises you where and what to build. There are many professional buyers’ agents out there that can help you if you need help, but there are just as many people who are just looking to offload property any way they can.
Make sure you get advice from a reputable professional every step of the way. Engage a mortgage broker to sort out finance early. Get a conveyancer to help finalise the legal side of things. Recruit a building and pest inspector to make sure that there are no nasty surprises.
Finally, just keep your goal in mind. If it’s an investment, focus on the numbers. If it’s a place to live, make sure that you’re going to be happy living there.
Q. Who can Gen Y go to for advice or support in this process?
Depending on how you’re approaching this process, there may be a number of people you’ll need advice from.
- If you’re involved in the building process, then obviously you’ll need some architect and builder support. If you’re buying off the plan, then you won’t need to worry about this.
- I do recommend that you sit down with a financial planner to help you articulate your goals. If you get into a meeting with a financial planner and they are pitching products to you – run. A professional planner should focus on your goals and what’s important to you.
- You’ll also need to engage a mortgage broker early in the process. Please don’t leave this until later, sorting out finance can be stressful, so get the ball rolling as soon as possible.
- Finally, you’ll need a conveyancer to take care of the legal side of the purchase. If you’re purchasing an investment, you may also want to speak with your accountant for tax advice. I encourage people to find a good financial planner first as they will have likely surrounded themselves with quality people from the other professions. I know that I have a strong network of top-notch professionals that I work with…. and an even longer list of ones who I wouldn’t send my clients to. A good financial planner will have already vetted professionals that can get you the result you need.
Q. If you had one last message for Gen Y, what would it be?
Start with the end in mind and reverse engineer your path forward. Once you’ve identified that path and are confident that it’ll get you close to where you want to go, stay focused. Ignore distractions and don’t be afraid to say ‘no’ to distractions disguised as opportunities.
Who is Shane Black?
Shane Black initially came from a law enforcement background, serving in the NSW Police Force as a Detective. However, his keen interest in investment markets and personal finance led to a pivot in career towards financial planning. After a few formative years learning the ropes, Shane started his own financial advice firm – Pearl Financial – whose broad client base slowly evolved until it exclusively focused on Gen Y clients.
He specialises in cash flow management, debt optimisation, investments, wealth protection, investment & ownership structures and estate planning. If you’d like to read more about Shane Black’s financial tips or enquire about personal financial advice, you can explore Peal Financial Group’s website here.
