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One of the main problems facing the investor these days is frustration with a finance portfolio that just isn’t growing with the speed that an investor expects. There may be many reasons for this, from bad investment choices to conservative capital investment. But if you ask any successful investor what they think the most important aspect of their investment portfolio is, I’d be surprised if you found one who didn’t say property. Here’s why.

Leverage
Property offers the best options for financial leverage and the more leverage you have then the faster you can grow your capital and build wealth. Even if you have borrowed a large portion of the money used to buy the house from the bank, say 90% with lender’s mortgage insurance, you still stand to make a considerable sum when the value of that house increases, because even though you only put down a payment of 10% of the price of the house, you get 100% of the growth.

If you draw the original deposit from existing equity then you are contributing no cash of your own but still reap 100% of the growth value. It’s not hard to see why this is such an attractive option for successful investors. Confused about leverage? Read our exclusive eBook and find out how you can use it to boost your borrowing power today using the equity in your own home!

Control and Stability
The property market is far less volatile than stocks, mutual funds or many other areas of investment, especially in times of economic uncertainty. An investment property also offers a much higher level of control over what you are buying, where you buy it and when you want to sell it. You also have the option of growing the value of the property through renovations or rental income.

It is worth remembering, too, that while the property market does fluctuate, you aren’t actually losing any money until you’ve sold the property, so you can wait out a market downturn, still receiving rental income, until the market picks back up again. Even through times of economic unpredictability people will always need somewhere to live and so you can be guaranteed of a rental income even when many businesses are losing money and closing down. Housing is an essential service and will always remain so.

Property Leads To Growth, Which Leads To Money
The simple fact of the matter is that real estate makes more millionaires than any other asset class. It’s so often that you see switched on investors going from owning one property, to several, to dozens – all within the space of a few years. It can be a little daunting to get started, but once you’re going it’s one of the safest areas to invest in and also features one of the best possible earning potentials.

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It’s Quite Simple
Once you get your head around the paper work and documents required to purchase property, it’s surprising how simple it actually is. Once you have your budget and finances sorted out, if you follow due diligence in watching market prices and have potentially properties thoroughly inspected then there is little chance you will overpay or end up with a dud property. It’s much easier then keeping a constant watch over an unpredictable stock market, for example. For example, let’s say you are interested in property investment Melbourne; you would need about $20,000 to put down 10% of the price of an apartment in the inner city and borrow the rest from the bank. With a year or two the price of that apartment may have risen by 10%, which means that you have already made a 100% percent return on your initial investment, and now have potentially $40,000 in equity to put down 10% for another property. You can see how quickly your empire will build up.

Get in touch with us today and find out how you can increase your portfolio’s growth with property:

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When I first meet with a potential property investor I always ask them “What type of property would you buy if you were to buy a property today?” Most people suggest that they would buy a property around their local area, and more often than not, that they would but a negative cash flow property. First time property investors don’t usually have the knowledge to know too much about the fact that this property would be costing them on a weekly basis just to hold the property. Well, what if your investment property could actually generate a positive cash flow rather than a negative cash flow?
A property with Positive Cash Flow means the rental income from that property will cover all of the outgoing cash costs (interest, council rates, body corporate, agent’s management fees and so on) associated with that property.

Property Investment in Melbourne

A property with Negative Cash Flow means the rental income from that property does not cover all the outgoing cash costs associated with that particular property. That is, it makes a loss.
It is important to note though, that a Negative Cash Flow property for one person is not necessarily a Negative Cash Flow property for another. The same goes for Positive Cash Flow properties. Your own personal situation will determine what aspect the property has. Therefore it is extremely important to ensure that the property you wish to purchase best suits your personal situation.
So why not focus on properties that generate a Positive Cash Flow? The reason being is that generally, Positive Cash Flow properties have a low Capital Growth aspect. Again, your individual situation would determine if properties with a higher Capital Growth aspect would best match your requirements.

Property Investment in Melbourne


The advantages of Positive Cash Flow properties:
1. Increased Income
2. Can reduce risk
3. Balance a property portfolio
4. Easier to obtain finance for

The disadvantages of Positive Cash Flow properties:
1. Increased tax
2. Slower capital growth
3. More volatile

The advantages of Negative Cash Flow properties:
1. Tax deductions
2. Stronger capital growth
3. Stronger rental demand
4. More stable

The disadvantages of Negative Cash Flow properties:
1. Constant input of funds
2. Long term strategy
3. Higher financial risk

Before negatively gearing a property consider whether you can support the additional and ongoing out-of-pocket expenses. Be aware that if interest rates go up you can’t offset this by increasing your rent. It might not be a problem now when life is all smooth sailing, but what if your personal situation changes? You don’t want to have to sell your investment property before any capital growth kicks in.

If you either don’t have the time or if you’re just not able to investigate the criteria of a particular property to ensure that it best suits your situation, think about engaging the services of a property professional who can remove the guess work. As buyer’s advocates we work with you to assess your financial situation, and then help you to develop a property wealth plan that will go on to secure your financial future.

If you want to know more about positive cash flow properties then you need to read our eBook on the subject. It explains everything you need to know about the pros and cons of a positive cash flow property, and explains how it can be the gateway to your investment success. This kind of information is usually only known by investors with years of experience, but we wanted to make it accessible for you, so we’ve made it available as an exclusive offer!

Download your exclusive copy now.

In a new report from HSBC, it’s been predicted that Melbourne will see the highest growth next year out of all the Australian capitals.

Paul Bloxham, HSBC Australia chief economist forecasted between a 4% and 8% price growth across Melbourne for 2016, after growth of between 7% and 8% growth in 2015. The predictions were made in the latest HSBC Australia Downunder Digest report.

He expects that in 2015, Melbourne and Sydney will “continue to outpace the rest of the nation”, noting that since its mid-2012 trough, Melbourne’s housing prices have increased by 20%.

Source: RP Data Core Logic

However, Bloxham does not raise the prospect of a housing bubble in Melbourne as he did for Sydney, where HSBC predicts prices could fall by 2% in 2016 when they expect interest rates to increase.

He also noted the impact of foreign buyers on demand for Australian property, explaining that Foreign Investment Review Board figures “suggest a strong rise in foreign investment in Australian housing in 2014, with particular strength in investment in new dwellings.” (see chart below).

Source: RP Data Core Logic

“Much of the interest from foreign buyers is in the Sydney and Melbourne new apartment markets,” writes Bloxham.

While he has noted that foreign investment “is only a relatively small proportion of overall housing turnover”, it is “likely to be having some effect on housing prices”.

Victoria, which has seen the highest dwelling approvals of any state since 2009, is likely to see continued strength in the construction sector, according to Bloxham.

Source: ABS

“As Australia’s growth rebalances away from the mining states towards the south-eastern states – of New South Wales and Victoria – the strongest ramp-up in construction should be expected in these states,” states the report.
No matter what you read, and no matter where the predictions lie and no matter what the experts are saying, you’re going to be better off on your property investment journey if you get some guidance. There’s a lot going on at the moment and it makes sense to consult with the experts. Get in touch with us today for your complimentary consultation with one of our buyer’s advocates.

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We’ve seen a lot going on of late with changes to foreign investment property laws. There has been ongoing support from industry leading bodies, but these changes have worried some developers that are heavily dependent on overseas buyers. An inquiry by Liberal MP Kelly O’Dwyer recommended an application fee of up to $1500 for foreign buyers wishing to purchase property in Australia. This money will be used to boost the Foreign Investment Review Board’s currently fairly inadequate enforcement of laws banning foreign investors from buying established homes.

The Property Council of Australia said it supported “a robust and well-enforced compliance framework that continues to encourage foreign investment.” Residential executive director Nick Proud said that “The government has an excellent opportunity to ensure that we end up with a much better data set and understanding of the exact level of foreign property ownership property.”

Property Investment in Melbourne

Chief executive of Real Estate Institute of Australia, Amanda Lynch, welcomed Tony Abbot’s claims that he would instigate changes, saying “It beggars belief that not a single enforcement order has been issued since 2006. Either every single foreign investor is doing the right thing or FIRB has been caught asleep at the wheel.’’

This anticipated change has come at the time when there have been some concerns about housing affordability in Melbourne and Sydney, and the role of unpoliced foreign investment in driving prices up. While this may be a solution, it’s suggested that the proposed $1500 fee may serve to deter buyers just when the RBA and the Australian government are trying to stimulate construction. “The proposed $1500 fee really could cut foreign investment in Australia,” Andrew Taylor said. “Other markets that have proposed fees and taxes on foreign buyers have done so with the explicit goal of discouraging foreign investment, so it’s no wonder that this fee could do the same.’’

The head of developer Meriton, Harry Triguboff, whose developments attract large numbers of legal foreign buyers said the changes were “quite unnecessary and very silly. I don’t know of any other country with this attitude of trying to catch people out. By all means catch them, but don’t talk about it and (offend) those doing the right thing.”

Property Investment in Melbourne

The government led committee has recommended a data-matching program between¬ immigration and invest¬ment authorities, and has recommended fines that would be applied to real estate agents, accountants, lawyers and conveyancers who knowingly assisted with illegal purchases. So what does this mean for you as investors?

Well, the proposed $1500 fee is just that: a suggestion for curbing foreign investment and it’s by no means something that has come into practice. If you’re looking to get ahead with property investment, I have this advice for you:

    • Exercise some caution when you’re looking at buying new property and when you’re looking into markets that are overly driven by foreign buyers.

 

    • Ignore the hype: A lot of properties are being ‘dressed up’ for the sale, but you need to be able to look past the hired furniture and the lick of paint and see the long term issues, if any.

 

    • Research the market and invest in areas where new infrastructure is planned to be taking place. This is what is going to be adding value to your property.

 

    • Don’t fall for the property that is cheaper just because it’s in a less desirable location (like next to a busy road). It will experience growth but won’t perform as well as something else which may only be slightly more expensive. Consider your long term prospects.

 

    • Buy a property that is attractive to tenants. Things like balconies, sunny backyards and nice alfresco areas are all appealing additions to a potential investment property.

 

    • Do your homework! You need to research properly in order to get the results you want.

 

  • conduct your due diligence, and investigate comparable sale results and the sale history of the property. You also need to conduct building and pest inspection reports and take a look at things like any locational attributes, street appeal and floor plan. Also consider the orientation, outlook, future surrounding development, town plans and zoning precincts.
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A question I am continually asked is, how do I select the right property for investment? The simplest answer I find is to compare it to any product out there. Basic economics tells us that price is dictated by demand and supply; this is true for anything from bananas, to the latest iPhone, to property. If demand outweighs supply than prices will increase and continue to increase as the gap widens, similarly if supply outweighs demand prices will decrease. As our growth is dictated by the price or value of the property it is important to know your demand and supply variables.

Property Investment in Melbourne

I like to describe Demand variables as things that make a place more liveable. Most people know what these already are, just consider the things you like about your area and then consider what you would like to have in area. Things can include as a start:

  • Proximity to work
  • Good Schools
  • Entertainment
  • Shopping
  • Public Transport
  • Parks and Scenery

The more of these boxes you tick the more demand is likely for your area and property

The Supply side is the trickier part, we all know what people like but it is hard for the everyday person to know what the market is building and what impacts supply will have. Things to note should include:

  • How much of particular product is being built in the area. Is there sufficient demand?
  • What type of product is it, apartments, house and land subdivisions, town houses etc.?
  • What is likelihood of oversupply into the future?

There are also variables that negatively impact Demand. Mining communities are a good example, what if the mine closes? Or any one industry reliant community, what if that industry goes into decline.

Property Investment in Melbourne

So as a simple rule: look for areas that will always be in demand, now and into the future. Be wary of supply, and try to imagine the area now, 5years from now, and 10 years from now. Imaging forward will often force you to analyse risk and visualise potential.

There are a multitude of things to consider when buying a property and these are just some basics, remember knowledge is usually the key to success. As a simple rule know your demand and supply, do your research, and talk to people better than yourself. Property is not like buying an overpriced banana, it’s likely the most expensive purchase you will make in your life and similarly could be the most rewarding.

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Investor activity has been a huge driving force behind the housing market’s recent growth, and there has been a lot of speculation about when housing prices are going to cool. A new quarterly report from NAB’s Residential Property Index Report has shown that the NAB Residential Property Index has fallen across the nation, as housing prices have been pared back and rental yields weaken.
Buyer sentiment has been softer across all states, and almost 10% of all property bought by first home buyers is now being purchased as an investment. This cooling has surprised some economists who had posited possible gains of 1.7%, but investor loans have fallen in value for the first time since May, with values down 2.2% in November. The Reserve Bank will be pleased about the drop – and we can all remember the speculation of late last year about the possibility of a housing bubble in the Sydney and Melbourne markets. If you are wondering how you can continue investing in the face of a cooling market, you need to check out this guide on how to get equity out of your home, so that you can continue to borrow and invest.

Property Investment in Melbourne

The NAB’s survey found that New South Wales has overtaken Queensland as the strongest state in terms of buyer sentiment, although many buyers are still looking at Queensland as the place to buy. Buyer sentiment is notably lower in South Australia and the Northern Territory, and quite negative in Western Australia. Despite this, the report states that buyer optimism is most apparent in South Australia and the Northern Territory.
The outlook for housing prices remains pared back over the next one to two years, and the NAB also expects housing price growth to slow down. The overall expectation for rents are largely unchanged, although there are slightly stronger expectations in Victoria and Queensland which masks the softer outlook in New South Wales and South Australia.

The biggest concerns for the new housing market are affordability, construction costs and a lack of development sites, and employment security and price levels are the biggest stumbling blocks for people looking to buy an established property. In purchasing habits, the report stated that around 53% of all purchases were for apartments, while 31% of purchases were houses, and the remaining 16% were redevelopment purchases. Across price points, 40% of purchases were for properties between $500k and $1m, and 29% were for properties less than $500k. Properties over $5m accounted for around 5% of total purchases.

The overall prospect for capital growth has been pared back by the report, and the suggested growth has been pared back across all states in all price ranges over both the established housing and apartment markets – with the exception of apartments valued between $1 and 2 million.

What this means is that buyers who are looking for a good opportunity as an investment property need to seek out reasonably prices opportunities that have growth potential, as the biggest property markets across the country are showing signs of slowing down. You must know though, that there is still value in those markets. If you research comparable properties and aren’t afraid of buying outside of your local area you will find a great property. Just consult with a buyer’s advocate and make sure you are buying under market value. The bottom line is that when you’re investing in property, you need to remember that property is to be purchased with a long term outlook. Buying in a strong location will ensure future growth.

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Investing in property is something that many people strive to do, and yet so many people get stumped financially, or fall into the mindset of feeling as though they can’t invest, or can’t increase the size of their portfolio.

Property Investment in Melbourne

We’ve taken a look at four major things that cause a lot of people to fall short, and gone over them here so that you can learn from these stumbling blocks!

  • Developing an Investor’s Mindset

When you’re getting started with investing you’re essentially learning a whole new language and a whole new way of approaching something. Your financial decisions are suddenly going to revolve around something that’s probably a bigger commitment than you’ve ever had to make before. Because of this, it can be daunting for some people to see that they’re in a lot of debt all of a sudden, and sometimes people get overwhelmed. It’s important to know what’s coming up ahead of you and know how you’re going to deal with any possible financial hiccoughs or unexpected events.
Part of developing your investor mindset is developing a plan first – that way when you move along the path in property investment you know where you’re headed, and so there’s less chance of getting spooked or concerned.

Property Investment in Melbourne

How do you develop your plan? By sitting down with an expert and working out what you want to achieve financially and figuring out how you’re going to do it. This means working out what properties you need to buy, when you need to buy them, how you’re going to finance them, where to buy them and who you’re going to take the journey with! Having an experienced guide, buyer’s advocate or mentor will go a huge way towards helping you to develop your investors mindset.

2) Knowledge + Focus = Results

If you want to invest in property but know nothing about investing in property then you either need to start reading up about it (like, yesterday!) or you need to enlist the help of a property investment expert or mentor.
As part of your plan detailed in the previous step, you also need to figure out how risk averse you are and what you are comfortable with as an investor. For example, some people will advocate a strategy where you put zero of your own money down, and others will suggest a strategy where it’s high risk but the potential for high gains. Whatever you want to do, just make sure you know what you’re comfortable with and stick with that.

3) If you’ve got no money, then figure out why and change it!
You might be a low income earner who struggles to make ends meet, or you might earn a good salary but struggle to save properly. Whatever your situation you need to work at it if you know that you want to buy property. There is always a way to get ahead, and whether you need to create a strict budget or if you need to speak to a financial advisor, you can save enough for a deposit with enough time and determination. Speaking of determination, that leads us to our final point:

4) Be prepared to put in the hard yards!

Investing in property isn’t something that just happens overnight – despite the plethora of articles and information to suggest that it’s easy – and it requires a lot of planning, hard work and saving. A successful investor has a plan, the right mindset, tenacity and stick-ability, and will work hard at their goals until they get there.
You can start today by setting up a high interest savings account or by getting in touch with a buyer’s advocate who can help you to figure out your plan.

 

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Saving for an investment property doesn’t have to involve huge sacrifices, but you are going to have to make some lifestyle changes if you want to reach your savings goals sooner rather than later. These are a couple of tips that may seem pretty simple, but if you have a savings goal in place every little bit helps! The important thing to note for these tips to be as effective as possible is the plan that you need to have in place. It will keep you focused and concentrating on your efforts to reach your savings goal and the goal of your own investment property.

  1. Consider where you can cut back – and then do it.
  • Do you stop for a coffee every morning? Even though it doesn’t seem like much week to week, your daily caffeine shot could be costing you up to $1000 a year. Think about what that could do for your deposit and savings. Instead of getting a coffee out, think about investing in a good podded coffee machine for home, or switch to instant (just for a little while) and get yourself a reusable takeaway cup. These small savings will make a difference in the long run.

property investment

  • Are you spending money on unnecessary expenses like a huge data bill for your phone, lunch outside the office, gym memberships or even things like extra expenses that you don’t use often? Take stock of where you’re spending in your life and consider where you can save. Yes, every bit helps.
  1. Save in a high interest bank that you can’t touch.

This works because you can’t access the money in your account for impulse buys or last minute purchases. Think about setting up a direct debit for the amount that you want to save each month or week, and then if you can add more to it – great.

  1. Set up a good budget.

There are a lot of budgeting tools around online and available from your bank. If you’re rubbish at saving money, and not sure where your monthly wage is going, consider enlisting the help of a professional who can guide you in creating a budget for yourself. This can be a real eye-opener for anyone who’s never budgeted before (you may be astonished how much money you spend on eating out!) and can be really helpful.

  1. Make some extra money on the side, and then save every bit of extra that you make!

If you’re existing fine on the wage that you have right now, but know that with your skill set that you can freelance or do some cash work on the side, then do it! And then to ensure that you don’t blow out on the extra money, set up a direct debit for the exact amount extra that you’re making. This is a great way to inch closer to your goal.

  1. Grow your business/decrease your costs.

If you’re self employed, think about how you can decrease your costs or increase your client base. No matter what you do, if there’s extra money that comes about as a result of your actions be sure to save every bit of it so that it’s not a wasted endeavour.

  1. Save at home.

If you’re currently living in rented accommodation on your own, think about moving into a shared house for a 6-12 month period, just so that you can save with a vengeance. It will be worth it in the long run when you’re the happy owner of a new investment property.

There are other ways to get a deposit together, like accessing the equity in a home that you already own, but if you’re putting the money together for your first investment property or first house purchase, then you need to be frugal, a savvy saver and most of all focused on your goal. Good luck, and happy saving! If you want more help with your property investment goal setting, get in touch with us today for a complimentary consultation.

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Property management is one of the last things on the list that you need to think about when you’re buying an investment property. You’ve gone through the contracts, sorted out the stamp duty and the house is yours – but now you need to get it rented or managed! While it might be one of the last things you need to check off your list, it’s certainly not one of the less important things. The company who will manage your properties is going to be responsible for making sure that your rent is paid on time, that your property is maintained and that your tenants are doing all the right things by you.

property manager

In order to feel secure as a property investor you need to have someone managing your properties who you can trust manage your properties for you and who can ensure that any grievances are dealt with promptly, correctly and in accordance with the law. You need to ensure that your property manager has your best interests at heart, and that you are able to communicate with them regularly and openly.

Let’s take a look at how you can find the right property manager for you.

  1. Look at them objectively

What is the communication like between you and your prospective property manager? How good were they with getting in touch when they said they would, or with emailing you? Your property manager needs to be able to speak to your tenants in a timely manner and to be able to communicate details to everyone involved in a rental situation, while at the same time keeping people on side and keeping the peace. A good property manager is going to be someone who is professional, a good negotiator and who is polite and firm. You need a professional person who can keep a cool head and who can communicate the facts about an issue without blowing things out of proportion. High drama has no place in a rental tenancy situation. Even though sometimes tenants may be upset about possible things that can go wrong in a house, it will only compound the problem if your property manager isn’t calm.

property management

Is the property manager a likeable person? They don’t need to be your best friend, but they certainly need to be reliable and affable. The relationship they are going to have with your tenant needs to be a relatively friendly one, so that your tenant feels that their property manager is approachable. Your tenant is one of the most important parts of the rental process, so it’s vital that the person you choose to manage your property is going to enjoy the relationship that they have with their property manager.

  1. What is their fee structure like?

Sometimes it varies slightly, but your fees are generally going to be 7 per cent plus GST for the property management – and this covers things like collecting rent, and then you’ll also pay one to two weeks’ rent for leasing the property. While the fee isn’t the most important part of your property management choice – it’s certainly something to consider. Just remember though, that as with most things, you get what you pay for.

  1. What is their experience like?

Years of experience doesn’t necessarily mean that a person is a good property manager, and conversely, a small amount of experience doesn’t equal a bad property manager. The right balance of personality and experience will usually equal a good property manager. When it comes down to it, a good property manager is going to be pragmatic about how they resolve issues, and they’ll use tried and tested systems and processes for resolving conflicts. Also, it pays to find out whether you’re going to have a principal director or manager managing your property, or if you’re going to have a junior delegated to manage your property. Just ask your property management company and be clear about your expectations.

  1. What are their systems like?

If the agency you’re considering doesn’t have a dedicated property rental management department in place, then you need to ask some questions about how they intend to cater to your property investment portfolio. You need to know when inspections are going to be performed and ask them to take you through the process. Also get them to take you through their process for record keeping, and get them to tell you how they intend to keep you in the loop.

Find out what kind of process they have for expenses and repairs. It depends on the kind of portfolio you have and how many properties you have with them – some investors prefer to be told about every single dollar that is going to spent, but sometimes with some investors you might choose to have an automatic authorisation for any spend under a certain amount – say for example $200. A good property manager will probably have already thought of this – and will probably be able to take you through some of these things, and will probably think of things you haven’t even thought of!

Here are a couple more tips:

  • You can choose a well-established agency or a boutique one, but just make sure that you like the feel of the agency and what they offer. You might enjoy the flexibility offered through a boutique agency, or you might prefer the professionalism of a larger agency if you have a lot of properties to look after.
  • Use your buying power as negotiating power: if you’re buying a new property or selling one you can use this as pulling power to reduce a fee with your agency if you enlist them for the sale.
  • Make sure your agent is incredibly thorough with their checks. You need to make sure that their process is to only call landlines for reference checks, and to be through with investigating the professional and rental history of your tenants.

If you’re wondering about property management for your investments, then get in touch with AllianceCorp today. We have a full service property management department who can help you to get your properties rented sooner rather than later. We also pride ourselves on our excellent working relationships and have a large range of experience and skills with getting the best situation for both tenants and investors.

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Learning how to negotiate on a property is one of the best skills to have when you’re a property investor, as not only will you potentially end up saving yourself some money on the purchase price, but you’ll also end up paying less on other related costs like stamp duty. There are ways to learn how to be a better negotiator, and it helps to learn these tricks and tips early on, so that when you start to really build momentum with your purchasing you’ll be able to get the best price. Of course, some of these tips can only be learned by practicing them, so it pays to get out there and start investing!

  1. Know the market in which you are buying and selling. This way you know that your expectations about the price that you’re asking or suggesting are fair and reasonable.
  2. Be confident. If you have the confidence and the knowledge about a house that you’re looking to buy, you’re going to appear more confident to the other negotiating parties and thus be more able to negotiate a good deal.
  3. Keep the power that you have to walk away from a property. It helps to not become emotionally attached to a house – especially if it’s an investment property – and you could possibly have some other houses in mind that you can potentially purchase.
  4. Find a vendor who is motivated to sell and then negotiate with them based on their willingness.
  5. Don’t be afraid to put in multiple offers. It may be the case that you have to put in multiple offers before you’ll find someone who will accept the price you’re wiling to pay. Don’t stop looking though, and don’t back down.
  6. Don’t get rushed by anyone. If the selling is rushing you, you can always find another house elsewhere. Time constraints can make you feel pressured and force you to take or make an offer you’re not ok with.

How To Be Confident

You’re essentially working to reach an agreement on a price between two parties. You want to be able to stand your ground and you want to be able to have your needs met without compromising too much. Just as too much confidence is a bad thing, so is not having enough confidence. You need to be able to walk into a negotiation situation, keep your head and keep your eye on what you want without backing down or being bullied into anything.

House selling

Confidence comes from researching the area you’re buying or selling in and finding out what the prices are in the local area. Once you’re confident on the price that you’re pushing towards, you’re going to be a lot more successful in your negotiations. Keep things amicable and stay calm and confident and you’ll get there. A good buyer’s advocate can be integral in figuring out the best price and in working out what you should be aiming for.

If you place a first bid and it’s knocked back, you’ll have a bit more room to move higher on price. That said, your timing for doing that is going to vary depending on the demand, the number of interested parties and the vendor’s personal circumstances, among other things.

If there are a lot of other buyers interested, it might be best to put a bid in sooner rather than later, otherwise you run the risk of another buyer making an offer and it being accepted before you have even shown interest.

Property investment is a rewarding and financially beneficial investment to make, provided that you know what decisions to make and when. Your chances of success are going to be greatly enhanced if you have a good mentor and a solid team behind you – but who are the people that you need, and what roles do they play? This is a quick and easy guide to follow to ensure that your property investment team are right for you!

Your Team

A property mentor

This person is going to be absolutely vital for your success. A good mentor for you is going to be someone who you know has had success in property investment using the same or a similar strategy to you. For example, if you’re looking to invest in residential property you probably wouldn’t seek the help of someone who has made serious inroads in learning about commercial real estate. To find your mentor you can start to think about the people among your friends or acquaintances who you know have had success in property investment. If they’ve done something that you think you’d like to do, then think about how to get the skills that they have for yourself!

If you can’t think of anyone among your friends, consider asking someone who works in the property investment industry, and if you really think you don’t know anyone, then get creative and use tools like LinkedIn to find people. Other options for finding a mentor include going along to meet-up groups or other professional meetings in your local area. You’ll find that once you find someone who you think could mentor you, they’ll most likely be flattered to be asked for their advice and will share it willingly with you.

Solicitor

Your solicitor needs to be able to read all of your documentation and contracts and make sense of it all relating to your needs, so it’s best if you choose someone who has experience with property investment. You’re going to be needing them to advise you about any clauses or exceptions – or anything at all that is of importance – so it’s vital that they know what you want to achieve.

Financial planner

Your financial planner is so vital to your success, because they’re going to structure your finances and ensure that all of your purchases and financial decisions are going to allow you to continue to borrow. Your financial planner is also going to advise you on your financial position as well as talk to you about superannuation, tax benefits and anything else related to your finances and property investment. Note though, that financial planners aren’t authorised to offer property advice, because property isn’t considered a ‘financial product’ as covered by the financial services license. You’ll be getting general financial advice from your financial planner, but if they steer you towards investing in a particular property investment product (like an off the plan development), be wary as they may be gaining a commission from the advice they give you.

Accountant

accountant

Your accountant will help you to gain the highest possible tax benefits, and will work to ensure that you’re meeting all of your tax requirements as well. Ideally they’ll have a solid understanding of property investment and may even be investors themselves.

Mortgage/finance broker

Your broker needs to be able to manage your loans and will know how to manage the lending process to make sure that you can continue to borrow. They’ll have a good network of contacts and will be able to negotiate on your behalf to get the best possible outcome for you.

Just remember that if at any point you realise you know more than someone on your team – it’s time to replace them!

Who can help you create your property investment plan?

Ultimately, you want to work with an expert to define your goals and then work out how you’re going to achieve them. Your mentor or a buyer’s advocate is going to be someone with the skills and experience to structure your plan, and they can also map out your goals and ensure that every property that you buy matches up with your goals. If you find yourself asking the advice of lots of experts you might find that you become overwhelmed with information as everyone has a different opinion. If you have chosen a good buyer’s advocate or mentor you’ll find that they have sufficient information to help you.

Keep It Simple

If your mentor can help you find a good property, and your broker has your loans sorted, then why consult anyone else? These are professionals who don’t stand to gain anything from advising you incorrectly so you know you’re in good hands.

How Your Team Will Help You

Your mentor is going to advise you, and may ultimately play a role in developing the rest of your team – as they may have a great network of people and can recommend professional service people to help you.

Your whole team will be coordinated by you and your mentor, so make sure that you have a good working relationship with them as it will be vital to ensuring your continued success.

If you don’t have a property mentor yet – think about getting in touch with us to help you get started. Our team of buyer’s advocates can help you to get started on your journey to property investment success.

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With Sydney house prices soaring it’s making it harder and harder for Sydney-siders to purchase their first home. With Sydney’s median house prices sitting around the $850k mark people looking to get their first home have simply been priced out of the market.

Based on an average combined income of $110k, couples would need to save on average for 4.1 years before they have enough for a 20% deposit to buy their first home – which at that point, prices would have risen even further. Not only is that 4 years of having to wait before they make their first purchase but it’s also 4 years that they are missing out on potential property growth.

What does 4 years look like in the property market?

Sydney’s annual capital growth rate is 8.6% on a $600,000 property — that’s $51,000 a year worth of capital growth that you are missing out on by not owning property in this current market. On top of that if you had been renting a property at $600 per week, that’s another $31,000 that you will never see again!

new-apartments-sydney

So what can you do about it?

Well, the property market is cyclic in nature and just because Sydney is sky high at the moment it doesn’t mean that some of the other states are too. It’s not just the median house prices that differ from state to state but also the amount of interest from prospective buyers. Sydney is a hot market, but other areas like Brisbane are great for an investment, with the median house price being almost $250,000 cheaper and a far less competitive market.

So why wait?

Instead of sitting around waiting for years until you have the right amount of deposit, invest into other states, wait for the property to grow in value and then use that equity to fund your first home, or to fund your next investment.

The opportunity costs are too significant to pass up. Not only is renting dead money if not used correctly, but after your lease is finished up, you have nothing to show for it. If you are looking at investing there are also some clever strategies that can assist you in getting into the market sooner, rather than having to save a 20% deposit.

For more information, schedule a property investment strategy session where we can tailor a strategy to your goals. Make your new year’s resolution property ownership!

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In the AllianceCorp blog we often talk about a mentor or buyer’s advocate, and your mentor or guide is a great person to have as part of your property investment team. Because I am a relatively ‘seasoned’ property investor, my friends and relatives will often turn to me for advice and information about what kind of property they should buy, or for advice on how they can maximise rental returns; among other things. The great part about all of my experience is that I’ve been there, made the mistakes and am now well positioned to advise my clients, friends and family about how to get ahead. The best part for my clients is that they can then go and get involved in property investment using my advice, and knowing that before they’ve even started, the risk of making a mistake has been greatly reduced!

I’ve compiled a list of four things I’d do differently if I could do it all again. And because I can’t do it all again, I’m giving them to you!

Mistake One: Over-capitalising on renovations

From reading magazines and listening to more experienced investors, I knew that I could do some renovations to my investment properties and that this would potentially create more equity (and possibly more rental return) but for my first renovation I over-capitalised a little too much, did the work myself (and wasn’t super careful with my money), and eventually I ended up with reduced profits on the sale. If I’d stuck to a simple renovation, and not poured more of 10% of the purchase price into the renovation, then I might have seen a better result.

How to avoid this: Consult a builder or renovations expert and read as much as you can about renovations. There is a right way and an expensive way to capitalise on your renovation costs.

Mistake Two: Not having a plan right from the get-go

This one knocked things around a bit – because when I first started investing in property I wasn’t entirely sure which kind of investment properties I wanted to buy, and what kind of investor I wanted to be. I bought a couple of properties and tried to flip them (based on the success I’d read about in magazines and seen on TV) and although I had some success it was certainly a lot of running around and a LOT of hassle. The hassle ended up being for a relatively small amount of money, in the end. Once I had gone and seen a buyer’s advocate, met with some property gurus and finally found my mentor, I realised that I would prefer a buy and hold strategy, and that I needed to target properties that would suit that strategy. My spray gun approach to property investment thus far hadn’t proven especially successful, and then once I had a plan in place I knew what I had to do and where I was going.

How to avoid this: Have a plan! Well, obviously. But it’s not as easy as just saying that you’d like XYZ amount of money by a certain year. You need to take a lot of different components into consideration, and you need to think about things like how risk averse you are, and how much you can save, as well as tax breaks and other considerations. Consider making an appointment with a professional buyer’s advocate who can work out a plan for you, and the best part is that it’s complimentary.

Mistake Three: Only buying in my local area (at first)

This is a classic, and I know I’m not the only person who has made this one! When I started investing in property I bought a house in the same neighbourhood as my own. Now, I knew that I lived in a good neighbourhood but I hadn’t done my research on enough other areas to know that if I bought somewhere else my potential for return and growth were going to be higher. As it turned out, the first property I bought did do well, but then a couple of suburbs over, there was even higher growth and greater rental yields! If I’d been more adventurous with the areas I bought in I would have seen greater benefits.

How to avoid this: Use resources like realestate.com.au, REIV, CoreLogic RP Data and other statistical and comparison sites to look at what kind of vacancy rates, population statistics and other influencing factors to make you feel more comfortable with other areas to buy in. The more you know about something the more comfortable you generally are with it, so get used to the idea sooner rather than later.

Mistake Four: Being wary of debt/not using my equity properly

When I started out, I  listened to my father who was quite against getting into debt. As a result, I tried to avoid being in debt as much as possible. The only thing was, the fear of debt meant I missed out on a couple of opportunities that now would be very lucrative indeed. I learned the difference between good debt and bad debt, and slowly learned to put myself into as much good debt as possible, knowing that it was going to be for the best in the long run.

How to avoid this: This one just has to come from you — it’s important, and indeed, vital, that you are OK with debt because it’s really the only way to get ahead with property investment. If you need help alleviating any concerns, you can schedule time to come in for a chat with one of our advisors who can talk you through the pros and cons to each different type of investment strategy.

If you’re looking for advice about property investment and would like to speak to someone about any concerns you may have, or if you have questions, why not come along for a complimentary session with myself or one of the team, either in Brisbane, Melbourne or Sydney.

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2014 was an interesting year for property investment. We saw a lot of talk and commentary surrounding the foreign investment market, and we watched with interest to see whether the Reserve Bank was going to raise interest rates, and then exhaled slowly as they kept the cash rate unchanged at 2.5% for the majority of the year!

property investment

Capital city values for housing were up by 7.9% at the end of December across the nation, and this increase had continued for most of the year – but the pace did tail off a little towards the end of the year. According to CoreLogic’s annual Best of the Best report, Mary’s Hill – 24km west of Sydney’s CBD recorded the best growth in the housing market in Australia. In 12 months, the median housing values grew astronomically by 48.8%. In the unit market, the best growth was also to be found in New South Wales in Winston Hills. The suburb saw huge growth of 41.5% during the period, and the median unit price now sits at $450,840. The major factors driving this growth in 2014 were investors and up-graders, according to Tim Lawless of CoreLogic RP Data.

He says, “Investment lending has risen across most states however, New South Wales and Victoria have seen the most significant escalation.” He also suggested that the growth would continue across the market during 2015, but not quite at the same rate as we saw during 2014. Because of the huge interest from investors in capital cities, we would expect to see more investors looking for good returns from regional areas, and also from suburbs outside of the major capitals. Certainly, that is where investors will have seen great returns in Winston Hills and Mary’s Hill!

At AllianceCorp we always focus on buying property for our clients in areas that are primed for excellent growth, and have bought units for clients in areas like South Kingsville, VIC (35.4% growth,median value $489,653), Windsor, QLD (13.5% growth, median value $392,137) and houses in areas like Box Hill, VIC (21% growth, median value $967,923) and Fairfield, QLD (17.8% growth, median value $647,408). Our Analysts and Buyer’s Advocates focus heavily on making sure that their clients are all getting the best possible options and focus on the key demographic indicators when curating a list of properties to present to clients.

The major lesson that we can takeaway from 2014’s results is that when you’re investing, you need to look to the signs that point to great growth, and not to get all of your investment information from property magazines and other online sources. Sure, these information sources are a great place to get motivated and to find out what other people are doing for success, but the people who are getting great returns across Australia right now are the ones who did the research on the demographics and infrastructure, and bought in a place that they saw were going to do well.

 

So I urge you for 2015, get searching, don’t rest on your laurels, and if you don’t have the time to dedicate to researching the property market (and let’s face it, not many of us do) then get a buyer’s advocate who can do some of the work for you!

Our team research property day in, day out, and know where the best spots to invest are. Put yourself in a good position for property investment with a buyer’s advocate and make your appointment for a complimentary consultation today.

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Property as an investment is widely known as being a great way of generating wealth. Everyone needs a place to live, and while the population keeps growing, land is becoming more and more scarce. As a result of this, off the plan (OTP) properties are increasingly turned to as a great investment option that allows investors to get into property without the higher costs of a house.

OTP properties are very literally bought ‘off of the plan’, because when you first put down a deposit, there is little that exists of them besides the blueprints of the property. This does give you the option to invest in a building before it is even built or while it is being built, creating many advantages.

property investment

By investing in OTP property you will own a brand new property which will be an attractive option for leasing by prospective tenants the moment that it’s completed. In a market where there are a number of property investment options, it is important to speak to buyers agents and property experts to assess your position and what investment matches your goals. Like all investments though, there are risks, and I’ll touch on these too to present a whole picture for you.

What You Stand to Gain

These properties are young and full of potential – including your own vision. If you have ever had a desire to see your impact upon the world around you, investing into one of these OTP properties may be your chance to influence the architecture and design. Sometimes, when you buy into a project you are actually able to give advice and recommendations about the design of the building to the developer. Your money is what is being used for the construction, so you have a say in what can to be done. If you’re passionate about boosting the “green” factor in local properties, as an investor you can push the design towards alternative energy sources and natural lighting. Maybe your contribution will inspire others to follow.

Off the plan properties are also relatively low cost for investors, which is a great starting point for the novice investor. As an unfinished project, they can be marked well below what their ultimate market value will be. This takes care of the scary investment costs that go along with large properties. Your investment may be worth a fair amount of money once finished, but you got in on the ground floor and saved a bundle of money. This will mean that once it is finished you will immediately be ahead on your investment. When renters start living in your property, it will only increase your profit.

The Australian government also offers tax benefits if you invest. As a method to encourage investment into the housing market, the government has put tax deductions on investors whose properties have faced depreciation. In the same vein of saving money, you usually will not have to put down the entire purchase price up front. This will vary greatly from investment to investment, but often only around 10% of the total cost is required upon signing the contract. The remainder of the cost will not be required for the next 12-18 months. This means you pay in increments which reduces the overall financial sting of investing.

Finding The Right Property And Developer

Investment opportunities are not guaranteed to be easy find, no matter their nature or location. You will have your homework cut out for you as you look into developers so have a plan in place and stick to it. There are property experts and buyers agents who can assist you in making a property wealth plan and coaching you the way through.

When looking at developers find out everything you can about them. Figure out the financial viability of the company. Developing properties is an expensive business and disaster can strike quickly. You want a developer that has a solid reputation, successful results, and is friendly towards investors. Try to choose a developer that will allow you to inspect the site and the blue prints. It is a large bonus if they will air your recommendations about the design. If they have a model of the finished product, inspect it. You should use everything within your means to know what this property will look like once it is finished.

The location of your investment is crucial. A developer should allow you to see where your investment will be, which gives you a chance to see the area and amenity. Does it appear that this place is frequented by possible renters? Are there nearby business, roads or schools that will draw in more investors? The location is as important as the property itself.

Property-investment

You should have disclosure of the blueprints and development plans from the developers. This gives you an idea of if you can alter the design at all – it will vary from developer to developer and some can be strict, but also it can indicate how professional the developer is. The property should look good and function properly. A slick design is great, but if it comes with a poorly made interior or layout it may kill the full potential that your property has as a liveable space.

You should know the contract in its entirety. Once you have contacted a developer and drawn up a contract for investment, speak with your lawyer. Sit down with them and ensure that they go through every line of your contract. You want to be aware of the contents of the contract and ensure there will be no nasty surprises in the months to come.

Possible Challenges

There are certain problems that all property investments risk, whether they are legacy properties with a long history or a newly opened apartment complex. These issues can stem from an incompetent developer, oversights in the contract or the wills of the economy. You should be aware of the biggest threats in property investment before looking at off the plan properties.

The market value of the property could drastically drop during construction. Just because the property you purchased was estimated to be worth ‘X’ does not mean it will still be worth ‘X’ five months later. This is an unfortunate occurrence and decreases your investment’s worth. The best way to limit risk on this factor is to invest in apartments that are near completion. Purchasing a sure thing and being able to turn it around within weeks or a month limits the risk that the value will dive soon. This does reduce your possible discount which you may receive by purchasing before the property is built, but if you’re more risk averse this may not be a bad thing for you.

What you had in mind about the property may not be what the final product is. Developers face the problem of creating a good property with the least money expended in the shortest amount of time. Sometimes they will cut corners to ensure that these goals are met. A developer may make poor design choices, use poor materials or install cheap fittings and fixtures to stay within budget. This is a perfect example of why you should be aware of the design plans and what the developer is agreeing to deliver on.

Conclusion

Off the plan properties can result in immense profits by jumping into a thriving housing market. There are challenges you will have to face, but is anything worthwhile achieved easily? Take a look into developing properties near you and for more advice come in and see us at the office for a complimentary chat with one of our property coaches.

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Never been involved in Property Investment before but decided that this year it’s your year? Then read on, friend!

property investment melbourneWe’re all guilty of it; over promising on the ol’ New Year’s Resolutions and then guiltily slinking away from and abandoning our promises by the start of February… Well not this year, and not this time, because this is far too important to give up on! Sure, it’s ok if your resolution to eat less Doritos falls by the wayside (because Doritos are delicious) but when it’s your financial future we’re talking about, you need to be a bit more vigilant and have more stickability!

So this is tailored to you, the newbie property investor and is aimed to really get you thinking about how you can make your property investment dreams a reality, and what better time to get started then a new year?

1. I will be financially ready to invest

This is pertinent, because there’s not much point resolving to invest if you’re in no way financially ready. You need to whip your finances into shape ASAP and now is the perfect time to do it! If you’re unsure of what you need to do to get financially ready then take a look at these bullet points below:

  • Do you have a deposit?  A deposit of 10% of the purchase price plus enough to cover costs is a good goal. This money doesn’t necessarily have to come from savings either, there are other ways to get a deposit together. If you own you own home and have paid off some of your mortgage, you might have a fair amount of equity just waiting to be used. Check with your financial planner, or if you don’t have a financial planner come in to see us for a complimentary analysis of your borrowing power.
  • Get a good saving habit. If you have a history of being a regular saver and have stable and permanent employment you’ll find it a lot easier to be approved on a loan. If you work freelance or own your own business, then consider taking a full time job or paying yourself a salary.
  • Get pre-approval. Get out there are start comparing loans already! If you’re faltering and worrying about not being able to afford your repayments but you have no idea because you’ve never approached a bank, then you need to get out there! Once you have pre-approval from someone you’ll know what the rates are and whether you can actually afford the repayments.
  • Get your head around having a buffer. You need to have a cash buffer to back you up as an investor as it takes all of the stress and strain out of investment. By having a cash buffer available you remove the possibility of there being any impact on your lifestyle.

 

2. I will build my investment team

Your property investment team are so, so vital to your success as an investor. Do you know who you need on your side, and what roles the various team members are going to play?

property investment melbourne

 

A great place to start is by getting a mentor or by researching the necessary people who you need on your side. A short list of the main players are:

  • Property Coach/Mentor
  • Mortgage Broker
  • Solicitor
  • Accountant
  • Financial Planner

And you’ll find that the more you start to learn about property investment the more you’re going to want to learn from as many people as possible – which brings us to our next resolution…

3. I will educate myself

This is such a huge part of your property investment journey, and it’s a fundamental cornerstone of all that you’re going to use moving forward. Education can come in many forms, from classroom style education through to the stuff you absorb from just being around investors and picking up on what they say and think about property. It doesn’t matter if you’re attending every workshop under the sun or just meeting up with a mentor and having a chat over coffee once a week, as long as you’re getting your mind into the investor’s mindset you’re on the right path.

As you start to educate yourself (or continue to educate yourself) you’ll find that your enthusiasm grows for investment, and your concerns and fears fall by the wayside.

Turn your property investment dreams into reality and get in touch with us today for and find out your property portfolio potential.

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Am I the only one who thought that year went by really quickly? We’re sitting at the start of 2015, so I thought it was time – and certainly pertinent – to share with you some New Year’s resolutions for property investment.

If you look back on the past year, would you say that you gave it all you had, and can look back with pride at all you’ve accomplished? Perhaps you might remember a time where you didn’t act and you regret it or maybe you missed an opportunity to due to your finance not being where you wanted them to be. Maybe you seized an opportunity and are now enjoying the capital growth that has come from being in the right position to invest.

Whatever your position, the best way to be ready for investment opportunities is to ensure that you understand your financial position thoroughly. Taking the time to do a review is going to benefit you both now and in the future, so let’s have a look at some New Year’s Property Investment Resolutions.

property investment

1. I will review my financial and investment goals

Number one on my list is to make sure that I do a thorough check of where I’m at with my goals. I do this every year to realign where I am, with where I want to be. Sometimes your goals shift, and that’s ok. You just need to make sure that your investments shift along with them. The new year is a great time to be proactive and to take stock, so make sure that you use the time to go over your investments. If you take a structured approach to reviewing and assessing your investment and financial goals you will be in prime position to capitalise on 2015.

A couple of things to consider for your review:

  • Where did you see better results than you expected?
  • Where were things worse than you expected?
  • Being honest and analytical – why did these variances occur?

Also take a look at the following:

  • Is your cash reserve higher or lower than at the start of the year?
  • If the performance of your portfolio beat your expectations, was this the result of patience in a buy and hold strategy?

Taking these sort of things into consideration will be helpful for your movements moving forward.

2. I will think about my tax position

You need to consider a few things:

  • Was your tax outcome for the 2013-14 financial year what you expected?
  • Did you pay more or less tax, or was it what you expected? How about your spouse/partner?
  • Have you maximised the tax benefits available to you within your investment property?

With six months lefts of the 2014/2015 tax year to go, it might be time to take advantage while you can.

3. I will map my expenses for the upcoming year

If you’re looking to get ahead financially in 2015 (and let’s face it, who isn’t?), you need to be aware of and make the appropriate estimates for any possible changes to your income and cash flow. Be conservative when you’re estimating, and be aware of any possible reductions in bonuses, tax benefits or other lump sum cash amounts that may be reduced. If you think there will be changes you need to ensure you have enough money in your Master Facility to take care of the deficit. Also, take care when taking on any new investment opportunities or debt and ensure that the investment ties into your plan.

Also, analysing your expenditure is more than just looking at outgoings. You need to ask yourself:

  • Were there any cash flow problems that resulted in you needing to borrow cash, sell off an investment property or otherwise dip into your saved buffer?
  • When do your financial commitments fall in the year – for example, do you have a lot of expenses around the end of the year or the end of the financial year? You might need to shuffle around a few things to ensure you can cover the costs.
  • Do you have any big-ticket items like school fees or a holiday planned?
  • Have any of your houses moved from negatively to positively geared in the past year? It may be worth a review from a tax perspective.

property investment

4. I will structure my incomings and outgoings

Match your upcoming expenses with cash flow, and match your incomings and outgoings with your financial commitments and plan for investment.

If you’re in the important stage of approaching retirement you need to think about how you structure your incomings and outgoings to reduce the effect of sequencing risk, which is “The risk of receiving lower or negative returns early in a period when withdrawals are made from the underlying investments. The order or the sequence of investment returns is a primary concern for those individuals who are retired and living off the income and capital of their investments” (from Investopedia).

5. I will maximise my portfolio’s potential

A small renovation is a great way to add value to an existing property in your portfolio. If you’re looking for a boost in your equity or you’re looking for a way to get more borrowing power from your portfolio then you need to consider getting a small renovation done on a property. We can help you to assess within your property which would give you the best gains and can also organise and project manage your renovation.

I always do a complete review of my portfolio every year, twice a year and on an ad hoc basis after any new purchases or value add renovations. It’s the only way to ensure that you take advantage of your capital gains and maximise your buying power.

Be smart with your investments and your wealth in the future will be greater for it! If you think you’re due for a review of your investments then get in touch with us today for a portfolio review with one of our experienced Property Coaches!

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Do you recall learning how to drive? You were most likely extremely keen for getting in the driver’s seat and taking off all alone. Before you had the capacity do that however, you needed to make sense of how the vehicle functioned, and how to move the car to get to where you needed to go.

property investment melbourne

There were probably a whole lot of moving parts to research, certain guidelines and rules to retain, and you needed to make sense of how everything worked in the car to get you in motion. When you finally figured how to work the clutch, and you got your license you also required a decent spatial awareness to work out where you wanted to go and how to get there.

You likely didn’t figure out how to drive all alone; you in all probability had somebody to show you and let you figure out the ropes in a safe environment with guidance and coaching. Certainly, you could’ve worked it out alone – on the off chance that you’d totally needed to – however there was every likelihood that you would’ve been crunching gears and possibly smashing into things as you got the hang of it. It’s in all probability that you were taught how to drive by a trusted individual who was well positioned educate you, or by an expert educator who sat with you in the vehicle and guaranteed that you learned everything effectively.

So you probably knew that this was coming, but property investment? Yeah it’s a bit like learning how to drive a car… You have a lot to learn and a lot to take in, but luckily there are plenty of others who have gone before you and who can educate and guide.

Just as learning how to drive without an instructor can be dangerous and possibly result in smashes and crashes, heading into property investment without the right instruction can result in poor investments and possible mistakes. That’s why you need a mentor to guide you, just as you had a driving instructor to teach you! Ok, enough of the driving metaphor now. Let’s look at how to find a mentor!

property investment melbourne

Who is a good mentor?

A good mentor is somebody who can point you in the right direction for your investments, and who can be a font of direction, inspiration and knowledge. They’re somebody who understands and gets your objectives and ideal system for investment. Ideally your coach has actually invested using the same system for their property investment and so will be ideally placed and positioned to offer maximum advice and coaching around your decision making process.

So how would you go about discovering this mentor who will guide you? And then once you have them, how do you maximise their involvement in your property investment journey?

Step 1. Use your network of friends and family. Is there somebody you know, either specifically or in a roundabout way who you know has had some success with property investment? Use your channels to get in touch with them – online networking is a fine way to get in touch as well– and let this person know you’re keen on property investment as well for yourself. Chances are they will be totally flattered that you’ve communicated an enthusiasm toward learning something from them and will be totally positive about helping you.

Step 2. Look at what you want, and how you’re going to get there. Have any of the potential mentors that you’ve identified with used the same system/attained comparative results themselves? It’s all well and good to have an Über-successful mentor at the top of your priority list, but if all they’ve done is commercial development and you’re looking at buy and hold with cash flow positive properties then you need to look at someone who’s made their success with the same strategy you want to use.

Step 3. Once you have them, listen and learn. If you hook up with a mentor and then start telling them all the ways that you know you’re going to get ahead, either in an attempt to let them know you know your stuff, or because you’re keen to share your knowledge, they might think you’re ok without them and not bother. The best thing is to have a few things to ask, a few questions to lead them and after that listen to what your coach/potential mentor wants to say. You ought to be similar to a sponge in this phase of your property investment venture – and throughout it – on the grounds that truly you never quit learning!

Step 4. Gather your team. Your mentor may have the capacity to suggest to you an awesome accountant, solicitor, buyer’s advocate or mortgage broker, all of whom will assume a fundamental role in organising and guaranteeing the success of your property portfolio. Your achievements rely pretty heavily on upon how you structure your finances and how you deal with your purchases, so you have to ensure that the people around you have your best interests at heart. Leverage off your mentor and get them to help and guide you in the selection process.

If you’re stuck and not sure how to get ahead, AllianceCorp Property Experts offer a full Buyer’s Advocate service and coaching team who can advise and aid you in your property investment journey. If you’re serious about getting started in property investment you should get in touch today for a complimentary consultation with one of our coaches.

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So auction clearances rates came through and Melbourne’s auction clearance rates market over the weekend wrapped up the spring selling season on a 67.2% clearance rate. This rate was quite similar to the results from last weekend where we saw the lowest clearance rate for spring (and for the year thus far) with an initial rate of 67.1% which was then revised to 66.8% after late results.

A late boom across the numbers for spring saw buyers being inundated with opportunities, according to Australian Property Monitors (APM) and over 1300 homes were listed for auction over just the past weekend.

APM’s Andrew Wilson said that “This is well ahead of last weekend’s 1,154 results and just below the 1,341 auctions conducted over the same weekend last year.”

Still remaining to be advised are around 400 of the 1,326 results.

At the top of the list for sales was a property in Brighton called Sandy Cove at 38 Dawson Avenue (pictured below), which sold for $8,525,000 through Hocking Stuart. The 1989-built Jon Friedrich house sits on a 771 square metre block and i t last sold in 2007 for $6.1 million.

property investment

There were a few pre-auction sales with REIV recording around 170 pre-sales from its larger sample of 1181 auction results.

The REIV listed the top sales amid its 65% success rate:

TOP 5 HOUSES
1. 38 Dawson Avenue, Brighton $8,525,000
2. 37 Elizabeth Street, Brighton East $4,345,000
3. 6 Chilcote Avenue, Malvern $3,760,000
4. 2 Barnsbury Court, Deepdene $3,700,000
5. 129 Richardson Street, Albert Park $3,510,000

TOP 5 BARGAIN HOUSES
1. 83 Seventh Avenue, Rosebud $240,000
2. 11 Romsey Crescent, Dallas $270,000
3. 72 Songlark Crescent, Werribee $270,000
4. 36 Chelsworth Loop, Craigieburn $330,000
5. 15 Freda Street, Broadmeadows $330,000

TOP 5 APARTMENTS
1. 2/8 Glenview Avenue, Malvern $1,920,000
2. 4 Bosisto Street, Richmond $1,530,000
3. 105 Ormond Esplanade, Elwood $1,500,000
4. 3 Edward Street, Toorak $1,250,000
5. 1B Wordsworth Street, St Kilda $1,036,000

TOP 5 BARGAIN APARTMENTS
1. 1/44 Brunswick Street, Fitzroy $133,000
2. 9/10 Derby Street, Fawkner $228,000
3. 36 Elinda Place, Reservoir $253,000
4. 5/216 Sladen Street, Cranbourne $255,000
5. 710/551 Flinders Lane, Melbourne $295,000

Source: Australian Property Monitors.

The largest number of auctions was seen in Melbourne’s inner city, with 220 auctions in total. This number was followed by the inner south where there were 209 auctions, and then there was the inner east with 188, the west with 185, the north east with 165, the outer east with 160, the north with 109 and the south east with 49.

Richmond was the most popular suburb for auction listings over the weekend in metro Melbourne with 24 auctions. This was followed by Glen Waverley in the outer east and Reservoir in the north east each with 22. Port Melbourne in the inner city saw a total of 21 auctions and, St Kilda in the inner city saw 19 auctions. Mount Waverley in the inner east and Melbourne CBD each with 18 and Doncaster in the inner east and Brighton in the inner south each with 17 auctions scheduled this weekend.

The auction clearance rates for last weekend of 67.1% were well below the previous weekend weekend’s auction clearance rate of 72.1% and Wilson stated that “Record numbers of auctions will continue to test a fading market through December to the Christmas break.”

Before the results on Saturday, Melbourne’s four weekend average clearance rate had fallen to 72.7% which was well down on the previous four weekend average of 75.4%.

If you’re looking at investing in property you need to come in for a session with one of our property experts for a complimentary consultation. Register here for more information about how you can get started today!

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Article originally published as Melbourne’s weekend auctions end spring on weakened 67% clearance rate

We’ve seen some changes lately in how property is being built and to the rules that govern what’s allowed and what’s not. Gradual shifts in legislation to allow more building in built up areas is going to shape the way that we live, and consequently the way that we invest. In Sydney this year, the government’s housing plan has made allowances to build in already developed areas.

New ‘manor homes’ have been green-lighted to be built on street corners and ‘Fonzie flats’ will be encouraged over garages under a state government plan to fit more people into Sydney’s fastest-growing suburbs.

But hang on. What’s a Fonzie flat? Well believe it for not they’re named after The Fonz from Happy Days, and they refer to a dwelling or flat being built above garages. They’re so named because The Fonz used to live above the Cunninghams’ garage in a flat, and Sydney developers are looking to build the same sort of one bedroom or studio arrangements above flats in Sydney in dense urban areas.

This will add value and increase living space for residential developments. Such flats already exist, but could be strata subdivided from the main home under the plan. Further to this, there have been plans in place to build manor blocks on street corners, and though they would look like large two-storey homes they actually contain four separate units.

The government’s housing diversity plan would allow townhouses and other higher-density house types across more suburbs in Sydney’s north-west and south-west growth areas, changing the appearance of many residential areas. The government says that their plan, which will affect growth centres around the Hills, Blacktown, Camden, Campbelltown and Liverpool council areas, will increase affordability and housing choice and help create more than 180,000 new homes over the next 30 years.

property investment

The importance of staying informed about what’s going to happen in the property investment market is clear when you consider things like what kinds of dwellings and houses are being built or are becoming available on the market, and when you compare stuff like demographics with the availability.

It makes sense to choose a property that will match the needs of your renters, especially if you’re buying in an area that is up and coming, as it means that your property’s rentability will be higher to potential tenants. It makes sense to buy a three bedroom house in an area that is popular with families, and it makes sense to buy a one bedroom apartment in an area that is popular with young urban professionals and singles. The demographics of the area plays a huge role in choosing what kind of dwelling to invest in.

There are a large number of things that work in the favour of property investment as a vehicle for wealth: It’s a bricks and mortar kind of obsession that Australia has with property on the whole, and although being able to reach out and touch it is a good feeling, there’s a lot more going for property than just that.

  • Capital growth: Your property is going to increase in value over time, and sometimes the growth can be a very attractive prospect. The growth that you see in your house is going to ensure that you are able to use the equity to buy more investment properties.
  • A safe investment: A buy and hold strategy will ensure that even if you happen to purchase the absolute worst house in the worst street, you’ll probably make money on it eventually due to growth.
  • Mitigate risk: While it would be great to be able to insure your stock portfolio against a crash, it’s sadly not possible.
  • Anyone can do it: Property investment is accessible to most people with a sufficient deposit. Although research certainly helps (of course), you can get going in property investment pretty easily.
  • Tax benefits: The tax breaks for investors in Australia are very good compared to other countries and although it shouldn’t be a primary reason for investing, it certainly helps!

 

Just so long as you have a plan and aren’t afraid of doing the research on the property that you’re considering making a purchase on you’ll be well primed for success in property investment. If you know what your plan is you’ll be able to buy better using the strategy and tactics you outlined.

Using a buyer’s advocate is an excellent way to ensure that you have a plan in place, and to make sure that the property you buy matches your goals. Buyer’s advocates have the skills and ability to align property purchases with your financial aims. If you’re serious about developing financial independence through property investment, I suggest that you get in touch with one of our experienced property coaches today to book your complimentary 1-2-1 consultation.

 

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After a quick and simple refresher on how to make your money work for you with property investment? Take a look at these quick tips on how to make sure that you’re doing as much as you can to be successful.

Always remember: Lazy money is money that is just sitting around. Put it to work!

In order to be a successful investor you need to look closely at your incomings and outgoings, and to get comfortable with the idea of being in a bit of debt.

Not all debt is bad, because as you may have heard there’s good debt, and then there’s bad debt.

propertyinvestment

In a nutshell…

  • Good debt is an asset which increases in value over time.
  • Bad debt is an asset which declines over time.

The type of debt most of us are familiar with is the kind where you have to pay back money with interest for purchases that you’ve made.

It’s often in the news about the amount of debt Australians have. While this can be something that can make you worry, it’s important as an investor to understand that not all debt is bad! In fact, good debt can help you to grow your wealth.

What is good debt?

Good debt is when you borrow to invest and your investment produces an income. This therefore makes the interest you’re going to pay on the loan tax deductible. Good debt is also where the investment increases in value after you have invested, for example, when you invest in property or shares.

What is bad debt?

Bad debt happens when you borrow to invest but the asset depreciates in value. This means the interest on the loan is non-deductible because it is a non-income producing asset, such as a car.

Many of us cannot avoid some form of bad debt, but it is best to try and minimise it whenever possible. So how do you put your debt to work (once you’ve become comfortable with the idea of being in debt)?

1.  Minimise your tax and maximise your debt!

The average tax bracket is 33%. That means that on a 5 day working week for Monday and most of Tuesday you’re working for the tax man. Then for the tiny bit left of Tuesday, all of Wednesday and a little bit of Thursday you’re working to pay rent, then for the rest of Thursday and Friday you’re working for food and bills and petrol and everything else.

We live in a society where we’re living beyond our means as well, with the average person spending above and beyond what they earn. With spending like this, how are you meant to get ahead in life?! You need to make your tax work for you instead of just squandering it. Australia is very kind to property investors when it comes to tax breaks, so use them!

property investment

2. If you can control it, you should

You need to take stock of the things you can’t control, and then make them work  against the things that you can. Let’s take a look at some things you can’t control:

  • Supply and demand
  • Rental demands
  • Economic growth
  • Population growth
  • Interest rates
  • Policies

You can’t walk into the bank you have your loan for and negotiate a lower interest rate after they’ve hiked them up, sadly. What you CAN do is control as many of the factors that you can to mitigate against the unknown.

So, what can you control? Things like how you’ll structure your property portfolio, and what sort of investments you’re going to make. Stuff like:

  • Renovations to add value
  • Subdivisions/developments to add value
  • Strata
  • Off the plan purchases with increased value
  • What kind of property you buy in which area

While you can’t control supply and demand, you can make sure that you choose a dwelling in an area that appeals to the demographic of that area, or that you take population growth into account before you buy. It’s all about how you approach things and how you structure your finance around your property investment plan. Actually, speaking of finances…

3.  Structure your finances and know your stuff

When we sit down with our clients we go over five key things which are vital to any balanced and measured property investment strategy:

  1. What is your protection strategy?
  2. What is your debt reduction strategy?
  3. What is your property strategy?
  4. What is your finance strategy?
  5. What is your tax minimisation strategy?

If you don’t know the answers to all (or at least 4 out of 5) of these, then you might be in need of some property investment advice!

You need a great strategy to get ahead in property investment and thankfully, we know our stuff. Without a strategy and plan, everything falls apart. After all, as Sun Tzu said “Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.” We ensure that we give every client that comes into AllianceCorp has the right strategy for their goals.

This is all tip of the iceberg type stuff though, and we’re always looking ways to help our clients with investing smarter and building a portfolio. If you’re ready to get ahead with your property investments, register here for your complimentary and obligation free session with one of our property experts:

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As property investors we are always looking for a great buy. The right house on the perfect street with a great rental yield and excellent potential for capital growth. Well although the absolutely perfect investment property doesn’t exist, the good news is that it doesn’t have to — because there will probably always be one or two things that aren’t exactly what you want with a property, and that’s ok. The best part about doing your research is that you can get pretty dang close to a ‘best fit’ for you by looking in the right places for your investment properties, and by working out what works for you and what doesn’t.

You don’t have to say goodbye to your ‘good buy’ aspirations, and with the right research you can find excellent property choices for your investment property plan.

Plus, before we delve into this juicy stuff here, If you’re totally new to investment property research or investment property as a whole, then you will definitely benefit from having a look at our guide on getting to know property investment as part of your educational journey, in addition to reading this piece.

property investment melbourne

So we know that there is a LOT of information out there for any potential property investors, and you can get as deep as you want with the stats and figures. Depending on your level of knowledge you may enjoy getting into the nitty-gritty of the stats, and there’s plenty of merit in immersing yourself in research and looking at data. There are some things that are better to look at than others when you’re trying to find the best investment property for you – and although the ABS and RP Data are fantastic resources it’s worth your while to take a look at indicators, as well as stats from the past.

property investment melbourne

After all, most research data tells us what’s happened, and while that can be a good indicator for the future there are also excellent resources to look at for what’ potentially going to happen in the future.

My top things to look at are:

  1. Population growth
  2. Supply of property
  3. Infrastructure and employment rates
  4. Finance trends

When you look at the prices of property the overall rise and fall is always going to be dictated by a couple of main factors:

  • Supply and demand, or how many people there are, and where and how do they want to live?
  • The overall wealth of our nation

You can use the aforementioned Australian Bureau of Statistics data or other statistical sources to locate the areas where you’ll find people who have a higher than average income, and who are prepared to pay a premium to live a certain way in a certain type of accommodation. From here you can then target the kinds of properties and drill down to specific areas and streets within these areas where you’ll find people wanting to live.

You can move further from here by getting to know the markets in the areas you’re targeting by looking at market trends – supply and demand, auction clearance rates and vendor asking prices etc. That way you can hone in on your best choice properties and get your ducks in a row.

The one thing you also have to do to get your head around the market is to inspect a whole heap of properties!

If you haven’t the time in your life to do this level of research then you need to surround yourself with a solid team who can work with you to build and develop a property portfolio that’s going to work for you. Professional services like a buyer’s agent or buyer’s advocate do a whole heap of the legwork for you, and we offer a full range of these services at AllianceCorp. If you’d like to get into property investment and are just too time-poor, then get in touch with us today to book your complimentary property investment consultation.

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Did you know that at AllianceCorp we offer the full range of services to make your journey in Property Investment as profitable and painless as possible?

Just take a look at this property that we purchased for a client using our Buyer’s Advocacy service and performed a value-add renovation in just three months using our Renovations Department. The client saw excellent results from their renovation in a very short period of time.

Check out the figures below:

Apartment in Haines Street, North Melbourne (2 bed/1 bath/1 car)

Purchase price:  $449,000

Rental Income prior to renovation:  $400

Renovation investment: $30,000

Renovation period: 9 weeks

Estimated value after renovation: $500,000*

Rental income after renovation: $440

Estimated added value:  $21,000 in 3 months

*Estimation based on sale price of a similar property at 1/55 Haines Street, North Melbourne (2 bed/1 bath/1 car)

Haines Street Comparison

If you’d like to experience these sorts of results for yourself then get in touch with us TODAY to arrange your consultation with one of our Buyer’s Advocates and get started on your journey to greater wealth through property.

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For any potential property investor, the auction can be an exciting time. You’ve done your research and now it’s time to go and throw your hat into the ring for an investment property. While it’s exciting it’s also a path that can be fraught. You need to do your research properly to get the most out of any auction, and you also need to have your wits about you to make sure that you’re getting the best possible deal.

property investment

You can’t cut corners on something like looking for a house, because it’s one of the biggest purchases you’ll ever make in your life and you need to make sure you’re totally ready, both financially and in terms of the preparation. There may be things like significant structural damage or compromise that you need to take into consideration when making your offer on a house, so you need to make sure you know how to find out about that sort of thing, and how you need to make your bid based on other property prices and what you need to do on the house to fix it up, if it’s a property that you’re buying to renovate.

To get your head around the prices of property and what is suitable as an offer you need to start researching the market to find out what is selling at what price. A good place to start is online, and if you research 10 properties a week for 10 weeks you’ll knock over 100 houses. It might sound like a lot, but when you consider that the research you do has the potential to save you hundreds of thousands of dollars it makes for a worthwhile investment. A benefit of engaging a buyer’s advocate means that you don’t have to do any of this research, as the buyer’s agent will look at the houses for you, and then select properties based on your specifications and present them to you. Regardless, it’s worthwhile knowing how the process works, so I’ve outlined three possible scenarios that you can get tripped up in as a new auction bidder, and they’re things to be aware of for any new property investor in Melbourne.

GETTING CARRIED AWAY

Everyone wants to win and unfortunately auctions can quickly turn into an expensive game or an ego play for inexperienced and emotional bidders. One extra bid can quickly snowball into a handful of extra bids – and this behaviour can result in you paying a price way above what you anticipated, above fair value and beyond your means.

property investment

If you’re the kind of person who gets carried away in the moment, then get engage a trusted friend or family member or a professional buyers’ advocate to bid at the auction for you. You won’t regret it.

FORGETTING THE SELLING AGENTS’ ROLE

You need to remind yourself that the selling agent is only ever acting in the best interest of the seller, and not of the buyer. On the day of the auction, don’t let the selling agent pressure you into increasing your bid if they can’t keep things moving.

If you’re the highest bidder and the property isn’t on the market, simply allow the property to be passed in and focus on starting your negotiations again in the post auction environment. Stay focused on the task at hand and don’t get trapped into bidding against yourself at auction. For property investment Melbourne you need to think with your head, and not get carried away.

Bidding up against yourself happens more often than you might think at auction and it usually comes down to a simple error often fuelled by the flurry of activity at the final call – the highest bigger isn’t sure if they’re still the highest and they raise their bid. So keep your wits about you.

NOT GETTING PROPERTY INSPECTIONS

Imagine this: You’ve previously paid for pest and building inspections on two properties that you’ve not gone ahead on buying. You’ve then found another property but you’ve managed to convince yourself that you don’t need the check this time around because the last two came back fine. You might have fooled yourself into thinking these inspections aren’t really necessary. Well, think again, because you absolutely need to know what you’re buying.

The property might be riddled with termite, the construction might be in need of repair or poorly done, or the wiring and plumbing may be faulty. Any of these major faults will cost a significant amount of money to fix and you need to factor this into the equation when you’re placing your bid on a property.

property investment
If you’d like to know more about auctions and how to get the best investments, register here for your complimentary and obligation free session with one of our property experts. We can save you the hassle of research, bidding and negotiations, and we can do it all in a hassle free way leaving you free to focus on the more important things.

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We’ve seen some exciting changes in the property investment market in the past 30 years, with Australian home and apartment values rising second only to Britain for any other market in the world. This is according to a new global report produced by The Global Living Report as produced by CBRE.

In the past 30 years, Australian housing prices have risen 221.4%, which puts us ahead of major countries including the USA, the Netherlands, Switzerland, France and South Korea. Britain surged ahead with housing prices reaching 232% in the same period of time.

property investment

The Global Living report which charts property performance in cities relative to London – demonstrates that Aussie capital values have more than tripled since 1975, along with our British counterparts.

You would have to say that one of the major factors contributing to the surge in values is a complete undersupply of new housing, alongside a burgeoning population that continues to grow. Add a strong number of emigration into the mix and you have supply and demand on a grand scale. CBRE Australian research head Stephen McNabb was quoted as saying that “Australian capital values have been supported by a good market balance,”  but “Under-building [has been] more prevalent over the past 10 years, ­combined with relatively strong population growth.”

Australia’s weathering of the financial downturn during 2007 and 2008 also ensures that housing values remained strong at a time when many other countries suffered falls due to the GFC. Mr McNabb said “The Australian economy and sound position of the financial system and the banks has supported capital appreciation without an extreme period of deleveraging in the household sector which affected asset values in Europe and the US during the GFC.”

property investment

There were only two developed countries that saw housing prices fall in the past 30 years, and these were Japan and Germany who saw falls of 14.5% and 7.8% respectively.

The report by the CBRE has been released at the same time that Australian property data has been indicating that housing prices might be finally starting to moderate after a huge 18 months of growth. The country saw housing prices rise by 1% nationally during the month of October which brought gains overall from the past 12 months to 8.9%. The report also revealed that Sydney is now the fourth-most expensive city in the world for new apartments. That’s absolutely huge, given the buzz that’s surrounded Sydney for months now, and the speculation that’s been going on in the media. A comparison of apartment prices per square metre puts Sydney ahead of even Paris, with $2197/square metre for new apartments being the average.

London’s still sitting pretty at the top with the most expensive new apartments ($3662 a square metre!) with Hong Kong close and New York not far behind, and our very own Sydney in fourth place. Interesting stuff!

property investment

It’s good to know where you sit on a global scale, and it’s interesting to look at information like this in terms of market rises and falls – considering that most property markets all follow a certain pattern and path of fluctuation, of peaks and troughs.

Consider an education in property investment as one of the most important things that you can do for yourself in terms of creating wealth and in building a successful portfolio. You need to have goals, you need to be educated and you need to get ahead of the pack by buying smart, and by sticking to your plan. If this sounds good to you, get in touch with us today and get started on the journey to wealth with AllianceCorp Property Investment Experts.

Register here for your complimentary and obligation free session with one of our property experts:

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Often, one of the first things that people look for when considering property investment is a bargain in their backyard. People often feel far more comfortable investing in their own neighbourhood as it’s an area they know intimately – like where to get the best coffee or where the best schools are. It’s this kind of knowledge that makes them feel as thought they’re best off buying a house in the same neighbourhood, even though they’re probably never going to live in the house at all…

Sadly, this is a trap that many first time investors fall into, as although you may know your own area inside out, your own postcode might not be the best place to be investing your right now. If you have the idea to look further afield and into areas you might not be so familiar with, and do the research to find some great properties, you will be rewarded with a property portfolio that’s balanced and can weather different market fluctuations. This is just one the great benefits to buying property in different states and areas and you can read more about balancing your portfolio here.

property investment

The analogy that I like to use is ‘just because it’s raining in Perth- doesn’t mean that it’s raining in Sydney’! Likewise with the property investment market, just because Sydney’s property prices are sitting at an all-time high doesn’t mean that all the markets around Australia are doing the same thing.

Let’s compare the markets so you can see what I mean:

Sydney

The property market has continued to grow over the past 12 months widening the gap between it and every other state

Median house price: $725,000 at 14.40% Annual Growth

Median Unit Price: $565,000 at 9.41% Annual Growth

Compare this then to the Adelaide market where the annual property growth figures are a lot weaker, but the median house price is drastically lower.

Adelaide

Median house price: $410,000

Median unit price: $345,000

While Sydney has experienced exponential growth over the last few years, the Adelaide market is just starting to show signs of life again – with clearance rates above average, time on the market and vendor discounting down.

Also at a different point of the property cycle to Sydney is Brisbane. Although the annual growth has been a lot less than the Sydney market at 5.12%, the median house price is currently sitting around the $475,000 mark, almost $300,000 less than Sydney. The sentiment amongst many investors is that Brisbane could be the next city to boom!

property investment

Understandably, the thing that stops many people investing into other areas and markets where they are likely to get more growth or a higher rental yield is just a lack of information. All too often I hear people say that they are waiting for their local market to change before they start investing again, but all the while are missing out on great property investment opportunities happening all around Australia. At AllianceCorp we encourage and educate all of our investors to be open-minded and to let the research dictate your next purchase, and not your emotions.

If you’re ready to start thinking outside the box and making it rain everywhere (rain property and capital growth, that is) then get in touch today and get started on your journey to greater wealth and choices!

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statistics: RP Data

It’s a common tale – all too common. You have a typical Aussie couple, let’s call them Tina and Jack Smith, who are saving up their money, working hard and trying to get their mortgage down. They’re in their 40s and comfortable enough, their kids are in their teens and their house is worth about $650,000 with $200,000 worth of debt. They only have $100,000 in super and no other investments to speak of. That doesn’t sound too good…

Sadly we see this pattern cropping up a lot – people who are in their mid 40s and even sometimes mid 50s with more debt than super and absolutely no plan or idea how to get rid of their debt, but with the mindset that if they keep working hard and chipping away at the mortgage they’ll see a better tomorrow. Oftentimes, people think that they don’t have the capacity to invest in property, theysimply think it’s beyond them. Many people have no idea that they’re actually fully capable of investing and have the capacity to do so straight away. The cost of not doing so is huge, compared to not investing.

The facts are that the way they’re going currently, their tomorrow is going to be tough financially if they don’t do somehting.

Tina and Jack want to get ahead – but they have a couple of things stacked up against them: being busy, and being afraid.

They’re totally missing out on the many legal tax breaks that Australia has for property investment, and thus they are missing the effective and powerful debt elimination tools at their fingertips! Being busy will keep them working for years, and working for every dollar they get because they’ve got bills to pay – but they don’t realise that by making smart property investments their money can work for them! There’s also the fear that accompanies the mindset of working hard for your money, and that’s the fear of loss and debt. No one likes to lose money or to be in debt – but that’s the very mindset of a successful investor. They get comfortable with debt and start to see their money working for them.

property investment

To some people it may seem easier in the short term to avoid the fear and go back to being busy working.

The end result for Tina and Jack is that they take home only two thirds of the money they work so hard for.

Without an understanding of the tax system and how to use it legally, their reality is that the harder they work the more the tax man gets.

So Tina and Jack just keep on working hard, while their internal dialogue (or permission for wealth) is to keep on working hard to pay for the house and educate the kids. And they probably see their friends all doing it the same way, and making the same mistakes. This creates the illusion that they’re on the right track – but they’re not! The reality is that their friends’ assets, just like Tina and Jack’s assets, wont be enough for retirement.

Like so many Australians, Tina and Jack don’t know how to get ahead financially and are afraid of losing the money they have worked so hard to earn.

They are financially naïve.

And being financially naïve is one of the most expensive luxuries anyone can indulge in. So what should they do? And what can you do?

For starters, it is important to take some proactive steps to take charge of your financial future.

If you don’t know where your future is headed, register here for your complimentary and obligation free session with one of our property investment experts:

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Property investment is open to anyone with enough of a deposit and the right income to be able to cover the holding costs on a property. That much you know. You also know that property investment doesn’t require a huge and intricate knowledge field to be able to do it successfully. By doing your research and having a plan in place you can invest in property, but what about your lifestyle, and being able to continue to invest? Will you have to live on next to nothing while you wait for your properties to gather equity?

There’s a reason why so many people get stuck on one or two properties, and it’s partly to do with planning and how you organise your finances, but it’s also do to this one thing: A buffer (or Master Facility as I call it, because it’s an overarching and key component to your overall property investment plan).

Making sure you have a sufficient buffer to cover your holding costs in the event of something going wrong (and unexpected things do happen, as we’ll see in a moment) is a lifesaver, and is a vital part of every smart property investor’s plan.

Just imagine this scenario for a moment. You own three investment properties and you get a call one week from your property manager: Your tenant has lost his job and won’t be able to pay rent for a couple of weeks, maybe a month and a half. Well, that’s ok – you can cover the costs of your mortgage and payments in that time, no problem. But then in the same week, the property manager calls again and the tenant in your apartment is moving out, and they’re going to need to decrease the rent to get someone else in quickly. Ok, you can make ends meet – and figure it out until you get by.

Of course, the next week you get a call from your other tenants and the carpet is starting to fray it’s so worn, and will you be able to replace it soon? After three hits in one fortnight you’d be pushed to the absolute maximum without a cash buffer in place to protect you. And of course, this would all happen over Christmas while you’re stretched as it is…

The reality is that property investing isn’t easy. If it was everyone would get on board, buy some property, make enough to retire and get out of the game with a tidy profit. The fact is,
that without a proper plan in place and the strategy around your purchases, you’ll have a hard time getting ahead. It might seem like there’s drama associated with property investment but I can’t say it enough, if you have a plan in place you won’t see the hiccoughs as dramas, just things you’ve already planned for financially, even if they were unexpected at the time. Think about whether you want to be in the group of people who rely on the pension and some savings in retirement, or whether you want a passive income to see you through in style.

Property investment is so rewarding, and yet along the way, there are going to be ups and downs, but that’s why having a cash buffer is so important. It helps you through the unexpected hardships, and helps you to sleep better at night too! Basically, your buffer protects you against things like repairs, vacant tenancy periods, damages, interest rate hikes, maintenance and other unexpected things that happen.

You can create a buffer in one of two ways:

  1. Cash
  2. Equity

The cash buffer is pretty simply that, cash. It comes from your savings and acts as your cash backup for holding costs and other associated costs.

The equity buffer is created by using the equity that exists in your home, but then purchasing investment properties that don’t take up the entire amount of equity available to you, thus leaving you with some cash free to continue investing/borrowing.

Take a look at this diagram below for an example of how the master facility can work:

Master Facility

I would recommend all investors build a master facility buffer, if not through savings then equity. It makes investing and life easier to know that throughout the ups and downs of property investing, most situations just aren’t worth stressing about because there’s always a back-up.

Unexpected things happen all the time and if you don’t have the cash to cover it, it’s not worth thinking about the stress this can cause.

If you want to know more about how to create a cash buffer for your property investment portfolio, click here for your complimentary and obligation free session with one of our property experts:

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Today I’m going to cover how you can manage your risk when investing in property. When you’re investing in any asset there’s no such thing as a sure thing, and investment property is no different. While there’s potential for capital growth which you don’t necessarily get in other asset types, there are still market peaks and troughs which you need to manage. The simplest way to manage the risks is by diversifying your property portfolio.

STEP 1.  Buy in different locations. That is, different suburbs within a city, and/or different states and areas.

If you choose to buy all of your property in the same suburb or area you’re intensifying your exposure to potential market changes beyond your control, as well as potential environmental factors that are beyond control.

property investment

For example:

  • If you buy all your investment property in an area where there is a lot of wind/salt damage to the paint, you may be up for repainting bills all at once, which can run into tens of thousands.
  • If you buy a large amount of your investment property in an area that loses popularity (like a boom town, for example) the subsequent reduced demand from buyers can affect the resale value.
  • If you buy all of your properties in an area and five years later the council builds a major freeway right next door, you risk losing value due to traffic noise

By diversifying across different suburbs and areas both within a city and across states, you can minimise the risk of repairs, outlays, damages and costs. If one of your properties needs repairs or drops in value the financial pain won’t be as hard when your other properties are holding up fine.

STEP 2.  Buy across different asset types and price ranges.

Doing this gives your much more flexibility when you do need to sell and free up your equity. If you have assets that are easy to move it makes the whole portfolio more liquid.

property investment

Here’s an example: You have $1 million to spend. With this cash you can either buy one house worth the whole $1 million or you can buy two assets worth $650,000 and $350,000.

If you buy one instead of two assets you have nothing to sell if you need to free up cash, while still maintaining an asset. If you buy two investment properties, you can sell one to free up cash, which allows you to keep the other and continue to amass a source of equity and income outside super.

This method also helps you with your capital gains tax (CGT). If you buy one property worth $1 million and sell it for a profit, you’re liable for CGT on the whole amount at once. Compared to that if you buy two properties and sell them in separate financial years, you can spread your CGT liability over two years.

How To Manage Risk

Basically, diversification covers a range of strategies but the bottom line is to buy across a range of asset types and locations, because not only does this ensure you can weather the storms of the ups and downs with property investment, but you also open yourself up to getting different rental yields, depreciation benefits and other tax benefits.

property investment

You can’t control changes in the local environment, infrastructure or demographics. But by diversifying your portfolio and choosing good quality properties, you can minimise the risks associated with these factors and come through the worst of storms relatively unscathed financially. The key to investing well is that whenever you can afford to buy any good quality asset you should.

Need some help with diversifying your investment property portfolio? Come and see us for your no obligation consultation today!

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There are lots of ways property investors can make mistakes. And knowing what makes a mistake is one of the best means of avoiding them occurring! It doesn’t matter how experienced you are in property investment, it all comes down to making sure you’re prepared with education and the right resources for every step of the journey. Let’s take a look at three of some of the biggest mistakes that you can make as a property investor.

1. Relying on low-interest rates

If you are making any kind of payment on a mortgage right now, then you should be pretty happy when you take a look at your interest statement. Why? We’re currently sitting on some of the lowest consistent mortgage rates going. Variable rates currently float at around 5%, and as investors we’re taking advantage of those very low interest rates in order to be get hold of larger loans, and also using the low rates to pay off mortgages faster.interest rates

 

But what happens when they go up again? Interest rates are currently quite low, and it’s predicted that they’re going to edge closer towards the rate of 6-8%. If you’re getting into investing and hoping that the rates are going to stay as low as they are, then think about what your potential is for borrowing, and make sure you take into consideration the possibility of increased mortgage repayments. If you’re counting on existing interest levels staying in place for the long term, you might find yourself overextended. It’s vital that when you’re an investor that you have a buffer in place to accommodate for any changes to interest rates and other changes in circumstances that can lead to having to find extra money from somewhere. I have spoken about this in the past and you can read more about it if you like. It’s well worth a look for anyone who’s currently an investor and who doesn’t really have a plan in place.

2. Investing with no clear strategy

Buying property ought to be an economically rewarding and positive experience that ultimately increases your wealth and financial position and makes your goal lifestyle more accessible. There are many ways that you can stand to make money out of real estate – and this is the crux of the problem for some people. With so many ways that you can make some money, it can be appealing for would-be investors to strike at many potential opportunities. Often at the same time. This can lead to disaster as there’s the potential for your borrowing capacity to seize up, you might be denied a loan that you need to get a property, or a property that you ‘flip’ doesn’t get the result you were banking on.

propertyinvestment

Whatever it is, you can access the range of property investment strategies out there, you just need a plan to do it. I’ve seen it happen plenty of times. An investor gets really excited by a real estate agent about the potential of a property to make them a huge return over a short period of time and they jump on the opportunity –  without taking into account the facts about the property and all of the potential hazards and troubles to be aware of.

There’s no point in living from income to income and restricting your current lifestyle, just as a way to try and maximise your property investments while you’re banking success on your future. There is a better way, and a better approach to investing that allows you to live comfortably and with no impact to your current lifestyle – provided that you have a plan in place and know where you want to be financially and how you want to get there.

But what makes up a property plan? How do you construct it?

A property investment plan is made up of an analysis of your current financial state, combined with an estimate of where you want to be for retirement/for your goals in the future. From there you then make a calculated projection based on what you have today, and what assets and properties you need to purchase to get to where you want to be. A good plan takes into account risk and potential ups and downs in the property market, but makes projections based on historical figures and projected interest rates and rates of appreciation and value increases for property. Once you have an idea of where you want to be financially, you can then get started with working out what kind of property you need to buy to get there.

Does it sound complicated? It can be! It’s not a big secret that doing well in property isn’t something that everyone does – and not everyone gets past one or two investment properties – because they don’t have a plan. If you want to get ahead with investing you can come in and see our team who can put together a financial plan with property investment for you – and it’s obligation free. You can get in touch with us here.

3. Not Being A Smart Buyer

A smart buyer is typically characterised by someone who isn’t afraid of stepping out of their comfort zone in order to be able to achieve their best result. This might mean looking for property to buy not only in a familiar area or suburb, but in another suburb, city or state entirely. It can be a bit scary for first or second time investors to look for property in an area that they’re unfamiliar with, but remember that with the right research, you can successfully buy property all over Australia, and thus create a more balanced property portfolio that is equipped with a host of different investment types. With a balanced portfolio you can better weather the property market peaks and troughs and find yourself in a better position financially.

property investment

The key point is that you can find a huge number of houses in a large number of neighbourhoods and suburbs around Australia, and since there will always be more opportunities for you to make money from real estate, keep your focus on your plan and keep educating yourself about new areas and new possibilities.

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You see the articles day in day out in investment property magazines and online, telling investors where they can buy next to best achieve high growth in property investment. I’ve always been quick to tell people to steer clear of hotspot-spruikers, because the hype surrounding the hotspot usually means that the time to buy has already passed…

property investment hotspot

Sure, I know that there are times when it’s acceptable to buy property in a certain area if it looks like something of note is going to happen, like an infrastructure boost or industry-related boom (see any mining town property price spike for examples!) and in this case it’s something that investors are usually onto through research and conducting due diligence. Researching areas for growth can be a great way to find property that will experience great returns, but you need to find them by doing the work.

Buying in high growth areas is great – provided you know what you’re looking for and how to do it. What I’m saying is that it isn’t the best strategy to follow hotspot reports in the media and then buy property based on what others are saying, because by the time a ‘hotspot’ hits the media it’s usually been around for a few months and everyone has hopped on that bandwagon already.

What I’d like to share is:

How to identify areas about to see a growth spurt

Identifying high-growth areas has become a super-competitive element to property investment. Everyone wants to find the next boom town and buy up big, so here’s a few tips on how to identify possible high-growth areas.

1. Look for areas that are undergoing gentrification

property investment hotspot

 

What’s gentrification? Any area where it used to be not so family friendly, but where you’re now seeing more families moving in.

Top Tips

  • Look at affordable areas in regions that you are interested in
  • Look at property prices over the past 2-3 years
  • If price growth is steady, look for younger professionals with good incomes – as this is usually a sign that the area is about to gentrify
  • Look for renovations or new buildings
  • Keep an eye out for new cafes and lifestyle stores


2. Look for the ripple effect

property investment

If you’re keen to get into a particular area but think you’ve missed the boat you can get into a surrounding suburb. This approach needs good timing, so you need to know what stage of the property cycle the suburb is in to get maximum results.

Top Tips

  • Check property value by looking at surrounding price. If the difference is more than 5%, chances are they’re playing catch up!
  • Watch median property trends. Set up alerts for surrounding suburbs to stay up to date. Look for properties within your budget that are as close to the growth as possible.
  • Try to buy within 10km of the city centre, as you’re usually pretty spot on for growth with properties within this band


3. Look at the state of supply and demand

property investment hotspot

Supply and demand is pretty much everything for growth past a certain point. If there’s no more capacity to build you can be pretty certain that prices will continue to rise.

Top Tips

  • Look for areas where the rental yield is rising. People usually tend to buy in the same area they rent, too.
  • Look at the demographics of people in the area, and at the average rental income of the people in that area. People with better financial situations are one of the usual driving factors for gentrification.
  • Look for population rising in an area. While population in itself isn’t enough to drive prices higher it can when combined with other indicators such as rising income and low supply.


4. Look for large infrastructure being built

property investment hotspot

The area might see a spike as workers come to the area for jobs.

So is there a perfect investment market? Well, no. The perfect investment market doesn’t really exist, but great investment properties can be found in any market! Plus, it doesn’t matter how amazing the property might be, or what kind of hot spot it’s in if it’s out of your price range, so always make sure you’re up to date with a portfolio review and updates of your financial situation.


If any of this sounds good to you and you’d like to find out more, get in touch here for your complimentary 1-2-1 session with one of our property investment coaches:

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It is no question that Gen-Y are finding it harder and harder to purchase a home, and are instead opting for vacations and shopping, along with other lifestyle choices, rather than saving to get a house deposit. Why? How about the fact that it’s peddled  as being a HUGE undertaking that, thanks to commentators and social media articles about the un-affordability of housing, now seems impossible.

Property-investment

The people to blame are those who go around saying just how unmanageable saving for a house deposit really is.

It is no wonder Generation Y don’t think there’s any point. Can anyone blame Gen Y for splurging on shopping and going on trips overseas when the prospect of saving for ten years just to buy one house seems so impossible?

These experts might feel they are sticking up for the poor ol’ Gen Y, but they’re really not doing them any favours. Sure it’s good to know the home truths about home ownership or property investment, but it has to be something that they still strive for, and can realise.

So how do you go about it, if you’re in the lucky bracket of home-ownership-impossibility that is Gen Y? You’ve got to make it important and prioritise your spending if you’d like to own your property. It will probably be more expensive to own your house than to rent in the initial stages, and for a Gen Y person that can be the difference between some lifestyle choices. With the emphasis on buying and owning things in the here-and-now, that can take some discipline, but you’ll be SO much better-off in the long haul.

There was a Melbourne couple recently I spoke to who said that they felt like they’d never afford a house. They had a child and were living in a three-bedroom house, and were paying a pretty high rent for this property. If they took the step of downsizing their rental property from a three bedroom to a two bedroom place, they’d save around $130 a week, or $6240. I guess the bottom line is here, that if you choose to spend your money rather than save some of it, you won’t get very far with home ownership.

The couple I was speaking to were on a single income of more than $80,000, quite a bit higher than average. By getting cheaper rental and implementing a careful budget they could save $300 a week. In five years this would amount to around $80,000 in savings.

Using this amount as a 20 per cent deposit they could buy their first home up to a value of $550,000. However, they would probably be better off buying a cheaper $450,000 home with a more manageable mortgage.

Plus:

  • It’s a lot easier to buy your own home before having a family of your own
  • If you’re young and don’t have and kids it’s far easier to have flatmates who can supplement your income
  • It is also easier in the short term to do things like buy a property with mates and then do it up, which then adds value to the property and means you can perhaps sell it after a few years so everyone has a deposit for their own home.

Property-investment

If none of the above appeals and the idea of saving is a big turn off, then you can take the cheaper option of renting and have more money to spend. It’s all about your own choice and there’s plenty of people online who will tell you that it’s the best and only way to do it. But remember if you’re young and want to own your own home, don’t be put off by the naysayers and get out there and DO IT. Home ownership is achievable, but it isn’t easy and hasn’t ever been that way. Mortgages have always been a big financial cost, and it’s better to be a homeowner and property investor than it is to pay off someone else’s mortgage.

Property-investment

If you’re ready to start investing or just want to find out more about property investment and how you can use it build a successful lifestyle and to achieve your goals, then get in touch today to find out more.

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What are your lifestyle goals?

Do you want to:

  • Pay off your mortgage sooner?
  • Work less?
  • Take more holidays?
  • Financial independence
  • Secure retirement plan
  • Kids education
  • All of the above?

If you look at the statistics, people need help in addition to their existing wage and super to achieve any of these goals. And property investment remains an attractive choice for many people with low interest rates and rising house prices across the country.

BUT…

There is no guarantee of success in property investment, and if you don’t understand how it works – the chances are you’ll be like 98% of all property investors who never reach their goal.

property investment

Below are 10 strategies that will secure your success.

At Alliance Corp we help you develop a property investment plan that matches your goals.

  • We develop a long-term wealth generation plan to suit you
  • We don’t sell properties – we help you buy them
  • We buy in certain locations and not others to ensure that you get the best possible property
  • We help you buy multiple properties in a portfolio as fast as possible
  • We help you manage your finances safely to get the most our of your opportunities.
  • You can trust our independent advice and experience to deliver results

The top 5 reasons why most property investors fail on their own

  1. They have no plan
  2. They don’t understand how banks work
  3. They don’t understand how property investment works
  4. They buy too few properties/risk management
  5. They don’t have a long term view.

The top 5 reasons why some property investors only partly succeed

  1. They buy the wrong property
  2. They don’t buy enough properties
  3. They don’t manage cashflow within the portfolio
  4. They don’t buy as soon as they are ready to do so
  5. They run their plan on emotion, not on a plan

The top 10 property investment strategies to guarantee success

At Alliance Corp’s upcoming workshop on 16th October in Melbourne we will cover why you should…

  1. Buy multiple properties and use leverage to succeed
  2. Hold onto properties for the long term
  3. Buy low risk properties
  4. Understand the mechanics of how the banks work
  5. Consider the importance of having a cash flow strategy before making any decisions.
  6. Develop a strategic plan to guide you, before you start buying properties
  7. Apply rigid rules about where and when you buy and where you won’t
  8. Understand the difference between a property wealth planner like AllianceCorp and a realestate agent, developer, project marketer or traditional buyers advocate
  9. Address all of the negatives – like market crashes, job loss, previous experiences, etc
  10. Know what it takes to be the kind of person who will successfully invest in a property portfolio

If you’d like to know how each of these 10 key strategies work then fill out your details below to attend our upcoming workshop in Melbourne, Brisbane and Sydney.

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Property Power Workshop

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There’s nothing worse than going into what is undoubtedly one of the biggest financial decisions you’re ever going to make and feeling like you’re not adequately prepared. There is certainly a whole lot of information to take in about the whole property investment process, so I’ve compiled a list of some of the most important things to take care of when you’re getting ready to start investing.

Property Investor Checklist

We collect this information because we understand that after you download this information you may appreciate a follow up call from our team to discuss any questions you may have about property investment.

 

I hope this helps you. It’s a document that you can keep to refer to, and hopefully will go some way towards making the property investment process easier. It doesn’t matter what stage you’re at in the process of investing: Perhaps you’ve already bought an investment property and want to streamline the process for your next property, or perhaps you’re new to investing and need to make sure you get everyone done right.

Whatever the reason, just keep on reading and getting your head around the whole deal, and remember to consult with a professional for guidance and advice when you need it. We can help, after all, we’ve gone through the property investment journey before (hundreds of times with all of our clients – and for ourselves) and are well equipped to advise, manage and even deal with the whole process for you, leaving you free to focus on what’s really important: family, education and your life.

Register here for your complimentary and obligation free session with one of our property experts to learn more about investing today:

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Are you looking to get into property investment as a way to achieve your goals? It helps if you know what your goals are, so that you know what you need to achieve them!

property investment

It’s not a huge secret that property investment eventually yields greater wealth through capital growth. And then,  even though we all know that money doesn’t buy happiness, greater wealth means more choices. And having choices is generally something that makes people pretty happy. Basically, property investment is an effective way to build your wealth and to enjoy a better quality of life through having greater choice. It’s pretty simple, really. Some common goals for investment that I’ve heard people say over the years include:

  • Provide for retirement
  • Financial independence
  • Passive income
  • Give the kids greater options for study
  • Travel more in retirement
  • Have more options for other investments
  • Pay down the mortgage
  • Diversify investments

It doesn’t have to be some lofty goal either – you might just really want a brand new car, and that’s fine too! No matter what your goals are financially, property investment is a great way to get ahead financially. The strategies that we use are simple, effective and tried and tested.

Of course, it depends on how soon you want to achieve your goals, and how much money you’ll need to make them possible, and as many people have seen in the past, property investment is a great way to grow your wealth over a period of time. If you’re looking to ‘get rich quickly’ then property investment probably isn’t the best and safest way to go about this, because property investment is a ‘get rich slowly if you play your card right’ kind of situation.

property investment

Take a look at the next section for some commonly asked questions about property investment.

Q. Don’t I Need A Huge Deposit?

A. Well, yes and no. If you’re getting into property investment for the first time and looking to buy your very first property then yes, you will need to save a deposit and approach a bank for a loan.

To get to this stage you need to be prepared to save aggressively! That might mean reducing your credit card limits or delaying a move to part time or contract work. If you own your own business you might need to pay yourself a salary to make yourself an attractive prospect for banks. If you’re still looking for your first investment property then you probably need to read our eBook Seven Reasons Why Property Investment Can’t Be Ignored before you read this one. If you’re ready to start investing then great! You should take a look at this information about property investment.

Q. Will I Need To Sacrifice My Lifestyle?

A. Saving up a deposit and then putting it to towards a house is fine for your first property. But what about when you want to buy more houses and create and investment portfolio? What then? Do you need to save as hard, and sacrifice as much every time you want to buy another invetsment property? Surely there must be a better way. You know of course, that I’m going to tell you that there is! The reality is that you can start with as little as 5% of the property purchase price, plus funds to cover your lawyer and stamp duty. How? Equity.

Q. What is Equity?

A. Equity is what makes up the difference between the market value of your home and the balance of your mortgage. If you’ve had your home for a few years and paid off some of the mortgage, that – combined with a rise in value of your house – could mean that you’ve built up some reasonable equity.

Accessing the equity in your home is one of the easiest ways to buy investment properties, and you may already have a property that will allow you to use this technique. Releasing equity from your home in a structured way allows you to keep your savings
in the bank. For investors, the usual situation is that most want to combine the benefits of not using their own savings with tax minimisation advantages when buying an investment property.

If you’re interested in finding out more about releasing the equity in your home or in building a property portfolio then please get in touch and register here for your complimentary and obligation free session with one of our property experts:

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It’s the start of a new month, and that means that the RP Data roundup is out. Let’s take a look at what the statistics say, and what it all means for property investment in general. Remember that it’s important to consider all of the information when investing in property, so this is a great source of staying across the whole spread of information available to investors.

We could see from the RP Data report that housing values housing values have made a small start moving into spring, with overall dwelling values reporting a rise of just 0.1%, according to the RP Data CoreLOgic Home Value Index. This was calculated across the month of September. This worked out to be a 2.9% capital gain over the third quarter of 2014 overall. This flat result for September resulted from five of the eight capital cities recording a loss over the month, with only Sydney (0.8%), Brisbane (0.7%) and Adelaide (0.9%) recording increases in dwelling values over the month.

property-investment

September saw gains in capital city dwelling values by 2.9%, which RP Data research director Tim Lawless said was driven by exceptionally strong conditions across the Sydney and Melbourne markets, where the quarterly capital gain was 4.1% and 3.7% respectively. In addition to this, Adelaide saw a solid increase in values during September, with 3.1% capital gains over the quarter.

Brisbane (0.6%), Darwin (1.4%) and Canberra (1.4%) showed capital gains in dwelling values over the most recent quarter and Perth (-0.6%) and Hobart (-1.0%) were the only capitals to record a decline in dwelling values over the September quarter.

Overall, RP Data’s report has shown that overall, dwelling values are now 9.3% higher over the twelve months to the end of the month of September 2014, with every single capital over this period recording an increase in dwelling values. Sydney is driving the trend, no doubt about it, with a huge increase of 14.3% over the past twelve months. A big gap exists between Sydney and the next best capital city, Melbourne, where values increased by 8.1%. Darwin came in third (7.1%) and Brisbane came after Darwin with 6.4% increase. Adelaide (4.8%), Hobart (4.6%), Perth (3.2%) and Canberra (1.7%) also all recorded gains in dwelling value.

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Despite the cooling off over September, signs point to values remaining strong.

Auction clearances kept on pushing past the 70% mark week after week, and the RP Data real estate agent and valuation platforms remained strong, and this is indicative of heightened levels of industry and mortgage market activity.

According to RPData’s research head Tim Lawless, more listings are going to enter the marketplace as the weather warms up. He says that the big test for the housing market is whether the additional stock is going to be taken up by an increase in buyer numbers.

He says: ”The annual rate of appreciation in dwelling values has actually been moderating since reaching a peak in April this year. The fact that the annual trend of capital growth has been trending lower is an important factor to note as it highlights that the rate of capital gain is no longer accelerating. Even though housing market conditions remain very buoyant, we have been seeing the 12 month trend drifting lower since peaking at 11.5per cent in April.”

“The softer September result is also likely to be seen as a positive indicator by the Reserve Bank which has recently raised concerns about the level of value growth and speculative investing in the Sydney and Melbourne housing markets,” Mr Lawless said.

It’s true that the high rate of capital gain has sparked debate around the sustainability of the housing market around Australia, and you can read more about this here, here and here. Mr Lawless does state that most of Australia’s capital cities are showing a sustainable rate of appreciation. Also, he goes on to say that the Reserve Bank has recently singled out Sydney and Melbourne as the markets that require some caution, particularly from investors who are buying into markets at a mature time in the growth cycle, at high price points and where rental yields are very low. It’s quite clear from looking at the consistently high auction clearance rates, and the ongoing increases in dwelling values that demand is high, and properties are going on the market and being met with hungry buyers. This much is true.

What we can learn from the RP Data report is that buying in these areas at such a time is better suited to home buyers, not investors. If you’re looking to buy a property that is going to achieve high growth and good capital gains then it’s important to research other areas that are experience good results, but without the saturated focus that’s currently taking place in Melbourne and Sydney.

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Additionally, Mr Lawless noted that when you look back through the cycles of the housing market, the current growth phase isn’t as aggressive as what was recorded over previous cycles.

At their peak, on a rolling annual basis, capital city dwelling values increased at a faster pace over each of the previous three growth cycles in 2009/10, 2007 and 2001/03. The big difference over this cycle is that growth has been very much concentrated within the nation’s two largest capital cities and has increased for a longer period than the previous two growth phases.

Mr Lawless said that what is concerning is that we have now seen the ratio of housing debt to disposable income reach a record level at 137.1 per cent and we are seeing substantial investor concentrations within the two largest capital cities, particularly in inner-city unit markets within these cities.

“The Reserve Bank has recently highlighted the risks that are becoming more evident in the Sydney and Melbourne housing markets and therefore it is no surprise that the Reserve Bank, together with APRA, is now contemplating the likelihood of introducing macroprudential tools to reduce some of the exuberance in the housing market and rebalance investor demand without having to resort to monetary policy,” Mr Lawless said.

So essentially, the RP Data report lets us know a lot of what we already sort of knew: Melbourne and Sydney and recording some huge growth and continued gains, and whether this is being fuelled by foreign interest, home buyers driving up prices or a combination of lots of different factors, it remains that you can always navigate any stage of the market provided you do your research and enlist expert advice.

If you’re ready to get more information about the possibilities for you as an investor, then get in touch with us here.

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The number one question I am asked by people is:

When should I invest in property?

Friends and clients alike want to know whether they need to wait until they reach a certain level of financial security, or until they can afford to pay a huge deposit before they start to invest. My answer is always the same: Invest as soon as you are able. You will always get a return on your initial investment provided that you follow a plan and are prepared to adopt a ‘get rich slowly’ attitude and hang on the property long enough.

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Property investment, despite what you might have read or heard, is not a ‘get rich quick’ game, and you will be disappointed if you enter the investment world expecting quick gains. It’s not to say that some people haven’t gotten lucky with ‘hot spots’ in the past, but I never advocate jumping on the bandwagon and trying to predict trends.

So How Do I Invest?

The best way to invest in property is by knowing the market, doing your research, ensuring you have a buffer and investing again and again as soon as you are able to.

It remains though, that the age old ‘when to invest’ question strikes many people down with fear, because undoubtedly there are a lot of things to consider, and sometimes it can get a bit overwhelming. But it just means that it’s all the more important to have a plan! It also remains that there are no simple answers, really, to any of these questions. You need to have a comprehensive approach to property investment as a whole, and to seek advice from professionals when looking to take the steps towards investing. After all, say that you want to get fit and are really serious about it, you’ll read as much as you can about diet, exercise and the best way to approach the whole task before, during and in an ongoing capacity to ensure you stick to your goals. You will probably even consult with dieticians, physicians and personal trainers to ensure that you have the best and most supportive team behind you. You’ll probably also find that you’ll be more geared for success and will have a better plan to follow than if you went it alone.

property investment

Investing in property uses pretty much the same tactics. You start by consulting experts in the field, and by reading as much as you can about locations, prices, reports and data before you even think about buying your first investment property. The people that you’ll have to consult with when you’re considering investing in property include solicitors, conveyancers, buyer’s agents, estate agents, property managers and a whole host of other services you might not even have known about. That’s really why I created AllianceCorp, as a one stop service for everything to do with property investment, because I knew that property investment could be a dizzying ride with people to see and things to arrange. As an investor myself I wanted to make the process easier for people who wanted to get into property investment for themselves.

When Do I Invest?

It’s impossible to point to a certain time in history where anyone should or shouldn’t have purchased property. Hindsight is a beautiful thing, and no-one has a crystal ball, so even the people who watch the market as closely as they can won’t be able to predict trends and prices. There are so many factors at play that it’s just important to look at your own personal circumstances and pinpoint when YOU can afford to invest.

Of course you will always get people saying that the best time to buy is when there’s not a lot of competition from buyers, and at this time in the market. And yes, according to economics and any analysis of the markets it’s true on paper, but if you can’t afford to invest at the time when everyone is telling you to invest, then quite simply the time isn’t right for you.

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It’s a key factor is that you should enlist professional advice at any stage of the market cycle when you’re considering a purchase to ensure that you’re in the best position and that you have adequate funds to proceed with your investment. The best plan will lay out a long term strategy with constant reviews and updates to ensure that adjustments are made as necessary, and to ensure that you stay on top of your buying capacity. You’ll also have an exit strategy in place at some point. Finally, it is not just about when you buy, but more importantly where and what you buy.

Never try to second-guess what the market will be doing in the future. Base your property investment decisions upon well researched professional advice and be prepared to adapt your strategy to suit changing circumstances including your own as well as what’s happening on the world stage.

If any of this sounds interesting to you, then register below for your obligation-free session with one of our property coaches today!

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For a look at the auction clearance results from the weekend have a look at this article. I know that people are watching the housing markets carefully with a lot of talk going on about bubbles and skyrocketing prices, so this is just a bit more information about the auction clearance results from the weekend from RP Data Australia. I can’t stress enough that a good investment strategy can help investors mitigate the peaks and troughs that are inevitable in any investment market.

Homebuyers appear unfazed by warnings from the central bank that Australia’s housing market is too hot, with Sydney recording its strongest ­September auction weekend on record. The result points to a bumper spring selling period to rival the record 2013.

The Reserve Bank of Australia last Wednesday warned against soaring house prices and an increasing imbalance between soaring ­lending to investors and weakening occupier finance.

But if consumers have any concerns, they did not show over the weekend, with the national auction clearance rate above 70 per cent for a fifth week according to preliminary figures from RP Data Australia.

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Sydney had a month high 927 auctions of which 78.5 per cent sold according to RP Data. Melbourne had 104 auctions, compared to more than 1000 the week before, as sellers sat out the Grand Final.

Andrew Wilson, senior economist at Fairfax Media’s Domain Group, said that while the housing market remained strong, price growth has slowed.

“I cannot understate how strong the market is but it is not as strong in terms of house price rises,” Mr Wilson said.

Yet buyers were prepared to pay up with many homes selling above their quoted reserve prices. A two bedroom home in the Sydney suburb of Surry Hills sold under the hammer on Saturday to local investors for $1.41 million, above the reserve of $1.2 million. This was a 47 per cent increase on what the house sold for in 2013, according to selling agent Con Fotaras of Belle Property.

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“This is a strong sale price showing how popular the area is, especially with car access and proximity to Central ­station,”Mr Fotaras said.

“It was last sold for $960,000 last year and has only had minor cosmetic work and a DA approval for a four bed, three bath property with parking.”

A preliminary weighted average clearance rate of 72 per cent was recorded this week across capital cities compared with 70.8 per cent last week and 73.5 per cent this time last year, according to RP Data Australia.

The most expensive sale reported to Domain Group in Melbourne a $1.6 million block in Glen Waverley. The 1433 square metre block has the potential for a 10-bedroom home. “Most auctions in Melbourne were held in areas strong for Chinese buyers, such as Glen ­Waverley,” Mr Wilson said.

The most expensive property reported in Sydney was a $5.7 million city ­apartment at The Residence Hyde Park. The three bedroom apartment, at 68/14-24 College Street, sold prior to ­auction through Simon Polito of Laing Real Estate.

Investors remain key buyers, Domain’s Dr Wilson said.

At Summer Hill in Sydney’s inner west an investor outbid first home buyers and young families for a post-war cottage. The 19 Smith Street house sold for $900,000, $400,000 more than what it sold in 2013 and following an extensive renovation.

The agent, Richardson & Wrench ­Pyrmont Glebe, Eileen Carroll, said ­buyers and sellers were undaunted by the RBA’s warning that the market was too hot. “I think the market is really strong but most buyers and sellers seem ­comfortable with where prices are at,” Ms Carroll said.

Another Surry Hills property, a one-bedroom apartment at 360 Bourke Street sold for $647,000 at auction – $117,000 over reserve. The buyer was the underbidder on the property when it last sold in 2012 for $478,000, according to selling agent, Belle Property’s Mr Fotaras.

Remember that if you’re already an investor, looking to start investing or wanting to find out more about investment strategies our helpful team are always available to answer any questions you may have about the market, properties or otherwise.

You can register here for your complimentary and obligation free session with one of our property experts:

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Originally published as Are Real Estate Prices Too Hot? Buyers Say No.

Well, there’s a lot going on in the property market lately, and there’s been a lot of talk today about negative gearing, about being in a bubble, whether the property market is over inflated or not, and what everything thinks about the reserve bank’s actions to curb the rising housing market. I have to say, I put this information and news articles on here so that you have a source of information to read which you can then make your own judgements about.

Ultimately though, I have to remind you of one key thing that you MUST to remember while everyone is running around saying that the sky is falling: The Property Market will always go in cycles. Always. That’s an undisputed truth geared by economics and human behaviour.

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You need to remember that as a property investor you’re not trying to time the market, and you’re not looking for the ‘right’ time to buy – you’re looking for a great house at the right price in the right location that will be attractive to renters. You’re looking to build an investment portfolio of property that meets a plan and set of criteria designed to get maximum gain over a long term period, to set you up for your life later on. Keep that in mind, and don’t lose your head, and always remember to do your research and consult with your property coach and team of investment specialists. Our team can ALWAYS find a great property at a great price, no matter the market. We have been doing this for years and have weathered property peaks and troughs before, and know that the key to success is time in the market, not timing the market.

So have a read of this piece from the Australian to see what’s happening in the world of property investment finance. Our team are always available for a chat or an email if you have any questions about anything to do with your portfolio or investing.

THE vast majority of property investors taking advantage of negative gearing are “mum and dads” earning less than $80,000 a year, countering the long-held view that the property investment measure was a tax lurk for the rich.

Australian Taxation Office data shows that of the 1.266 million Australians who declared that the rental on their investment properties didn’t meet the interest repayment in 2011-12, 883,325 earned less than $80,000.

More than 70 per cent of people who accessed negative-gearing benefits, where losses on property investments can be deducted from taxable personal income, only owned one investment property. A further 18 per cent owned two investment properties.

About 60,000 clerical staff earning less than $80,000 benefited from negative gearing, as did 54,000 teachers, 46,000 sales staff and 35,590 nurses and midwives. Lizzy Hubbard, a 29-year-old teacher from The Ponds, in Sydney’s northwest, said negative gearing was helping her pay for an investment property she had purchased in Muswellbrook in the NSW Hunter Valley.

“I really did want to get into the property market, and I knew it would be difficult to get into,” said Ms Hubbard, who purchased her house when she was 25.

“I hadn’t moved out of home, but I knew I could get a steady income and one day I would be able to benefit from my investment.”

Ms Hubbard admitted she didn’t know the details of negative gearing, and had gone through Aussie Home Loans instead, but knew that an increased tax refund had made it easier to save and pay back her loan.

With no sign of a slowdown in house-price growth — investment bank UBS has forecast that tomorrow’s Australian Bureau of Statistics figures will show a 10 per cent year-on-year increase — calls to address affordability and the debate around the housing bubble will continue.

With a tax review likely over the coming months, a number of economists are already calling for negative gearing to be abolished or pared back to make property investment less attractive, leading industry groups to lobby for it to remain.

“Negative gearing works effic­iently over the life cycle of Australians, with younger people relying upon the concession with a shift towards positive gearing as people get closer to retirement,” said Nick Proud, the executive ­director of the Residential Development Council.

“Individual investors incentivised by negative gearing have ­increased over the past 30 years and their emergence will reduce the future reliance on the pension.”

Mr Proud pointed out negative gearing applied in the majority of OECD countries and said its removal in Britain had not improved housing affordability.

Originally published on The Australian.

Want to find out more about negative gearing, or just want to find out more about property investment for your future? Sign up here for your complimentary one on one session with one of our property coaches!

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Take a look at this commentary from Robert Simeon at the Property Observer. It’s been interesting to watch what’s been happening in the news with the property bubble speculation. Hot topic stuff!

Check it out here:

For some very strange reason property commentators are struggling to differentiate between the investor property market and the household property market.

Treasurer Joe Hockey was right when he commented this week: “It is just an easy mantra for international commentators and for analysts based overseas to say ‘well there’s a housing bubble emerging in Australia’; it is a rather lazy analysis because fundamentally we don’t have enough supply to meet demand.”

I have been saying this for the best part of 12 months now, given the figures provided are a bundle of property sales where the demographic markets are not broken down – simply because they are lazy and you get a meatier headline by using the bundle method.

During the global financial crisis (GFC) we kept hearing the ongoing reference to “green shoots” emerging where today some are attempting to decimate the Australian real estate industry. Many forget that Australia’s property market and the real estate industry is directly one of the largest employers in Australia and there is a very strong argument that it is playing a major role in keeping our economy buoyant.

I don’t really buy the argument about the low interest rates although in five years’ time we in all probability will see distress sales as the cash rate moves up and home buyers come out of their fixed periods – that is inevitable and should not be used as some sort of shock therapy. Many are forgetting that the Australian banks borrow a substantial amount from overseas so when the cost of lending increases it won’t be the Reserve Bank of Australia (RBA) dictating the rates rather the banks will be increasing regardless of the cash rate setting.

With the ‘Big Four’ banks holding 80% of Australia’s mortgage book they won’t be waiting for guidance from the RBA – they’ve done it before and they will do it again. Although mysteriously the commentators have the RBA front and centre whilst constantly missing the big picture. The cash rate might well remain at 2.50%, but we miss the point that the lenders are hedged to their funding costs which are not determined by the RBA.

Another reason as to why Australia’s property market is strong is that rental vacancy rates in the Sydney 0 to 10 kilometre range can’t get above 2% yet we forget that twenty years ago they sat between 3.50% and 4.00%. Back in those days landlords were offering one month’s free rent to entice tenants. It needs to be pointed out that the problem we have is on the supply side, which is why I don’t see the slightest problem with this niche market.

The problem is misinformation and yes some markets have reached unprecedented record prices, which in time as interest rates correct property values adjust accordingly based wholly on demand. The interesting part in this is when the property markets are in decline the purchasers decline too, despite the fact that the markets are what we call a buyers’ market. We are currently in a vendors’ market where the buyers are happy to pay over and above the market value.

Real estate has always been a long-term hold, so for the vast majority what prices do is not really a major concern. There are clear patterns evolving where the majority now are not trading up given from a cost basis analysis it makes more sense to renovate – which is exactly what we are seeing today.

Well! What do you think? If you’re thinking about investing and wondering when the best time is to invest, just remember that you should do your own research and be as well informed as possible when investing. It’s also advisable to remember the adage: it’s not timing the market, it’s time IN the market that makes all the different. So get in touch today and get started on your property investment journey today!

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This article was originally published on The Property Observer.