The Smart Investor Swims Against the Current!

The Smart Investor Swims Against the Current!

Are you a smart investor? Or do you follow the herd of sheep – or maybe you are a fish mindlessly swimming along with the current? I want you to start thinking like a shark, going against the current, being the top predator and ruling the ocean, or in this case the property market. When the market changes the smart investor will look at opportunity. They see gold where the other investors see dirt. Where other investors pull out of the market, by fear, new regulations, the media, so called experts, all creating a monster. Now is the property market ever going to completely disappear? I don’t think so. But buying an off the plan unit in Sydney at this point in time might not be the best option. However buying a property in Sydney where you have the possibility to add a granny flat could be a great investment as you are adding secondary income to help pay for the high purchase price of a house in Sydney. You still have to do your research with any property investing. Currently we are seeing the banks and the regulator, trying to stop the fuel of investment lending in Australia by enforcing regulations in regards to investment loans. They are forcing the loans to be principle and interest repayments over interest only repayments and they are also making the loan to value ratios (LVR) higher for investment loans so you need larger deposits. They have increased serviceability so on the banks calculators you need to earn more income to purchase an investment property. What does that mean for the investor?...
The Budget 2017- What Investors Need To Know

The Budget 2017- What Investors Need To Know

This is a great article by the Australian giving a summary of the budget 2017 and what it means to the Property Investor. For the active investor this week’s federal budget hits a remarkable spectrum of issues: few stones were left unturned by Treasurer Scott Morrison as he issued a range of amendments that will ­affect tax, super, property and shares. This year’s budget lacked the surprise — some might say consternation — around large-scale superannuation changes we got last year. But Morrison did cast the net wide with a significant number of changes, which every investor must get to know. Some of these changes are ­positive — in super and in home ownership and many are negative such as sharp cutbacks on property tax breaks and targeted ­measures against key investment sectors such as the banks. Crucially, there are also a ­number of political dimensions to the ultimate delivery of this budget, which must be kept in mind: it has yet to be passed and some compromises on budget details are inevitable in the weeks ahead. This year the budget item that would appear to be in jeopardy is the planned removal of the so-called Temporary Budget Repair Levy — the extra 2 per cent individuals have to pay on annual earnings above $180,000 — which is due to be scrapped by June 30. It has been reported the government may be put under pressure to extend the application of this tax into the future in order to get other budget measures passed. Here are the ten things from the budget 2017 every ­investors should know: 1. Tax...
Do You Suffer From BANK Pain?

Do You Suffer From BANK Pain?

Bank pain, we’ve all had it at one stage of our financial life – but what have we done about it? Some people complain about it at their local branch and maybe get a fee refunded or waived every now and then. Some people just like complaining about it to their friends or family but few will get up and do something about it. When was the last time your bank called you to let you know about a great offer they currently have on home loan rates? Or even new savings account or term deposit that has a better interest rate than your current one? Never, that’s when! They don’t, why would they? It’s simply because they hope that you fall in to the group of “set and forget” so they can kick back and make as much money off you as possible. Welcome the Mortgage Broker, your number 1 friend in helping you to not only make sure that you have the best home loan solution now but also well into the future. Showing you how you can own your home sooner than 30 years, doing regular reviews of your home loan to make sure that you are getting the best rate available at the time. Then if you want to begin to create real wealth, showing you how to purchase  your own investment property and eventually an entire property investment portfolio. Why a Mortgage Broker you ask? “I have been with my bank for years and never had an issue”….that’s great but when have they gone out of their way to help you reduce your debt? Earn...
Are we in a Property Bubble?

Are we in a Property Bubble?

What is a property bubble? Well, all the talk in the media is that property prices are too high and we are going to hit this massive wall and there is going to be this mighty property crash, the bubble will pop and the price of properties will fall up to 50%. Is this property bubble situated in a couple of the markets or is this Australia wide? We have seen the property prices in WA drop by about 10%, this was due to the declining mining sector and people actually moving away from Perth to the eastern sea board. Now there will be a slight over supply of dwellings in WA and we are probably likely to see it drop another couple of percent. The mining towns will be the hardest hit some dropping by 50%, which was the highly speculative market where you where always taking a big risk to make big profits, not a place to invest for the mum and dad investor. We expect that the later half of 2018 will be the bottom of the WA market, but it will probably take some time to come back and see growth out of WA. So what is happening in the other parts of Australia? We must remember that Australia has a whole lot of different markets and property clocks working in each area. Australia is bigger than Europe and look at how many countries and areas there are there with different property markets. For example; Sydney, Melbourne, Brisbane are all independent markets and have different forces affecting the growth and decline of these markets. We can...
Where is The GOLD When Buying an Investment Property?

Where is The GOLD When Buying an Investment Property?

I am often asked “Where should I purchase an investment property for maximum profit and capital growth?” Or “what is the next Hot Spot that I should be looking to invest in?” So where is the GOLD? What I’m talking about is the little nuggets of gold that I get as property investment strategist –  the great investment property deals. So what makes a gold nugget? An investment property where you are going to see capital growth and a good rental return. People say they don’t exist, but they do and I come across the on a weekly basis. Now everyone is an expert at finding capital growth in property. I’m sure you’ve heard the talk round the BBQ “blah blah area is so good for buying in right now or no I would not invest in blah blah, there’s no money there.” Most of the time they may have only ever brought one investment property and it’s in the same suburb as where they live and think it is a great investment. I’m not saying it’s wrong – it could be a great investment but the fact is – you need to do your research. A key characteristics to look out for when buying an investment property is the planned infrastructure of an area. What the government, both local, state and federal is spending money on in infrastructure and the location. Things like new railway lines, road upgrades, new schools and future large land developments such as Aura on the Sunshine Coast – where it has a full town plan. These are great starting places as there are going...
Buying Property With Friends / Family

Buying Property With Friends / Family

If you’re looking for a creative way to overcome being locked out of the property market by rising prices, buying property with a group of friends or relatives may be a solution. It can also be a minefield though, so here’s how to avoid it all turning to custard. While the excitement of banding together in such a life-changing moment can put everyone on a bit of a high, you need to plan for situations in which things might go wrong. It’s essential you have all been completely upfront from the start about what you want to achieve by purchasing property together, as well as your personal expectations about timelines for purchasing the property, paying it off and selling it. And all of this must be documented in a co-ownership agreement. Your finance broker can refer you to a solicitor or conveyancer with experience in working on co-ownership agreements, who can advise and create yours and make sure it is suitable, providing the necessary legal protection for everyone involved. The big question will be what structure your ownership takes. There are two options: joint tenants and tenants in common. Joint tenancy is the most common ownership structure in Australia, as it is how most family homes would be owned. However, because friends are less likely to share assets and long-term debts than a couple, and less likely to will their assets to each other, the ‘tenants in common’ model would usually be more suitable for this situation. Under this model, each person owns a specified share of the property’s value. These shares may be equal, but needn’t be. So,...
Harmony – Sunshine Coast’s EnviroDevelopment

Harmony – Sunshine Coast’s EnviroDevelopment

Harmony is the latest housing development to be launched here in the Sunshine Coast. Nestled in between the pristine coastline and lush green hinterland; it  has all the heart of a village community – with all the soul of beachside living. Here, you’ll find everything you’ll ever need……. that year-round sunshine, un-spoilt beaches and the tranquillity of the tropical hinterland, all right at your doorstep. Inspired by the great outdoors, Harmony is a living tribute to the 378 hectares that it lies on. A big 1.5km linear park (the length of 10 football fields) sits in the centre of Harmony, similar looking to the world famous Champs-Elysee in Paris. Forest hikes, bike and walking trails thread through it all, bringing the whole place to life and the people closer together. No matter where you choose to live in Harmony, you’ll never be more than 500 metres or 5 minutes walking distance from a park or an open green space. The Sunshine Coast offers a world class learning destination and is one of Australia’s best lifestyle locations. Harmony rests in the centre of everything the coast has to offer including cafes, restaurants, shopping and entertainment. The Coast’s unique casual culture is genuine and welcoming, and Harmony will emulate this desirable, authentic way of life. Set on 378 hectares, Harmony will deliver more than 4800 homes for 12,000 future residents as well as a town centre and 100 hectares of parklands. With a development timeline of 15-20 years, it is anticipated that Harmony will create around 9000 jobs and the first land release will take 12 months to complete. AVID General Manager Bruce Harper said Harmony was...
No Time to Buy an Investment Property?

No Time to Buy an Investment Property?

I am often talking to my clients about how busy their life is and that they seem to have less and less time to do the things they love; like spending time with the family, going on holidays, enjoying their hobbies and even having romantic time with their partners….. So where are you going to get some spare time to consider your finances, set your goals and get an investing plan? You need to fit this in around your job or business, your children, your partner, your fitness and your weekend hobbies. Life just gets in the way and before you know it you’re in the Rate Race or on the hamster wheel….. going round and round and getting no further ahead. Well something needs to change – because becoming smart about your investing and knowing your finances can make a massive difference to your lifestyle later in life. When you start thinking about your retirement…. where do you want to live – close to the beach or in the city? I bet it’s not in a dingy flat in an undesirable area! Will you get the best medical care available or are you happy to be just a public patient….  wait in line and take a ticket? All of these variables in your retirement years can be determined right now! You know with the amount of people I talk to; the majority when asked what is the balance of their superannuation – or how much their current house is valued at – they don’t know the numbers? There are sometimes hundreds of thousands of dollars locked up in...
Brisbane Property Values on The Rise!

Brisbane Property Values on The Rise!

While the general price growth for the greater Brisbane property market has been steady for most suburbs, there are some which have well and truly over performed. Some in demand suburbs in the greater Brisbane area chalked up massive median price increases and “earned’’ more than a typical worker during the past year, which according to the Australian Bureau of Statistics is $78,832 per annum. 23 suburbs in greater Brisbane achieved median house price growth of more than the above figures in the past year. Inner city Teneriffe and its neighbour New Farm topped the list. Teneriffe’s median house price leapt from $1.47 million in 2015 to $1.9 million last year – a difference of $430,000. New Farm also performed well with its median house price jumping by $316,000 to $1.675 million. Inner city suburbs were not the only ones to achieve such strong growth during the year. In the outer suburbs south of Brisbane, Robertson “earned” well above the average yearly wage last year with its median house price up by $227,000. SUBURBS THAT EARNT MORE THEN THE AVERAGE WORKER……… Suburb Median 2016 – Suburb Median 2015 – Difference Teneriffe:                2016 –  $1,900,000          2015 – $1,470,000          Difference – $430,000 New Farm:              2016 – $1,675,000           2015 – $1,358,750           Difference – $316,250 Milton:                     2016 –  $951,000              2015 – $695,500             Difference...
Don’t Put All Your Eggs in One Basket!

Don’t Put All Your Eggs in One Basket!

How NOT to Finance an Investment Property…. I’m sure you have heard the saying ‘Don’t put all your eggs in one basket’. It is a metaphor that if you were to potentially drop the basket with all of your eggs in there together – all of them could break and you would be left with none. This goes for property investing too. What I’m going to focus on in this blog is the lending side of building a property portfolio. After a conversation with a new lead that came through last week, they said to me, “Chris we need to have a meeting with our bank to see what our lending limit is.” My reply was….. “It’s interesting you are going to a bank to tell you how to build a property portfolio! There’s a good chance that the loans officer you see does not have a property portfolio; do they even understand what you are trying to achieve? They just quickly work out a loan that they sell from the banks products that might not even suit your needs. Do they do a goal setting session with you to try and find out what your short and long term goals are? How many questions do they ask about the property, do they understand what an advance strategy property deal is? How can you know what the rental return of the property is if you have not found one yet?” Now the bank is a business and they are there to make money for their shareholders – are they going to be the best representation for you and have they...
Depreciation – What, When & How

Depreciation – What, When & How

Every year there are millions and millions of dollars in unclaimed tax deductions for depreciation. That might make the ATO happy, but as a savvy investor you should be making sure that you are not one of those contributing to these unclaimed tax dollars when they could be in your pocket. Firstly let’s start by explaining what exactly is Depreciation? It is – put simply – compensation for wear and tear. Buildings being rented out suffer wear and tear, so do the assets (fixtures & fittings, or chattels – including appliances, floor coverings, hot water system etc). It is a tax deduction. Depending on the property, it can easily exceed $10,000 in a single year. Even older properties usually have something worth claiming. It is definitely worth finding out if a Depreciation Schedule is viable for your investment property. It is treated by your accountant as just another tax deduction. Every year you probably claim on interest payments, council rates, water rates and property management fees as tax deductions against your investment property and depreciation should be another. Secondly what is a Tax Depreciation Schedule? Again, put simply – this is a document that sets out how much depreciation you can claim on your property every year from when it was first available to rent. People also use different terms for ‘Tax Depreciation Schedule’ like the shortened ‘Depreciation Schedule’ or a ‘Quantity Surveyor Report’ or a ‘Capital Allowances Schedule’…… or sometimes people just say, ‘my accountant said I need a building tax report thingy’. Title aside if you are an investor you should have a building report tax thingy for...
Investment Property – the Real Wealth Creator

Investment Property – the Real Wealth Creator

Creating real wealth with investment property is not hard you just need to plan and have a strategy. Property over the long term usually does very well as you have seen for the Sydney market. The real wealth starts from the scarcity of a resource; in this case, it is land. Everyone wants to live in Sydney and there is only so much land. They are not making more of it so if you want to live close to the CBD then the price increases. However, there are other factors that affect the cost of the land which are external, for example what is the demand to live there, does it have views, is it close to amenities, etc. So how do you make a greater or faster uplift in the price of the property, forcing up the value of your investment? These are called my advanced strategies. So you can just build a standard house, which will do well over the long term, as long as you have researched the area, but doing some advance strategy investment can give you far greater returns. It is usually doing a duplex, or a dual occupancy property, maybe multi units or town houses on a site, splitting the land up or subdividing, adding a granny flat or doing a renovation, knock down and build. These strategies allow you to make much faster capital gains and rental returns on the property – giving you better cash on cash return i.e. the yield on the property if a rental. Or the capital growth giving you an excellent return on initial deposit you put...
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