S2E28 - A Case Study: Should You Use A Parental Guarantor To Buy Your First Investment Property?

[00:00:00] Imti: Should use mum and dad as guarantor to buy your first investment property? Quick refresher. A parental guarantor is where a parent provides equity in their property as additional security for your loan. And what that allows you to do is get into the market with a smaller or no deposit at all. We broke down exactly how that works in our explained episode, and you can go back for a full deep dive, including what mum and dad are actually risking in that scenario, whether you can get extra borrowing capacity and a whole bunch of extra information that you would wanna know. But today we're gonna talk about it in practise, and the question that we want to is, when does using a guarantor for an investment property make sense? I've built four versions of this decision around our client, Jess her position is gonna stay the same the whole way through. Same way that it would with perhaps someone listening to this at home. And then each time we're gonna change one key thing, because these factors are actually the biggest hinges when it comes down to whether you should or whether you shouldn't do this, and whether it's right for you. Pete Skye, we're all gonna be making a call on the paddles that we have in front of us. Only rule is no fence sitting. Make a decision, commit to it back yourself, and we'll see where we land from there. You guys ready?

[00:01:24] Skye: Yep.

[00:01:25] Pete: Yeah, let's do it.

[00:01:26] Imti: Cool. Lemme give you some background about Jess. So, Jess is vet, she's her mid twenties. She earns $110,000 a year. She got $60,000 in savings, lives at home, no debt doesn't pay board, and she's looking to buy her first investment property. Now, the key things that you also need to know is that because of her job, her income will probably go up around $10,000 a year for the next four years. So there's a bit of a buffer there. And a guarantor allows her to purchase a property at about $600,000, borrow all the money and stamp duty. What that means for her is that if she buys a property, her monthly financial position, she's only in a $750 a month surplus at the end of the month, every month. Now with that in mind, I want you guys to make a call. Should she use a guarantor now or because of her income going up and her ability to save more money over time, should she wait and try and either save a deposit herself or just buy it later off? All right. Everyone's writing down what they think. Lemme know when you're ready. Alright, do the the flip. Okay, okay, there we go. So Pete, you've said yes, Skye, you've said yes. So going now instead of waiting. And i've also said, now

[00:02:47] Skye: no one disagrees.

[00:02:48] Imti: No, but could be for different reasons. Pete, why do you think that Jess should go now?

[00:02:54] Pete: Well, two reasons. Living at home.

[00:02:56] Imti: Mm-hmm.

[00:02:56] Pete: So we've got really fixed expenses there. There shouldn't be too many anomalies there from a month to basis. And you said only 750 a month surplus, but I actually think that's quite strong because she's living at home.

[00:03:07] Skye: Yeah.

[00:03:08] Pete: And the fact that she's gonna get an increase of $10,000 per year

[00:03:11] Imti: Mm-hmm.

[00:03:11] Pete: In her income.

[00:03:12] Imti: So from your perspective, it's, she's got cash in the bank, the surplus isn't too bad, all systems go.

[00:03:19] Pete: Yep.

[00:03:19] Imti: Mm-hmm. skye, what about you?

[00:03:21] Skye: My thought process is always, and you might disagree, Pete, but real estate's only as cheap as it is today. What I see when people wait is generally worse outcomes. And meaningfully, how long would she have to wait to improve that surplus outcome? I don't know how long it took her to save the $60,000. Because the guarantor scenario doesn't change borrowing capacity, what's the benefit in waiting?

[00:03:45] Imti: Yeah. So you would say also go now?

[00:03:48] Skye: Yes, go now.

[00:03:49] Imti: But for a completely different reason.

[00:03:51] Skye: Yeah.

[00:03:51] Imti: Mm-hmm. for me, similar to you Skye in the sense that you have certainty now, if you can go now, you know that you can go now.

[00:03:59] Skye: Mm.

[00:04:00] Imti: There's nothing to say that the type of property that Jess would be looking at later on doesn't get more expensive and her ability to buy it gets

[00:04:08] Skye: less

[00:04:09] Imti: worse. Right.

[00:04:10] Skye: Exactly.

[00:04:10] Imti: We've seen it over the last 12 months where property prices have gone up, wages haven't gone up as much, deposits have been worth less. Rates have gone up and the borrowing capacity has gone down.

[00:04:20] Skye: Yeah. So the risk is bigger if she waits.

[00:04:23] Imti: Mm-hmm.

[00:04:24] Skye: And if people are suggesting that the market could drop further, and that's the reason for waiting..

[00:04:28] Imti: Mm-hmm

[00:04:29] Skye: What if it doesn't?

[00:04:30] Imti: Yes. what if it does? What if it doesn't?

[00:04:32] Skye: It's a gamble.

[00:04:33] Imti: Mm-hmm. So we're all on the same page. Baseline level, Jess should be going ahead because she's got cash in the bank, she's got cashflow and she has certainty right now.

[00:04:43] Skye: Yeah.

[00:04:43] Imti: That she can do the thing.

[00:04:44] Skye: Yep.

[00:04:45] Imti: Cool.

[00:04:45] Pete: I've got one more thing to add actually.

[00:04:47] Imti: Mm-hmm.

[00:04:47] Pete: Unless you've got one you wanna add.

[00:04:48] Imti: No, no. Go.

[00:04:49] Pete: Well, it's an investment property, so you shouldn't have an emotional attachment to it.

[00:04:52] Skye: Mm-hmm.

[00:04:53] Imti: So you're just saying, the numbers number.

[00:04:55] Pete: Yep.

[00:04:56] Imti: And that's all that should matter.

[00:04:57] Pete: Yeah. If there's no emotional element to it and it's purely an investment, Jess is never gonna move in or anything like that.

[00:05:03] Imti: Mm-hmm

[00:05:03] Pete: Then yeah.

[00:05:04] Imti: Okay.

[00:05:05] Pete: And that's what the facts tell us, so

[00:05:06] Imti: Right. So let's move to scenario two. I wanna throw a curly one at the both of you that comes up really often in this scenario, everything stays the same and it will stay the same throughout. Wages, cash in the bank, all of those things. But now let's say that mum and dad are really nervous and and what they're saying is they want to help, but they're nervous about putting their home on the line behind behind Jess' investment journey because it's not an owner occupier. It's an investment, and they're worried about the market and whether it's the right time to buy. Now knowing this, what do you guys think?

[00:05:43] Pete: Mm,

[00:05:44] Imti: lock it in. Alright, 3, 2, 1. Oh, okay. Yeah. First disagreement. So, Pete, you're a yes. Skye, you're still a yes.

[00:05:55] Skye: Still.

[00:05:55] Imti: And I'm saying walk or potentially run a mile. So this gonna be fun.

[00:06:00] Pete: Mm-hmm did you wanna go first?

[00:06:02] Imti: No, no, I'm in the minority here. so I get to go last.

[00:06:05] Pete: Yes. You get to listen to the arguments.

[00:06:06] Imti: Yeah. Pete why are you still a yes?

[00:06:08] Pete: Well, assuming you've got a good broker, and you get the legal advice and as long as they understand it and you can get 'em over the line, then yes, I think it's a good move.

[00:06:16] Skye: like I have a ridiculously high risk tolerance and I appreciate not everybody does. So I'm coming at this angle trying to put myself in their shoes when my kids are older and I'm having the same concerns.

[00:06:27] Imti: Mm-hmm

[00:06:27] Skye: and if the market's the way it is right now. Yeah. Cool. get that. But from the risk perspective as we learn in the last episode, it's minimal. Even if the market tanked, the risk is still very, very low from the numbers.

[00:06:42] Imti: Mm-hmm

[00:06:43] Skye: What's your problem?

[00:06:44] Imti: Well, my problem has nothing to do with the risk and everything to do with the relationship. Property, inherently is emotional and stressful. Families are complicated. And the last thing that I personally would want is feeling like I owed my parents something and having that hanging over my head 24/7.

[00:07:05] Skye: But I would do anything for my kids. So

[00:07:08] Imti: you would, but it may not change how they feel about it.

[00:07:11] Skye: Yeah. The borrower, slave to the lender.

[00:07:13] Imti: Right.

[00:07:13] Skye: Get that, but it is a temporary

[00:07:16] Imti: mm-hmm

mm-hmm

[00:07:17] Skye: Ideally temporary moment in time.

[00:07:20] Imti: Mm-hmm. Well, I still think families are complicated. I wouldn't wanna personally deal with the headache and if at the very start they're already super nervous and it's not just one reason, it's multiple reasons. There's being nervous about putting their property risk, but if they're nervous about the market in general. They can't control the market in general. can control Jess' behaviour and they can agree that she's gonna pay down the debt and all those sorts of things. But then if the parents are gonna continuously be refreshing Instagram and, watching Channel Seven where the property cycles about to burst and we're all gonna be broke and then

[00:07:57] Skye: That would be annoying for four years.

[00:07:58] Imti: Me, as the kid,

[00:07:58] Skye: as a kid

[00:07:59] Imti: have deal with. Every single time that happens, I'm gonna walk away. Have I changed your mind?

[00:08:05] Pete: But what's the alternative though?

[00:08:06] Skye: I see your point.

[00:08:07] Imti: Mm-hmm.

[00:08:07] Skye: But no, I'd like, mum, dad, come on.

[00:08:11] Imti: Mm-hmm.

[00:08:11] Skye: Get over it.

[00:08:12] Pete: Yeah. Especially in the scenario where she's getting 10 grand, she's a vet, right?

[00:08:18] Imti: Mm-hmm.

[00:08:18] Pete: So like

[00:08:19] Skye: her income's increasing,

[00:08:20] Pete: 10 grand every year.

[00:08:21] Skye: She has surplus. Like,

[00:08:22] Pete: yeah,

[00:08:23] Skye: well what's your problem?

[00:08:25] Pete: Because that 10 in the next year, that 10 grand becomes, what's that? Over 52 weeks of the year?

[00:08:29] Imti: Hmm.

[00:08:30] Pete: That's. Ten's a lot.

[00:08:32] Imti: Yeah. Yeah.

[00:08:32] Pete: That takes the 750. What does take? The

[00:08:34] Imti: It takes the 750 to about 1,250 after tax.

[00:08:36] Pete: Yeah.

[00:08:38] Skye: Yeah.

[00:08:39] Imti: The surplus goes up.

[00:08:40] Pete: Yeah.

[00:08:40] Skye: Big surplus.

[00:08:40] Pete: Like if that surplus was different, maybe it would be a different story. But yeah, I'd still be a yes. But again, if you've explained everything to the parents and they still don't get it.

[00:08:48] Imti: Mm-hmm.

[00:08:48] Skye: Mm-hmm.

[00:08:49] Pete: Then yeah, that's where you probably,

[00:08:50] Skye: yeah.

[00:08:51] Imti: Yeah. And I think for

[00:08:52] Skye: me, it depends how worried they are in the the relationship

[00:08:54] Imti: Yeah.

[00:08:55] Skye: Too. But I suppose the conversation wouldn't be happening if they didn't have a reasonably good relationship in the first place. Right?

[00:09:01] Imti: Mm. You'd be surprised.

[00:09:02] Skye: Mm.

[00:09:02] Imti: Sometimes all it takes is a, Facebook ad or a Instagram reel to make everyone think that the guarantor's a great idea. And then when it gets explained to them properly, they start worrying.

[00:09:11] Skye: Oh, they freak out.

[00:09:12] Imti: Right. And they freak out. for me personally, if it was just they were worried about the debt not getting paid down, I would be like, do it. But if they're worried about a whole bunch of stuff that's outside of Jess' control, I would just be like, no, not worth the stress for me personally.

J don't do it.

[00:09:28] Pete: You're coming from Jess's position. Yeah.

[00:09:29] Imti: Yeah. Don't do it. Find another way to do it.

[00:09:31] Pete: Yeah. And I guess there's other guarantee schemes out there and stuff like that

[00:09:34] Imti: mm-hmm.

[00:09:34] Pete: you might be able to, she's got the 60k savings.

[00:09:37] Imti: Yeah.

So mum and dad are nervous. We're agreeing to disagree?

[00:09:40] Pete: Mm.

[00:09:40] Skye: Still, yeah. Still haven't changed my mind.

[00:09:42] Imti: Yep.

[00:09:42] Skye: But

[00:09:42] Imti: yes,

[00:09:43] Skye: I see your point.

[00:09:44] Imti: Yes. And I'm still a "Wait.", if you're listening to this, it's just about understanding what the parents are nervous about, right?

[00:09:52] Skye: Mm-hmm.

[00:09:53] Imti: And how that can be controlled. But also, if you are looking at doing this, is it going to stress you out, them stressing out 24/7?

[00:10:01] Skye: Mm-hmm.

[00:10:02] Imti: Skye, to your point, might be water off a duck's back.

[00:10:05] Skye: Mm.

[00:10:05] Imti: Me personally, I wouldn't want a bar it and wouldn't want anything to do with it.

[00:10:10] Skye: Yeah.

[00:10:10] Imti: And I think that emotional layer would dictate my decision.

[00:10:14] Skye: Mm.

[00:10:14] Imti: So we're agreeing to disagree. Now, let's go to number three. A third difference in the scenario. I want you to forget about the one that we just discussed. Jess' parents are fine and the only thing that's popped up now is because of her job, she's eligible for an LMI waiver and can purchase the investment property with a 5% deposit. So her choice is she puts in some cash and goes alone, or she goes with a guarantor. I'm gonna give you guys some numbers to help you make a decision. Option one, she does the lMI waiver. Her purchase price has to be $400,000 because after she puts in from her 60k after purchasing the property, she'll have $20,000 left in the bank, which is why I've capped it at 400,000. So it leaves a responsible savings in the bank after she buys. Her monthly surplus. Goes from $750 to to $2,042. Why? Because her loan's lower compared to the bigger purchase price, and the parents are completely out of the situation. Option B, she uses the guarantor, purchase for 600,000 and exactly what we said at the very start, $750 a month surplus. And because she's using a guarantor and it's only based on borrowing capacity, she can actually purchase for an extra $200,000. But the catch is the parent's property is involved and there's a guarantor. So option A, she buys low at 400k, does it solo. Option B goes guarantor and gets to go high. All right. What do we got? Let's go.

[00:11:50] Pete: What'd you do?

[00:11:50] Imti: Oh, okay. This is a surprise.

[00:11:52] Pete: Mm.

[00:11:52] Imti: So we've all gone B and think all expected the other one to go A.

[00:11:57] Pete: Mm-hmm

[00:11:57] Skye: You've gone A

[00:11:58] Imti: Oh yeah. Shit. I have, well,

[00:12:01] Pete: too bad you gotta hold it now.

[00:12:02] Skye: You need to fight that argument.

[00:12:03] Imti: Yeah, that's the ADHD tax for anyone who's watching this. And we will not edit this out. So I did go A

[00:12:09] Skye: accidentally,

[00:12:10] Imti: No, I meant to go A.

[00:12:12] Skye: Okay.

[00:12:12] Imti: Me just looking at run sheet, like an idiot, I thought was B. But anyway, again, it's you two against me. Seems like a trend.

[00:12:20] Skye: I a hundred percent thought Pete was going A though.

[00:12:22] Imti: Yeah. Okay. So you are both saying B, which is buy 600,000, use a guarantor.

[00:12:29] Skye: Yep.

[00:12:29] Imti: I'm saying 400 K and go low. And not use a guarantor. a car tool. Try and convince me or I can try and convince you.

[00:12:36] Skye: Yeah. Can you go first?

[00:12:37] Imti: I will go first.

[00:12:38] Skye: Go low, go. No, I'll go low. Dunno why you would. Yeah,

[00:12:41] Imti: To me it's all about the surplus at the end of the month. If her surplus becomes over two grand and her surplus almost triples by going lower. I would be encouraging Jess to put the extra $1,500 a month into paying down the debt. Because the way things are at the moment,

[00:12:59] Skye: I

I gonna say, is your frame of reference the market right now?

[00:13:02] Imti: Yes.

[00:13:03] Skye: Yeah.

[00:13:03] Imti: It's the market right now, but it's also the fact that, negative gearing benefits basically don't exist anymore. And for someone buying their first investment property with strong surplus and their income's only gonna go up, the ability to have a really strong cash flow property with not a lot of debt within five years, and it's positively geared and their income's gone up, they'll be able to go again if they want to by themself, if they buy low. And that's why I've gone go low, because it's all about the extra buffer that she's got at the end of the month. So long as it gets pushed towards paying down the debt and not paying as much interest as possible

[00:13:43] Pete: Yeah. On the assumption that that surplus gets put into the

[00:13:46] Skye: Yes,

[00:13:47] Imti: yes. That is my condition. That is my condition.

[00:13:50] Skye: That was my brain.

[00:13:51] Imti: The surplus doesn't just get used on a holiday every single month.

[00:13:54] Pete: And I think that's important a lot of people don't have that willpower, but let's assume Jess does.

[00:13:58] Imti: Mm-hmm. Yeah. So assuming Jess does have that willpower,

[00:14:02] Skye: yeah,

[00:14:02] Imti: I'm option A all day

[00:14:04] Skye: because that was part of my thinking going, well that's a huge surplus. What are they gonna do? Invest it in shares. Like what are they doing with that surplus? So I hadn't explored that option.

[00:14:13] Imti: Paying down the debt.

[00:14:14] Pete: Does it change your, change your mind though?

[00:14:16] Skye: I I don't think it does. Because the costs of entry are so high.

[00:14:21] Imti: Mm-hmm

[00:14:22] Skye: in my mind, plus also my risk tolerance that I would absolutely suggest the 600. ' you don't wanna be going, okay, I bought 400 and I kind of wanted the 600 and I should have just done the 600, 'cause the cost of buying and selling it's just not worth it. but i've, yeah, I'm, leaning towards the A, but

[00:14:41] Imti: Have I twisted your arm?

[00:14:41] Skye: Yeah. 'cause my thought process was you wanna buy as much as you possibly can afford comfortably, she still has a surplus. And I saw the guarantor scenario being very low risk, her income's increasing. What's the saying? You buy the worst house on the best street, right?

[00:14:56] Imti: Mm-hmm.

[00:14:56] Skye: Like same theory. Buy as much of a good asset as you can. So in this current marketplace, maybe Pete can speak to it, but I would see that 600 gets you a far better quality of investment than 400.

[00:15:09] Imti: Mm-hmm.

[00:15:10] Skye: That was my logic.

[00:15:11] Imti: Okay. I can't disagree with you. between the two, the $600,000 property from a capital growth perspective will most likely perform better

[00:15:19] Pete: as long as you get the right help.

[00:15:20] Skye: Yes.

[00:15:21] Imti: Pete, what about you?

[00:15:22] Pete: I take it back to like the income and the risk profile of Jess. So it's pretty solid. Whether she's got a $750 surplus or a $2,000 surplus with 10 grand increases over the next couple of years.

[00:15:35] Skye: Mm.

[00:15:35] Pete: I don't think that really matters. And it does come down to what's gonna achieve the most amount of capital growth. Because if you can get the right asset and you buy something for six, you're gonna get growth on the extra 200k.. So assuming you can buy right, that to me is the better option because she's got pretty solid buffers. She's staying at home, she's got income increasing. If she had no savings or had a low income role, no chance actually income increases, then I be recommending the cheaper option. But in

[00:16:04] 2_Raw_Camera_21-08-2026: this

[00:16:05] Pete: this instance, 600k you a pretty good quality house or even unit these days.

[00:16:09] Skye: So potentially more capital growth than her $10,000 increment of salary.

[00:16:13] Pete: Yeah, that's right. Yeah.

[00:16:14] Imti: Mm-hmm.

[00:16:15] Pete: Yeah. it comes down to the quality of the too. As everyone knows, I've bought cheap before and have regretted it. At 600k, you can get some pretty good quality stuff. And

[00:16:23] Imti: What about negative equity?

[00:16:24] Pete: Negative equity,

[00:16:25] Imti: so straight away, if she's borrowing 107% of the purchase price

[00:16:28] Pete: mm-hmm.

[00:16:28] Imti: She's behind the eight ball from an equity perspective from day one.

[00:16:32] Pete: Mm-hmm.

[00:16:33] Imti: She needs to make up that difference.

[00:16:34] Pete: Yep.

[00:16:35] Imti: In the capital growth and then some.

[00:16:37] Pete: Yep. Which make that up ideally in the first two years. So it depends on how long she's holding it for though.

[00:16:42] Imti: Mm-hmm.

[00:16:42] Pete: if this is a 10 year hold, then I don't think that matters. If she's only gonna hold it for three or four years, that's when yes. What you just said does play a big factor.

[00:16:51] Imti: See, I think the opposite. I think if she's gonna be holding it for long term, it makes even more sense for her to go lower.

[00:16:56] Skye: Why?

[00:16:57] Imti: Because she can be positively geared probably within 12 months.

[00:17:01] Pete: But what type of asset are we talking though?

[00:17:02] Skye: Mm.

[00:17:03] Pete: This is where,

[00:17:03] Skye: that's what we are stuck on.

[00:17:04] Pete: If this was 800 versus 600

[00:17:06] Skye: different story.

[00:17:07] Pete: Mm-hmm. I'd go 600.

Yep.

[00:17:08] Imti: Yep.

[00:17:09] Pete: Look, I just bought 400k asset myself, but it was in a strata group. There's 10 units on the block, which is good, but strata does come with a lot of headaches for a first time investor. And that's where I also push towards at 600k where we can get a house.

[00:17:23] Imti: Mm-hmm. All right. So I think we're all on the same page. Yeah. She goes high. It's probably better capital growth long time. But I don't think either of you have flipped me , the, on the going low piece.

[00:17:31] Pete: Mm.

[00:17:32] Imti: Because I think just from a holding the asset, peace of mind perspective, surplus income.

[00:17:37] Skye: Yeah.

[00:17:37] Imti: If the discipline's there to smash down the debt, it just opens up so many more options over the next three to five years.

[00:17:43] Skye: That's variable.

[00:17:44] Imti: Mm-hmm.

[00:17:44] Skye: The other variables, we don't know how long she plans on holding.

[00:17:47] Imti: So,

[00:17:47] Skye: So,

[00:17:48] Pete: you're getting lower quality, so you risk the capital growth element.

[00:17:51] Skye: Yeah. Which, having heard your stories, is a is a concern.

[00:17:54] Pete: Yeah. It could be. Yeah. Yeah. If you're going into a regional town buying an old Weatherboard home for 400k.

[00:17:59] Imti: Yeah. Yeah, no. Don't get me wrong, but on both sides of the fence, it comes down to asset selection, right?

[00:18:03] Pete: It does, you've

[00:18:03] Imti: gotta pick

[00:18:03] Skye: the right one, which is where, in my head I'm going, 400 is a terrible asset selection. 600 is good.

[00:18:09] Imti: Okay. Agreeing to disagree.

[00:18:10] Pete: Yeah.

[00:18:11] Skye: Yeah.

[00:18:11] Imti: Alright. But

[00:18:12] Skye: But I, I've,

I'd like to be Switzerland.

[00:18:14] Imti: Almost swung you on the numbers?

[00:18:14] Skye: Almost. Yeah.

[00:18:15] Imti: Almost swung you on the numbers.

[00:18:16] Skye: Yeah, you did.

[00:18:17] Imti: Mm-hmm. I'll take that. All right, so we've covered now or later, we've covered low deposit and buy low without a guarantor. Now this one comes up all the time with clients who are living at home and looking to buy an investment property using guarantor. Is that eventually they wanna move out, right? So Jess plans to move out in 12 months time. Again, her income is gonna be the same. It's $110,000 and going up 10 grand every year. She's gonna have 60k the bank, and she's looking at the $600,000 purchase price with a guarantor. But now she's moving out in 12 months time. So in 12 months time, her income will go up. But what's gonna happen to her cash flow is that her cash flow is actually gonna be negative $750 a month. From when she moves out. Would you still buy, wait, or something else?

All right, let's go. Oh, okay. So

[00:19:15] Pete: all buy,

[00:19:16] Imti: you're sitting on the fence. "Buy, but" is a fence-sit.

[00:19:18] Pete: Well, you said or something.

[00:19:20] Imti: Yeah. Or something.

[00:19:21] Pete: It's not, but it is all. Yeah, it is. You understand why

[00:19:23] Imti: and you've got,

[00:19:23] Skye: and mine's a "yeahh".

[00:19:24] Imti: Yeah. Okay.

[00:19:25] Skye: There's a disclaimer.

[00:19:26] Imti: Not as confident.

[00:19:27] Skye: Yeah.

[00:19:27] Imti: So again, element of fence-sitting, And I've got "Buy."

Full stop.

[00:19:32] Skye: Okay,

Okay

[00:19:32] Imti: So, "Buy but..."

[00:19:34] Pete: But. Yeah, for me, based on what we can see, Jess is pretty switched on.

[00:19:38] Imti: Mm-hmm.

[00:19:38] Pete: A lot of people will plan to move out, they'll run their numbers and they'll be like, shit, I can't do it. Can't, so I can't do it, but, I would say get a second job. And that's what I did.

[00:19:46] Skye: That was my first thought at the start. Mm-hmm. Is there room in her life for a side hustle, if we're trying to increase income?

[00:19:53] Pete: Look, if you've got no kids and I know not everyone loves it, but if you want to get ahead, you wanna build wealth, you make sacrifices.

[00:20:00] Imti: Mm-hmm

[00:20:01] Skye: suck it up.

[00:20:01] Pete: And this could be one of them.

[00:20:02] Imti: Okay. So you wouldn't be worried about actually knowing that you're going into a deficit?

[00:20:07] Pete: No.

[00:20:07] Imti: You'd just tell Jess to get another job.

[00:20:08] Pete: Yeah. Worse comes to worse. Get another job, or don't move out.

[00:20:11] Skye: Yeah. Mm-hmm.

[00:20:12] Pete: she hasn't done it yet. And also knowing that she's getting the extra 10 incrementally. Right. So we assume she gets the 10.

[00:20:18] Imti: Mm-hmm.

[00:20:18] Skye: Mm-hmm

[00:20:19] Pete: well, if she waits another year, got an 10.

[00:20:20] Skye: So maybe two years,

[00:20:21] Pete: so maybe it's two years a little job on the side or something like that. Like it doesn't have to be as bad.

[00:20:26] Imti: Yep.

[00:20:27] 2_Raw_Camera_21-08-2026: Scott.

[00:20:27] Skye: Yeah. Which was my "yeahh" with the disclaimer. Because let's come back to the reason why we were doing it which was to grow wealth or depending on her age and life cycle. Like there's too many unknowns here. But what the, I guess what the goal was in the beginning, coming back to that, not wanting to live at home for the next 10 years, I don't think is a reality for anyone considering this.

[00:20:52] Imti: Mm-hmm.

[00:20:52] Skye: So there has to be a way for her to achieve both, whether it's getting another job or her income increasing. There needs to be an exit point. Or she's moving into it and it's no longer a rental property. Like I've got too many questions on the unknowns.

[00:21:05] Pete: It's also using what you got. You've got 60 grand there, right, so portion of that interest saving account, ETFs, whatever it may be. You're halfway to 750 already.

[00:21:15] Imti: Mm-hmm.

[00:21:16] Pete: And I'm just, I reckon that's what you are probably gonna say because you've been at me about ETFs and that, or cash at bank or whatever it is.

[00:21:22] Imti: Yeah.

[00:21:22] Pete: Term deposits.

[00:21:23] Imti: So mine's a "buy,". Provided that this is identified when the purchase is happening and it's planned for.

[00:21:32] Pete: Yeah.

[00:21:32] Skye: Yeah. The exit plan is already there.

[00:21:34] Imti: The plan is there. Mm. Because the 60 grand in bank, arguably in this situation, that's actually, I'm not gonna say too high of a savings buffer, but it's more than a comfortable savings buffer.

[00:21:45] Skye: Mm.

[00:21:45] Imti: In terms of having six months worth of expenses in the bank as a benchmark.

[00:21:48] Pete: Mm.

[00:21:48] Skye: Yeah.

[00:21:48] Imti: She's probably got double that in 12 months. The other thing is, if she knows that she's moving out in 12 months and she's got a surplus for 12 months

[00:21:56] Skye: Mm.

[00:21:56] Imti: She can actually save that deficit in the first 12 months.

[00:21:59] Skye: Correct.

[00:22:00] Pete: And have the original 60.

[00:22:01] Imti: And have the original 60.

And so that year that she's gonna be negative cash flow and " tight. " So long as it's prepared for, she won't it

Mm.

[00:22:09] Skye: Mm.

[00:22:10] Imti: She won't realise, because there is enough cash savings in the bank and there's a buffer of minimum six months worth expenses. In this case, it's almost 12 and she had this surplus in year one. But for me, ultimately it would just boil down to it being identified at the very start.

[00:22:24] Pete: Yeah.

[00:22:24] Skye: Yeah.

[00:22:24] Imti: And being planned for.

[00:22:25] Skye: I think the reason we all agree though, is that the future looks bright for jess.

[00:22:29] Imti: Mm mm

[00:22:30] Skye: If that wasn't on the table.

[00:22:32] Imti: Yes.

[00:22:32] Skye: Even with a second job, like if she had maybe not such a good job and there wasn't career progression or income progression.

[00:22:39] Imti: Yeah,

[00:22:39] Skye: Yeah.

[00:22:39] Imti: Not a chance.

[00:22:39] Skye: It changes the situation.

[00:22:41] Imti: Don't do it.

[00:22:41] Pete: Mm.

[00:22:42] Skye: Mm-hmm.

[00:22:42] Imti: Mm-hmm.

[00:22:43] Skye: But there's a lot of options and a lot of levers she could pull.

[00:22:47] Imti: the biggest takeout here is that negative cashflow isn't always a deal breaker if you've got savings in the bank and you've got a plan around it.

[00:22:54] Skye: Mm-hmm.

[00:22:55] Imti: Because most people would actually listen to this situation i'm not sure if you guys agree or not, they would be like, oh, my budget's negative $750 a month, I'm not doing it.

[00:23:03] Skye: Mm yeah. A lot of people

[00:23:04] Imti: you're crazy. I'm not doing it.

[00:23:05] Pete: Yeah. People don't step through option A, B, C, D.

[00:23:09] Imti: Mm.

[00:23:09] Pete: They'll just go straight to No.

[00:23:11] Skye: Yeah. There's only option A, we don't find B, C, and D. Yeah. Yeah.

[00:23:14] Imti: Whereas here, I think the important thing is, we know that good income trajectory,

[00:23:18] Skye: Mm.

[00:23:19] Imti: cash savings in the bank, and we've got a 12 month runway.

[00:23:21] Skye: Yeah. At least.

[00:23:22] Imti: And all those things bring us back down to Yeah, let's do it.

[00:23:26] Skye: Yeah.

[00:23:26] Imti: So to bring us home on the, should you use a guarantor for an investment property purchase, for anyone listening to this, if you could give them one thing to remember, Pete, what would it be?

[00:23:37] Pete: Buffers.

[00:23:38] Imti: Mm-hmm.

[00:23:39] Pete: Make sure you've got your buffers in place.

[00:23:40] Imti: Skye?

[00:23:41] Skye: If you are lucky enough to have parents to help hug them and love them, do it.

[00:23:45] Pete: I like that.

[00:23:45] Skye: How good.

[00:23:46] Imti: I love it. And I think mine would be, think about how you'll feel if things go wrong.

[00:23:51] Skye: Mm. Such a doomsdayer.

[00:23:52] Imti: Well, someone's gotta be a negative Nelly.

[00:23:54] Skye: It's fun over here with the rainbows.