A strategy only works if it survives contact with real life. In this episode of Confessions of a Property Investor, Pamela Philips and Michelle White from Chase Wealth Australia go through the ways clients quietly derail their own plans, and what it takes to put them back together.
It starts with the most common one. Equity is released from the family home to cover the 20 per cent deposit and completion costs on an investment purchase. The money lands in the client’s account, it looks like spare cash, and it gets spent. Sometimes $40,000. In one case, $90,000 on a new car. Every one of those turns into a renegotiation that Chase Wealth Australia absorbs rather than bills for.
Then the self managed super fund problems, which are less obvious and more damaging. Employer contributions are often what covers the gap between the mortgage and the rent, so when a fund tips into non compliance because the tax return and audit were never lodged, the Australian Taxation Office can pull its regulation details and contributions physically stop reaching it. The client’s read on that is simply that the super fund is losing money.
It closes on communication, and on the detail most people would never think to mention. Changing jobs mid finance. An undisclosed credit card. And the client whose two credit enquiries, on cards he never actually took out, dropped his score far enough to trigger an auto decline and force a change of lender, rate and product.
The plan has to be rebuilt around a smaller number. Michelle White describes the sequence: the refinance settles, the funds land, and the client reads the balance as an extra set of funds rather than the deposit it was calculated to be. Because the strategy was built against that client's borrowing capacity and lending requirements, removing part of the deposit changes what can be bought and sometimes whether the purchase proceeds at all. Chase Wealth Australia renegotiates rather than charging again for the work, but the episode is clear that this is the single most common way a strategy comes apart.
Usually because the fund has gone non compliant, and it goes non compliant because the tax return and the audit were never lodged. Pamela Philips traces the chain: without the documentation the accountant and auditor cannot lodge, the Australian Taxation Office eventually withholds the fund's regulation details on Super Fund Lookup, and because contributions are disbursed electronically through that record, they simply stop arriving. What the client sees is a super fund that appears to be losing money, with no obvious cause.
The episode treats that as the wrong question. A portfolio review showing several hundred thousand in equity is evidence the position is working, and selling ends the growth that produced the number. The response in the room is to ask what the sale is meant to achieve, because the usual goal, reducing a mortgage, rarely requires disposing of the asset still doing the work.
Yes, and this is the most surprising mechanism in the episode. A client enquired on two credit cards and never proceeded. The enquiries alone reduced his credit score to the point that the lender the deal had been submitted to would have automatically declined the file. The deal was restructured with a different lender, which changed both the loan product and the interest rate. The cards were never opened and never used.
Because a finance process is not a single moment. Michelle White describes roughly six months between submitting the refinance and the property actually settling, and the file is assessed again inside that window. Anything applied for in the meantime is visible when the reassessment happens, which is why an enquiry made weeks after approval can still change the outcome.
Anything that changes the financial picture, and promptly. The examples given are changing jobs partway through finance, so the payslips submitted to the bank come from a different employer on a different income structure, an additional credit card that was not on the original assets and liabilities, and a redraw that has been spent. Michelle White's position is that circumstances changing is understood and workable. It is only a problem when nobody is told.
Do not. Pamela Philips states it plainly at the end of the episode: while you are going through a finance process to buy an investment property, check with Chase Wealth Australia or your finance broker before you apply for a credit card, an additional loan, or anything else.
"And there've been times where we've had a client spend upwards of $40,000."
Michelle White, 2:22
"The client had not actually taken them out, but he'd enquired on them, and what that had done was decrease his credit score to a point where the lender that we wanted to submit the deal with was no longer going to accept his file."
Michelle White, 10:25
"What gets me, I understand circumstances change. Communicate it."
Michelle White, 8:44
"We are the first to say every strategy has to be fluid, because circumstances do change."
Michelle White, 9:28
