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We’ve seen some changes lately in how property is being erected, and what kind of rules have been governing what’s allowed and what’s not. There have been updates with being allowed to build certain townhouses and changes to high density dwelling areas. We’re all wondering what’s going to be changing in the future as the population grows and demand increases for space in urban centres so let’s take a look.

property investment

The first big changes is within the residential area with the development of Fonzie flats. These little developments will probably change the face of the whole property investment market, at least in some significant way and most likely after the next 3 years. Things will be the same until the green light is given for Fonzie flats, but these have been approved after this time.

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 studio flat being built above garages. They’re named such 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. Further to this, there have been plans in place to build manor blocks on street corners, and this is going to mean that a dual fronted townhouse building will actually hold 4 residential dwellings. This means some changes for property investment in areas where space is in limited supply.

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.

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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

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.

property-investment

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.

property investment

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.

property-investment

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.

property-investment

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.

property-auctions

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.

property-auctions

“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.

negative-gearing

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.

When you’re applying for a loan for property investment, you need to take care of the finest details, because banks see everything these days, and you need to make sure you’re up to scratch.

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You can be an existing clients with a major bank with an investment loan, credit card and savings account – in other words you might be a very loyal client! Regardless, you need to make sure that the way in which you manage your money is the right way to appeal to both your bank and you.

Tiny things, like an overdrawn account can flag you to the banks, even thought you might be doing all the right things but have just experienced an oversight. You might be a great client, but you need to ensure that you don’t miss a trick when you’re applying for a loan, as it can put you back in the race for a property that you really want!

So what can you do to ensure you have everything up to scratch when you apply for a loan?

  1. Always have a buffer in your working accounts – lenders frown upon overdrawn accounts now with the new credit reporting. We talk about this in greater detail in the section in our eBook on the Master Facility.
  2. With credit cards, try your hardest not to go over your limit! Regardless of whether you pay the whole credit card off at the end of the month, as soon as you start going over your limit, it’s a red flag and even the best of applications get declined for this reason alone.
  3. Any bills that are late, even your phone bills, by more than five days etc, these are all recorded on the new credit reporting system. So if you think you are winning by paying late, be prepared for a surprise the next time you apply for a loan. Regardless of what you earn.
  4. If you do move money around a lot to save interest, then set automatic transfers in case you forget.

So, I guess the moral of the story is pay your bills on time, every time and get sound advice before approaching a bank. It pays to do your homework.

If you’d like to find out more about how to structure your finances to best improve your chances for approval with your loans, then get in touch today to find out how we can help. AllianceCorp are your property investment professionals.

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Ok, before we get started and go any further, let’s just explain a few key things here:

What On Earth Is A Housing Bubble?

Housing bubbles generally occur when speculators enter a market where demand is already high and attempt to profit through short-term buying and selling, further driving demand. A housing bubble doesn’t just mean high prices — prices can be high in response to basic supply and demand. The concern for Australia is if a sudden increase in housing supply — as state governments speed up land release and development approvals, for example — coincides with a drop in demand. Demand can be reduced by range of interconnected factors such as rising interest rates or more restrictive lending practices. Whatever the reason, when supply suddenly outstrips demand, prices drop sharply and the bubble pops.

bubble

What is predicted to be a bubble isn’t always the case, and it remains to be seen what will happen here.

A recent study by US consultancy Demographia found Australia had some of the most unaffordable housing in the world, with the highest number of housing markets termed ‘severely unaffordable’ — that is, where the median house price exceeds five times the annual median household income. According to RP Data, house prices have risen by more than 16 per cent in Sydney over the past year, and almost 11 per cent across all the capital cities combined. The current median house price in Sydney now sits at $700,000, $532,000 in Melbourne and $469,000 in Brisbane. Strong, and in some cases double-digit price growth, over the past decade in Australia’s capital cities has raised concerns from some economists.

But experts are divided on whether we are in the midst of a price bubble…

Treasurer Joe Hockey has dismissed talk of a housing bubble as “lazy analysis”, blaming the rapid price increases on a shortage of supply. “It is just an easy mantra for international commentators and for analysts based overseas to say there’s a housing bubble emerging in Australia,” he said. “It is a rather lazy analysis because fundamentally we don’t have enough supply to meet demand.”

property investment

Economics commentator Alan Kohler has also hosed down bubble talk, describing it as “overblown”. “Is there a bubble in Sydney that we should be worried about? Maybe,” he said. “But there’s a lot of demand, and the demand’s not going away. There is a lot being built, so yes, maybe apartment prices will come down, but really I think it’s all a bit overblown.”

He added that high house prices were not necessarily a bad thing. “What the Reserve Bank was talking about is the wealth effect of high house prices, which is turning into consumption and therefore employment. “The real concern for the Reserve Bank in relation to housing is if there was a bubble and a crash, that might have a negative impact on consumption because of the negative wealth effect. The fact that house prices are high is a positive wealth effect, so it’s not necessarily a terrible thing that house prices are overvalued.”

David Rees, head of Australasian research at Jones Lang LaSalle, told AAP that although Australian housing was very expensive compared to much of the rest of the world, there was no housing bubble. A housing bubble is when prices move away from fundamentals, Dr Rees said, but in Australia’s case, prices were responding to fundamentals, like low interest rates, population growth and an undersupply of new housing. He said restrictive planning laws had created concerning affordability issues in the Sydney market.

Regardless, it’s spring, the property market is running hot and familiar debates are raging. Have prices overshot? Is there a bubble?  Over the past two decades patterns of housing affordability in Sydney and Melbourne have shifted as the values of properties close to the city grew much faster than those in outer-ring suburbs. This became entrenched during the great property boom from 1997 to 2003. With each subsequent run-up in house prices. the inner-city price premium seems to grow.

property investment

House prices have risen by 50 per cent in Sydney and 48 per cent in Melbourne since late 2008, according to RP Data. During that latest price surge the number of Sydney regions with a median house price over $1 million has jumped from three to five. The inner-west region has vaulted into the million-dollar median range alongside the Eastern suburbs, Lower North Shore and the Northern beaches.

Is it just supply and demand?

Former treasurer Peter Costello said the “music” of low, short-term interest rates and considerable money printing had to stop, which would cause markets either to tank or to return to more normal growth rates. But Mr Costello stopped short of calling Australia’s booming property markets a bubble, instead saying housing prices were growing so quickly because of a limited supply of land.

Australia’s limited supply of housing is being increasingly snapped up by foreign buyers, who in theory need to apply to the Foreign Investment Review Board to buy established homes rather than new developments. This is currently under review as it appears that these restrictions are not adequately being enforced.

property investment

“It could still be a good time for property if things revert to normal. But there could be a fair bit of hardship before we get there,” Mr Costello said. “Between now and then, there will be enormous adjustment in our society. Those that are nimble and those that are quick will take advantage, but it’s being ahead of the curve is what matters.”

Mr Costello, who is also chairman of Australia’s Future Fund, said property would be an increasingly important investment class as the population ages.

The Bottom Line!

Remember folks, there will always be fluctuations in the market. You don’t think that’s going to stop serious investors from buying houses, because the thing that a good investor has is a strategy to mitigate risk and to navigate any peaks and troughs. Because there will always be peaks and troughs in the market, it’s just the nature of supply and demand, and having the right strategy is everything.

property market

I always say this, but it’s time IN the market, not TIMING the market that makes the difference, you only have to look at what I’ve said before about opportunity costs to know that it’s just about your strategy and buying when you have the ability to do so.

Plus, you need to know that there is always a good property out there at a good price, it’s about doing the research and finding the house invest in. Our property coaches are scouring the markets EVERY DAY sourcing properties for their clients and they are finding success at every turn, because they are experienced and trained to spot the right house at the right price. With AllianceCorp, you get a team of dedicated professionals who spend every day searching for investment properties and sourcing excellent properties. If you’re keen to get investing, or just want some guidance for your existing property portfolio, why not come along to one of our free workshops or, if you’re ready to speak to someone face to face, register here for your complimentary and obligation free session with one of our property experts:

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Federal Treasurer Joe Hockey has again dismissed the idea that a property bubble is forming in Australia, saying that rising prices were just a reaction to lack of supply.

Echoing the thoughts of many private sector economists and bankers in the country, Mr Hockey said the idea that households and investors were taking on too much debt to buy houses was wrong.

“I’m not so sure it’s credit fuelled,” he said during a seminar in Sydney. “There’s a lot of cash going into property now.”

He said the recent surge in new dwelling construction – much of it the result of foreign investment – in Sydney, Melbourne and Brisbane might go some way to addressing housing shortages in the country.

“Australia fundamentally doesn’t produce enough houses to meet demand,” the Treasurer said.

“It is just an infinite mantra for international commentators, for analysts based overseas to say ‘well, you know, there’s a bit of a housing bubble emerging in Australia’.

“That is rather a lazy analysis, because fundamentally we don’t have enough supply to meet demand.

“That doesn’t suggest there’s a property bubble; there might be a price increase of some substance, but you’d expect the market to react and produce some more housing.”

The Treasurer’s comments come two days after the Basel-based Bank for International Settlements warned that Australia’s housing market looked overheated on a series of metric

Mr Hockey said a lower Australian dollar might encourage more investment in new housing, although he declined to speculate on whether or not current weakness in the local currency would last long enough to speed up Australia’s economic transition.

He said currency speculation was a “mug’s game”. However, Mr Hockey agreed with Reserve Bank of Australia governor Glenn Stevens that animal spirits were key to the re-engineering of the Australian economy, along with low interest rates, infrastructure investment and other government programs.

“Yields are, overall, quite low around the world,” he said.

“So if people are not having a go when yields are at very low levels, then when do you have a go?”

“Putting your money in the bank is not going to deliver you necessarily long-term benefit.

“Now’s the time to have a go – we’ve got a trajectory that involves improving economic growth over the medium term.”

If you want to have a chat to one of our property experts today, whether it’s about the property bubble or your investment portfolio, get in touch for your complimentary and obligation free consultation with a property coach:

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Originally published as Joe Hockey denies Australia in a property bubble.

The details contained on this website are made available for information only. Whilst we make every effort to ensure that information is accurate, complete and up to date, we make no representations or warranties of any kind, express or implied, about the information and as such we cannot be held responsible for omissions, errors or inaccuracies, nor for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss of profits resulting from direct or indirect actions based upon the content of this website. Any reliance you place on information on this website is therefore strictly at your own risk.

So you’re looking for what different types of property investment strategies there are out there.

That’s great! It means you’re taking a proactive approach to building your investment portfolio, and you’re looking for the best resources available.

Just to be clear, for the vast majority of this piece we’ll be talking about residential property investment, with a bit of a look at commercial stuff too. The one vastly overarching connector to these strategies is that each strategy has the objective of growing your wealth. So without further ado, I present seven of the major strategies.

1. Managed funds and/or property super funds

This kind of property investment strategy remains one of the most passive with minimal risk. It’s also heavily reliant on trusting a financial institution with your property investment and trusting that they’re going to produce financial growth for you. It suits people who are looking to manufacture some wealth but with minimal risks, and for people who are looking for a less risky and less involved strategy. This is a good strategy to use in unison with other investment approaches, so perhaps not one to use on its own if you’re looking for some good growth, both short and long term.

2. Home ownership

Ah home ownership… The most basic of them all – and often the strategy that many property owners employ without going any further. The bottom line is, if you’re going to own your own home and not invest in property any further, you really need to be working to feather your nest in other ways. While your home will improve in value over 30 or 40 years, that asset alone isn’t enough to secure your retirement. If you’re wondering whether property investment is for you, then you should take a look at this eBook about Seven Reasons Why Property Investment Can’t Be Ignored.

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3. Buy and hold

Without sounding like we have favourites, this is definitely one of the most popular and oft-used property investment strategies – and with good reason! It’s a lower risk and returns-based strategy used by many people, most of them very successfully. You grow your portfolio during an acquisitions stage and then hold on to them for at least two cycles of the property market (around 15 years or so, but ideally longer) and then later in life you can live off rental income and from selling a couple of properties. With the right guidance this strategy is open to practically anyone.

4. Buy, renovate and sell (aka ‘flipping’)

Flipping is not for the faint of heart. It requires you to take a property and buy it below cost (ideally) and then add value to it quickly with a value-add renovation, and then sell it again for a profit. And then you repeat the process. It’s high-octane stuff and requires a lot of planning, dedication and a level head. You’re not going to be renovating a house to suit your needs either, you’ll be choosing fittings and fixtures based on your bottom line. At AllianceCorp we don’t usually advocate this as one of our major strategies because we see greater long term value in buy-and-hold or renovate and hold, which we’ll talk about further next. If you are looking to flip property we can talk to you about the potential risks and benefits, but know that it’s more like a full time job than an investment strategy!

5. Renovate and hold

To renovate and hold is to kinda mix together buying and holding and flipping strategies and works well for people who are looking to diversify their portfolio, and perhaps to add value and to gain more equity from established properties. People who do this renovate and hold strategy generally either project manage the work themselves or get someone to project manage for them, and buy run down properties and perform a renovation that doesn’t overcapitalise on their property costs. They then can get it revalued and raise the rental return, or use the new equity in the home to purchase again. We have an entire department dedicated to this strategy, and the strategy can be used highly successfully with the right guidance – so get in touch if it’s something you’re interested in finding out more about.

property investment strategy

6. Syndicate/Co-Buying

In this strategy a group of two, three, four or more people band together and work to achieve their property investment goals. This can work well for people on low incomes or for those with limited resources. Co-investors also have the benefit of being able to share skill-sets, connections/contacts, and experience, to strengthen their plans. Cautions for this strategy though are plentiful: with difference of opinion, personality clashes, and long-term strategy shifting being the biggest challenges with this approach. Additionally, the legal complexities often make contracts/solicitors’ fees skyrocket; as all exit-scenarios need to be considered, and an iron-clad contract detailing the agreed outcome based on every possible scenario must be composed by lawyers. Additional stress can ensue when family or partners are involved. Should things go sour, the relationship can suffer. This can occur with friend-based co-investors also; but if you can find your rhythm early on, this can be an effective strategy.

7. Full-time property development

This one means building an entire development from scratch. So it’s not for the faint of heart! Usually this strategy is used by seasoned investors who have experience dealing with the many moving parts involved with commercial development and know what to expect legal and tax considerations to expect.

I’ve no doubt there are additional strategies out there that Australians are using in their property pursuits (and I’m keen to hear from you, more on them!). Overall, though, you have to  remember that there is no hard and fast rule or strategy to property investment. Some people choose just one of the above strategies and roll with it while others form a strategy that mixes several of the above as tactics along the way. Regardless, it is important to consider all of the options available to you when starting out, and to know that you can only do this; once your objectives and ambitions are laid out.

Remember that one thing that can help you with success in property investment strategies is having a good strong team behind you – and many people who have had success in investing swear by their dedicated team of buyer’s agents, financial brokers and renovations experts. We offer a huge range of services and are always happy to discuss your investment goals with you.

Why not register here for your complimentary and obligation free session with one of our property experts? You have nothing to lose and everything to gain.

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The spring “selling season” has landed, and investors and home buyers alike are all a-twitter with thoughts of real estate and property. We’ve hibernated a little more during the harsh winter, and now it’s time to get out and start looking at property again. Property stats report a surge in property investment and in people searching for new investment properties every year so you need to know how to weather the surge in interest and to ultimately come out on top.

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No matter the reason, the re-invigorated interest provides a great opportunity for investors to step up their game and produce some solid results for their property portfolio.

So what is going to help you to get the best results?

1. Know how to calculate the rental yield of a property

You might already have a go-to calculator for this one, but it’s also helpful to know how the calculations are made, and what impacts upon them. The Property Observer blog has a link to a great resource for calculating this, but there are a plethora of calculators available online as well. If you’re curious about how you can balance out your rental yields across a portfolio for maximum tax benefits then it might be helpful to get in touch with one of our property coaches for a more thorough explanation of how this works.

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2. Get a solid team behind you

It’s great that you’re looking to educate yourself – and frankly I don’t think you should ever stop in your quest for property investment education and knowledge! It does stand that at some point, if you’re serious about getting ahead with your property investment strategy that you’ll eventually need buyer’s agents, financial planners, legal help and other support. The best way to compile the information you need about suburbs and locations is to have people who can do it all for you – and we have a full service team of people who can help you to get ahead with your investment strategy. Want to find out more? Have a look at our range of eBooks and information here.

3. Know your strategy

It helps if you know what kind of investment strategy you’re looking at implementing. You need to know how much risk you’re comfortable with, and how to work out your property portfolio so that it meets your expectations. If you’re unsure about what strategies to implement, you can get started by having a chat to our property coaches for more information about what the different investment strategies there are. Every chat is obligation and cost free, so you’re not missing out on anything by meeting with us. The only thing you’ll be missing is some valuable information, really!

4. Interest rates may rise, so be ready with a buffer

Ah the Reserve Bank. They did just announce that interest rates are going to hold for now, so we’ll see what happens there. Regardless you should ALWAYS have a buffer in place to plan for anything unexpected! We never want bad stuff to happen in our lives but the truth is that sometimes it does, and it makes it a lot easier to weather anything unexpected when you’ve got the money to do so! Our experts can help you to plan out a buffer, or a Master Facility as we call it, to help you manage your portfolio better.

5. Learn how to research a suburb!

Or better yet, get us to do it for you! No, but really, any journey in property investment starts with researching an area and looking at population growth, infrastructure, industry and a whole host of other things. Buying and selling reports are valuable and having a good understanding of these is really useful for any investor.

 

We really can do the research for you, and part of our service involves our property coaches sourcing the best properties for you that meet a strict set of criteria. Why not come along to our upcoming workshop and learn more about these tips and a whole heap more?

You can either register here to get involved with our coaches 1-2-1 or you can sign up for our workshop here.

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Terry Rider from Hotspotting and The Property Observer had a few choice words to say warning against bad property advice yesterday. If you’re serious about investing you should read on for some good advice. He says…

“So many people have bad experiences with property investment. It happens, I believe, because Australians are fed so much misinformation.

Here’s the deadly formula that leads people to buy in the wrong place at the wrong time:

  • Writers on real estate who know little about real estate.
  • Media outlets which do little more than re-cycle press releases.
  • Researchers who don’t clean up the statistical absurdities spat out of their computers.

Mix those ingredients together and it’s a recipe likely to poison, rather than nourish, the finances of anyone who reads the resulting article and acts on the “advice”.

Here’s a stunning example published this week by a real estate magazine. The magazine took some figures from a research organisation that tends to be careless about its data in its haste to generate profile and it came up with this headline: ‘10 scorching hot suburbs for cash flow hunters’.

Top of its list was a town in Tasmania called Queenstown. If there’s a more depressing town in Australia or a more depressed property market, please tell me about it. The town resembles the film set for a western movie, with tumbleweeds in the main street.

The median house price ($70,000) says a lot. It’s 12% lower that it was a year ago. It’s lower than it was three years ago. Hell, it’s even lower than it was five years ago, having dropped an average of 3% per year since 2009. The typical house on the market takes nine months to sell.

Remember, a national magazine has placed this town at the top of its list of “cash flow hotspots”, even though the vacancy rate is 15% so the chances of achieving any cash flow at all are near zero.

But wait, there’s more.

The top 10 list of scorching hot suburbs recommended to investors also includes Kambalda in Western Australia. This is a godforsaken mining town in a “semi-arid environment” 600 kilometres east of Perth, split into two town sites 4 kilometres apart. The median price is $150,000, after a 19% decline in the past 12 months. Prices have fallen at an average rate of 6.5% per year over the past five years. If you have a house to sell there, expect to wait eight months.

And if you’re expecting scorching hot cash flow, the vacancy rate of 20% might present a problem.

Keep in mind that the magazine said all of its top 10 scorching hot suburbs were places “where rental yields are strong despite the solid growth in property prices”.

Another of the suburbs listed among the top 10 is described as “Maluwa Bay” in New South Wales. I’ve searched but cannot find a place with that name.

There is a Malua Bay, a small town on the South Coast of NSW where the average house takes almost a year to sell and where the long-term capital growth rate is zero. Sorry, that’s not fair – it’s 0.1%, which is the average annual growth in prices over the past 10 years.

That’s so scorching hot I can feel the heat all the way up here in Queensland.

The magazine lists the median weekly rent in this place as $925 per week, but that is a statistical error commonly made by the research source used by the magazine – whereby they list the holiday rental rate, rather than the rental rate for permanent tenants, and come up with a median yield which assumes properties are occupied by tourists 52 weeks of the year, which of course they are not.

The median weekly rent for Malua Bay is actually $350 per week and anyway buying there would be seriously into negatively geared territory. So, no cash flow there, either.

I could go on, but you get the picture. This is the worst kind of misinformation, presented by a national magazine as credible advice to property investors.

God help anyone who bases an investment decision on this disgraceful piece of non-journalism.”

What do you think about this? It just reinforces the fact that you’ve got to be careful who you’re listening to, and always be sure to do your own research and be dilligent before you purchase. I mean, we do have a team of property coaches here at AllianceCorp who take the hassle out of finding properties, so if you’re looking to buy or thinking about investing you should really think about engaging professional help to avoid the hassle of rediculously bad advice!

It’s easy to get in touch with our team to find out more, and I stress again, if you’re serious about investing you should think about taking me up on our obligation free offer today. You can try us for free before you even think about comitting, so what have you got to lose?

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Originally published as The deadly formula of bad investment advice at The Property Observer.

According to the August RP Data CoreLogic Hedonic Home Value Index, capital city dwelling values moved 4.2% higher over the three months to the end of August, the strongest capital gain over the three months of winter since 2007.property-investment

Capital city dwelling values moved 4.2 per cent higher over the three months of winter, once again driven by dramatic capital gains across the Sydney and Melbourne markets where values recorded a 5.0 per cent and 6.4 per cent lift.

The next best performing city was Canberra where values shifted 2.5 per cent higher over the three month period, driven entirely by a gain in detached house values which compensated for a 2.1 per cent fall across the weaker apartment market. Every other capital city has recorded much more moderate conditions over winter with Adelaide values up 1.5 per cent, Brisbane recording a 1.3 per cent gain and Perth values up 1.0 per cent. A modest drop in values over the winter months was seen across Darwin (-0.6 per cent) and Hobart (-0.8 per cent).

Dwelling values are now 10.9 per cent higher over the past twelve months; however Sydney and Melbourne are the only cities to record double digit growth over the past year.

property-investment

According to RP Data research director Tim Lawless, Sydney and Melbourne housing markets are driving these two tier conditions. “Over the latest growth cycle we have seen Sydney dwelling values increase by 27.2 per cent and Melbourne values up by 19.5 per cent. Sydney and Melbourne were also the strongest performing cities during the 2009/10 growth cycle. Since the beginning of 2009, we have seen values rise by a cumulative 50.1 per cent and 46.1 per cent respectively in Sydney and Melbourne. Looking at the remaining state capitals over the same time frame, the next best performer was Perth where values are now 15 per cent higher, followed by Adelaide at 9.9 per cent, Brisbane with 5.3 per cent and Hobart where dwelling values are actually 1.5 per cent lower.

“With today marking the first day of Spring, we are expecting listings numbers to rise over the coming month which will provide a real test for the housing market.

“Considering the ongoing high rate of auction clearance rates, a generally rapid rate of sale and the ongoing low interest rate environment, it’s likely that dwelling values rise even further over the next three months.

“Consumer confidence is also moving in the right direction now after the post-budget slump which will add fuel to the exuberant buying and selling conditions we have seen during winter,” Mr Lawless said.

According to today’s results, with rental rates rising at a slower pace than dwelling values RP Data expects to see a compression in rental yields across each of the capital cities. The only regions where yields have moved higher over the past 12 months have been across the Adelaide and Hobart apartment markets.

Across the combined capital cities, the typical gross yield on a house has reduced from 4.1 per cent to 3.7 per cent over the past twelve months.

Mr Lawless said the most significant yield compression is taking place in Sydney and Melbourne.

property-investment-australia

“Over the past year we have seen Sydney’s gross rental yields fall from by 47 basis points, from 4.1 per cent to 3.6 per cent. In Melbourne, where rental yields are even lower, we have seen gross yields fall by 32 basis points over the year to reach 3.2 per cent gross. Given the current rate of value growth and moderate rental growth, it won’t be long before Sydney yields have moved below those of Melbourne.

“With yields so low in the cities where values are seeing the largest capital gains, it is clear that investors remain very much focussed on value growth rather than yield.”

Investors are currently comprising their largest proportion of new mortgage commitments since late 2003. In fact, investor loan commitments have accounted for more than 38 per cent of all mortgage lending for nine consecutive months, the longest period ever that investment lending has held above that level.

“Investors are mostly concentrated across the Sydney and Melbourne apartment markets where capital gains have been strong but yields have been pushed very low. Potentially there are better investment returns to be had in the smaller capital cities where the growth trend is less mature and yields are also healthier.” Mr Lawless said.

To find out more about your existing portfolio or to find out about how you can start to use the skills of one of our property coaches to begin building a better future, get in touch here:

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Originally published as Capital city housing market records strongest capital gain for winter since 2007 at RP Data.

Hey everyone!

I’m really excited about our upcoming presence at the Home Buyer’s Show next weekend from the 29th til the 31st of August. We were there for the shows in Brisbane and Sydney but, being a Melbourne-based company, we’re always particularly enthusiastic about seeing people in our home city.

If you want to learn about investment tactics and tips from leaders in the field you should come along to this not to be missed opportunity to get a huge amount of information in the one place.

I will be speaking from 1.30 – 2pm every day in the Expert’s Lounge.

If you haven’t heard me speak before you should definitely come along where you’ll have the opportunity to not only hear some talks but also to ask questions. The Home Buyer’s Show is invaluable for anyone thinking about getting into property investment.

Today I’m going to tell you about potential benefits and challenges that you may face as investors buying off the plan (OTP) property. An OTP property is literally taken ‘off the plan’ because there is little besides the blueprints of the property. You can invest in a building before construction has even started or while it is being built. By working with the developer, you own a brand new property ready for the growing marketplace – often with some tax benefits or gains along the way.

Benefits of Off The Plan

Buying off the plan properties make for a low initial cost for investors, which is a great selling point for the first time investor, or for someone who is looking to add to increase their property portfolio. You only pay a 10% deposit when you sign the contract but you don’t actually have to pay the balance of the contract until the property is complete. Plus, in a rising market you can enjoy any capital growth that happens with the property. OTP properties often increase in value while they are being built, so it’s definitely a bonus with the property. I do have to say here that property is a long-term investment. Providing that you are buying your OTP property with the intention of holding long term, buying off the plan works well for most investors.

property-investment-australia

Also, if you are buying off-the-plan property in Victoria there are substantial stamp duty savings available. The Victorian Government has reduced stamp duty if you purchase before a property is built. As construction of the development occurs the rate of stamp duty increases until the building is complete and the full rate of the stamp duty applies. The concession is always greatest if the property is bought before construction commences.

Challenges Of Off The Plan

Investment opportunities are not guaranteed to be easy, no matter their nature or location. You will have your homework cut out for you as you look into developers and make sure that the road to your new property will go according to plan.

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 blueprints. 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. 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.

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Things To Be Aware Of

Just as with all forms of investing, buying off the plan does have some dangers. In particular, paying close attention to floor plan design can prove the difference between an apartment that has tenants queuing to move in (and never wanting to move out), and one that fails to keep tenants interested. A well-designed property will always outperform a poorly designed property. As a guide to the overall size when buying off the plan apartments, one-bedroom properties should be no less than 52 or 53m² internally plus a balcony space of at least 10m². It’s best to have a one-bedroom apartment with upwards of 55m² internally, plus balcony for a total space of 65 to 75m².

As a general rule, two-bedroom apartments should be no less than 75m² internally plus 10m² of balcony, but 85m² internally is a much more appropriate living space. Three-bedroom apartments should be no less than 100m² internally but once again 110m² is much more appropriate.

Not withstanding this guide for overall size, a larger property is obviously better than a smaller one, but will of course cost more. Regardless of this, a smaller well-designed property will often outperform a larger poorly designed property.

At AllianceCorp we have team members who are experts in off the plan property purchases and are happy to answer any of the questions you have about buying off the plan properties. You can register here for your complimentary and obligation free session with one of our property experts:

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Property investment is something that can be very financially rewarding. Investing in a property takes a lot of planning, but it’s certainly one of the most stable and lucrative means of growing your wealth for retirement. The idea of having a place to call your own resonates with many people, and considering 80% of people who have retired are reliant on the pension for their lifestyle, it’s certainly something to consider to build your position in the future. At AllianceCorp we have some of the best strategies around, and some of the best industry experts on our team to help you on your journey to wealth.

As a head start we’ve compiled this handy list to consult when you’re ready to start investing for your future.

  1. Know Your Budget

property investment melbourne

The financial commitment of investing is something that many people balk at, but done the right way, property investment can be a successful and on-going endeavour. It doesn’t take away from the fact that you need to know what you’re doing with your money. Aside from being financially sound and getting a loan from the bank, there are a couple of things to keep in mind.

Have a deposit ready for the loan. Most estimates say you should have 20% of the total cost ready to pay as a down payment. Being able to do this proves two things to most banks. First, it proves that you are serious about investing. They can trust you with a loan because you have put so much into this already. Second, it shows you are financially viable. If you can make a deposit like this and keep going, it generally means you have worked your budget to where you can adapt to almost any major purchase.

If you already have a history of saving, investments and loans, it can reflect well upon the rest of your coming housing loan. This is a fundamental rule of getting credit. A lot of loan giving is trusting in the other party, with a stringent contract holding that trust up. If you can prove that you have a history of paying bills on time with the appropriate amounts, then it is all the more easy for you to get your loan. Something else that we talk about in more detail that you can use as a strategy is when you get the equity from a home you already own and use it to buy another house. You can read more about that here.

  1. Government Assistance and Stamp Duty

The Australian Government supplies the First Home Owner’s Grant. This financial support program is intended to help bolster the finances of investors who are buying a new property.

This fund can be used to soften the blow of the down payment or be used to help keep your bank account healthy during the process of payment. The amount given by this fund varies on your position as a property buyer.

The other factor to consider is Stamp Duty. In Australia, Stamp Duty refers to the price for transferring property from one holder to another. This can make up a large portion of up front prices and should be taken into account for every single budget revolving around buying the right property for you. The exact cost changes from property to property and is based off a number of things. You will pay more stamp duty for an investment property than you will for your own home, so it’s something to consider when you look at tax and allowances.

  1. Make a Budget and Stick To It!

After First Home Owner’s Grant has been considered, your financials looked at, Stamp Duty paid and a budget formed you will have a rough idea of what you will have to pay per month to start paying down your loan.

piggy bank

The economy fluctuates in both directions every day and there is no telling when it may spiral or take off. You need to pad your budget in case interest rates begin to rise. There is nothing worse than calculating a razor sharp budget that will let you live as you want and pay off your bills quickly, only to have your payments rise by a few hundred dollars. We also talk about a strategy that we recommend to every one of our clients called the Master Facility. It allows you to pay off your loan and invest with no impact on your lifestyle and you can learn more about the life changing Master Facility here!

  1. Know What Property You Want

We have been talking about finances a lot. There is a reason for that. Paying off a property is a huge accomplishment. However, there is so much more than tinkering with numbers before you even move in. There are a multitude of property opportunities and you need to ask yourself what you are looking for.

If you are looking for a family home, the answer may be fairly easy. You will want to live in the house, pay it off and maybe sell it for more than you paid. This is standard for the majority of investors and a safe move. Alternatively, you may be looking at property investment as more of a financial opportunity. Investing into a rental apartment complex or a storage warehouse can become a second income for you. Many people pursue this direction while some undertake both paths. There is a lot of advice written about these two kinds of property investment, but you will probably know which one you are looking for already.

  1. Consider Location

Property investment melbourne

Is the location exactly what you want for the property? For example, buying a home for a family should be weighed against what the area offers. Where are the nearby schools? What kind of school is it, are there public transit stops nearby and are there grocery stores nearby? Many more questions become very relevant as you begin to think about it. As property investors you need to think about what is going to be attractive to renters.

Does the area have the requirements to create a successful property opportunity? Nearby commercial zoning is important for creating attractive options for potential renters. Nearby malls, stores, restaurants and parks can be a big green light indicating a prime area for investment. Does the income of the area support your idea for a property? Creating an eco-friendly, designer brand apartment complex may not work in low income housing as well as it might in a hip neighbourhood area. Buying the right property heavily depends on what you want and what is around it.

  1. What Condition is the Property In?

Consider what you will need to bring the property up to your idea of acceptable. Is the property you have your eye on going to need repairs? Investing in newer properties generally means you will not have to worry about condition immediately, but may bring about a higher price. Conversely, an older building may cost less, but with a little hard work you can make it look incredible.

Before investing in a property, new or old, hire a contractor or architect to inspect the grounds and the property itself. Make sure that the person you hire is certified in their field, as this inspection will influence what you will end up spending on this property. Similarly, hire an exterminator or animal control officer to take a quick look around the house and grounds. An infestation of funnel web spiders in the basement would be nice to know about before you sign on that dotted line.

  1. Use The Master Facility

Conditions change – the economy drops, you get in a car crash, a utility bill is higher than expected, you get a speeding ticket or something else equally annoying happens. The things you think are concrete now may not exist in a few months. No matter what happens in your life, a loan still has to be paid off. That’s when your master facility will come into its own. Having financial room to move is the best place to be. Read more on the master facility in this free eBook or get in touch for a chat with one of our coaches.

When you’re making an investment, these tips are important to consider. When you’re buying a property you need to ensure that you’re doing it in the smartest possible way. And in doing so, you’ll be able to get the most out of your investment.

If you liked this information then why not register here for your complimentary and obligation free session with one of our property experts:

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What is equity?

You might have heard people talking about equity but have no idea what it means! It’s easy to be amazed when you hear about friends or colleagues buying investment properties, especially when they’re on similar salaries and lead similar lifestyles. There’s no secret though, and what many people have done is used the equity that they’ve built up in their homes to give them a kick start.

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.

Equity can be a very valuable element when it comes to investing in property, as you’ll soon see. Your mortgage broker can also be a very useful asset when it comes to finding out how much equity you have in your home, and you might find that you’ll be able to borrow sooner than you think!

equity1

How equity can help

Here’s the lowdown: Let’s say you want an investment property that’s valued at $400,000. You can add additional purchase costs to this – stuff like legal fees, stamp duty and insurance – and you’ll end up with a cost of $420,000. Let’s also assume that you meet the loan approval requirements and that a lender will fund 80% of your property’s market value. This amount could be potentially more if you’re happy to pay lenders mortgage insurance (LMI) as you’re seen as less of a risk. So basically, the bank will lend you $320,000 but you still need to come up with an additional $100,000 for the deposit and the other up front expenses. This is where your equity comes in.

 

Let’s say your home is valued at $500,000 and the balance of your mortgage is $300,000. The $200,000 difference is your equity. As investors, you can access up to 80% of your home equity without taking out LMI, and in this example it equals $160,000. So basically instead of having to save and scrimp to come up with a cash deposit for the $100,000 you need, you can simply draw down on the equity in your home.

Important things to consider

equityMany investment gurus will stress the importance of repaying your loan on your home as soon as possible. The equity that you get from your home to purchase an investment property is tax effective but the remaining debt on your home isn’t! So the loan on your home costs you much more in the long run than the loan on your investment property. Your main place of residence isn’t the only source where you can get equity from – you can also use the equity of another investment property to fund more purchases. Check out our two part series on adding value by renovating for more information on how you can increase the equity of an investment property.

 

So there are basically two different strategies you can use to access your equity:

  1. Cross collaterisation. Quite simply you use the equity in your home to secure a new property using your home and the new property. You put no money down and the lender combines your home and investment together, and gives you a new loan that combines the purchase price and your costs. In this strategy your home will be directly linked to your new investment property, and also your lender will take the title over your home to secure the new loan as well as the title over the new property.
  2. Separate loans. This is a good strategy as it allows you to access only as much equity as you need to pay the deposit and the costs of the new property as a top up loan or line of credit. You can even use a separate lender to take another loan to get the remaining funds to complete your purchase. Once again you don’t need to pay forward any money, but the titles of your properties are separated and you have greater flexibility. Another advantage to this method is that you might have enough equity and serviceability to complete another purchase sooner!

There are positives and negatives with each of these methods. If you use cross-collaterisation you might find that over time lenders will start dictating conditions which you might not be comfortable with. They might only lend you money based on your new investment loan.

 

Many people who want to invest will use mortgage insurance so that they can buy more properties, and one of the benefits of cross-collaterisation is that you don’t have to get LMI, as the lender is tying up all available equity in your property – rather than just the amount required.

Really, you want to be able to combine the benefits of using none of your own savings and maximising your tax advantages when buying investment properties. Releasing equity in your home is a way to do this.

Property investment is a long term strategy and the more exposure you have to a market the more opportunity to build your equity and keep buying properties.

You need to have an exit strategy in place and to have information on hand about how to navigate tax and charges, and know strategies to minimise your financial commitment and impact to your lifestyle. Remember how we talked about how important your mortgage broker could be earlier? Well they can help you to work out how much equity you have in your home and how best to access it to fund your investment. They have access to a wide range of sources and insider knowledge, so be sure to consult with the professionals when you’re considering drawing down on your equity. At AllianceCorp we are happy to give you guidance and to meet with you to discuss any questions or concepts that you need help with.

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

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So you want to invest in property? 

Property Investment AustraliaThat’s great! There’s a lot to learn, but with diligence and a desire to get ahead you’ll go far. Even reading this is a great step.

Check out these seven property investment tips that I created to give you an overview of some of the things that you need to consider where property investment is concerned. Plus, if you’re after more information we regularly run property investment workshops which are free to attend and which you can really get a lot out of.

1. Be conscious of stamp duty and take advantage where you canstamp-duty-house

This is one of the biggest and most significant costs associated with buying a new house as an investment. Owner occupiers may be able to avoid stamp duty but property investors have to pay it up front. The best thing you can do is to stay up to date with legislative changes and updates. There are actually a could of different charges that have to be paid with the purchase of a new investment property, and these are different per state. There’s stamp duty, the transfer fee (which can be as little as $100 ranging into thousands of dollars) and the mortgage registration fees (usually very minimal fees). As the costs differ from state to state, it’s worth checking out what the cost is per state and looking into buying a diverse range of properties.

2. Check out the neighbourhood

Property Investment AustraliaGet to know your target suburb by getting in there and living like a local: eat in the cafes, walk around the parks and figure out what kind of people really live in the suburb you’re targeting. Census data cannot always be trusted to present the most accurate picture of who lives in a suburb. For example, if you see lots of families with young babies it’s likely that these families will need pre-school in a few years so it may be worth considering proximity to pre-schools in your search. Being as informed as you can is never a bad thing.

3. Be organised

get-organsied This one seems like a no-brainer but when you start to collect information, it can pile up and before you know it you’re swamped! At the start of your property investment journey it helps to start a system for collecting and storing information. If you happen to have worked in an office before you might be more organised than some when it comes to word processing and storing and collating information. If you’re pretty hopeless at getting organised or taking care of files and folders and information, you can take a look at these areas to improve on:

  • Name things correctly! By using a single naming convention for your folders and files and sticking to it, you’re more likely to know where things are and when you touched them. It can be helpful to write out your naming convention and sticking to somewhere that you can see it all the time.
  • Keep the important stuff. Solicitors, estate agents, sellers and purchase agreement; keep it all until you’re certain you don’t need it any more. You never know when you’ll need that letter from your lawyers.
  • Back it up. Take care to save and save your information on a secondary source. It may seem unimportant intially but if anything goes wrong you won’t lost documents and files.
  • File your print documents. You’ll get a lot of specially signed information and documents. Scan these and also file them in a particular place.
  • Log your expenses for easy tax and account keeping.

 

4. Get rid of bad debt where you can

GoodDebt-BadDebtAny debt that isn’t actually actively working to make you an income is bad debt. This sort of debt can damage your chances of working with a lender and can mount up, causing you undue stress or concern in the future. If you use the time that you perform your due diligence (say three months) to work on also paying off as much debt as you can, you’ll be surprised how much more a lender will loan when you’re free of personal debt! This additional amount can also be the difference between an ok investment property and an excellent investment property that you really want.

5. Get better at getting finance for your property investment

Don’t let the lenders say no! Unless you’re really great at convincing banks to part with their money, you might need to employ the services of a professional like a mortgage broker. Even if banks say no, never accept a ‘no’ as straight up defeat. Banks wouldn’t be in business without people to lend to, you just need to find a creative way to work with them to achieve your finance goals, and this can be anything from using different lenders to transferring debt from one place to another.

6. Work out your exit strategy

property investment strategyIt’s easy to focus on the acquisition stage and to pour all of your energy into more and more property investment. Some people are heavily focused on growth, so they set targets and work to acquire a certain amount of properties for each year. But what happens when they decide to cash out? Tax can be a big hindrance to selling your property and so you need to have thought out your exit as much as you think about your entry into the market. You need to figure out how you are going to dump as many of these properties as possible, at the right time to achieve your goals. If you have 10 properties you may want to offload over half of them, but beware: this process could take many years to do it in the most tax-effective way. Starting out, you must focus on the start, but so too should you map out when you want it all to end.

7. Make good contacts and keep them

Build solid relationships with your mortgage broker, solicitor, planner, accountant, managing agents etc is vital to ensuring a smooth working relationship. It can be something as simple as sending a Christmas card or something, just a little touch to help keep the relationship strong.  Being polite while being assertive will help you to maintain a good relationship with these people. Make sure you treat everyone with respect so that when you need something down the line it’s more likely to be a positive interaction. AllianceCorp Property Experts have a whole range of services and education choices for prospective property investors and future home owners. We love to work with our clients to give them the best possible advantage for their future.

Get in touch today and speak to one of our friendly property experts about how you can build your wealth today!

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

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Melbourne’s mid-winter home auction market recorded another solid result for sellers at the weekend with a 74.3 percent clearance rate – the highest weekend result recorded so far over July. The Melbourne auction results are as follows.

Auction sales levels in Melbourne are holding firm over winter with consistent results being reported each weekend. Auction clearance rates have averaged 73.2 percent since the Queen’s Birthday weekend compared to break 67.1 percent over the same period a year ago.

High winter rates have been recorded despite higher listing numbers with 3780 properties going under the hammer over the past 6 weekends compared to 3257 auctioned over the corresponding period a year ago.

 Melbounre-Auction-Results

Auction numbers have increased over recent weekends as the market now moves through the mid-winter trough. This weekend 548 homes were auctioned compared to 478 last weekend. Auction number will continue to rise and test the market over the coming weekends through to spring.

Melbourne’s inner city suburban region produced the best result at the weekend with a strong auction clearance rate of 87.9 percent. This was closely followed by the north with 87.8 percent, the inner east 84.6 percent, the north east 72.1 percent, the west 71.4 percent and the inner south with an auction clearance rate at the weekend of 70.7 percent.

Standout sales results in the inner city included a  4  bedroom home at 6 Survey Street Richmond sold for  $1,766,000 by Collins Simms, a  3  bedroom home at 35 Seacombe  Street Fitzroy North sold for  $1,545,000 by Chambers Real Estate, a  4  bedroom home at 69 Bendigo  Street Richmond sold for  $1,516,000 by RT Edgar and a 3 bedroom unit at 11/55-59 Moor  Street Fitzroy sold for  $1,410,000 by Jellis Craig.

Auction Results Melbourne

Moor St Fitzroy sold for $1,410,000

The most expensive property reported sold at auction at the weekend was a 4 bedroom home at 30 Dawson Avenue Brighton sold for $4,680,000 by Buxton. The most affordable property reported sold at the weekend was a 2 bedroom unit at 7/23 Ashley Street Reservoir sold for $265,000 by Ray White Northcote.

Melbourne’s home auction market has proven to be particularly resilient so far this winter producing remarkably consistent results in what remains clearly a solid seller’s market overall.Auction Results Melbourne

Latest ABS home loan data has revealed a surge in investor activity in Victoria. The value of loans approved for residential investment soared over May to a new monthly record of $3.04 billion – the first time the $3 billion mark has been exceeded over a month in Victoria. The value of investor finance approved is now 28 percent higher over the first 5 months of this year compared to the same period a year ago.

Investor activity now accounts for 48 percent of overall home sales finance activity in Victoria and continues to fuel prices growth in the Melbourne market.

Originally published on the APM as Melbourne July 19th auction report 

To find out how you can benefit from these strong auction results, register here for your complimentary and obligation free session with one of our property experts:

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A recent report by Ryan Fox and Peter Tulip for the Reserve Bank of Australia has presented some interesting information about renting versus buying in the latest Reserve Bank Report, which you’ve no doubt seen in the news and media of late. The RBA calculated that housing prices in Australia have risen by an estimated 2.4% a year (after adjusting for inflation and costs) and that housing prices would need to rise by 2.9% per year to make buying a better option than renting. After looking at the inflation of housing the RBA has suggested future housing price growth would be less than the historic average.

Housing prices Australia

They went on to say that because of this “the average household is probably better off renting than buying.” Cameron Kusher, a senior analyst for RP Data has estimated that suburbs experiencing annual growth of more than about 5.5% over the past 10 years would likely have outpaced inflation.

Sydney hasn’t achieved quite that growth as a whole, but still achieved 3.6% annual growth over the past ten years. Melbourne only just got there but managed at 5.6%. Brisbane houses were just outside the range with 5.2% with annual growth over the past decade. Kusher said that many suburbs within these cities were likely to have beaten the RBA’s estimate, and he stated that realistically, most Melbourne and Sydney suburbs have grown in excess of this 2.9%. Such a change doesn’t necessarily mean that prices will continue to rise at the recently seen levels, but there are further benefits to buying as opposed to renting, regardless of the financial ups and downs.

The figures that the report has put forward do make a compelling case for some suburbs in some areas, but the fact remains that when you buy a home – you’re actually getting something for the money you’re paying. When you’re renting a home, you’re still paying someone else’s mortgage. Plus, people who are renting still need to be saving a portion of their earnings for a time when they do want to invest – and thus it’s difficult to compare the spending habits of a home-owner to a renter.Property Investment

Paul Bird, a spokesman for realestateview.com.au noted that the outlook for purchasing was actually looking good, given the ongoing strength in the market and the fact that interest rates are remaining on hold for the time being. Mr Bird went on to state that over the next three months that the market is “expected to be strong, and certainly meeting if not ahead of the predicted 2.9% in the next few months.” Another report from Aussie Home Loans argued that the cost of an apartment rental in Sydney (approx. $500) exceeded that of a standard home loan, which they calculated at $431.52 at their current rate of 4.84% on an average $355,000 loan.

Property InvestmentUltimately, there are certainly benefits to renting when your financial situation demands it, but if you’re in the position to buy it’s certainly something worth considering. There really is no ‘best’ time to buy; sure there are times when you’ll stand to make more money initially, based on when you purchase property, but the fact remains that the longer you wait the longer you stand to miss out on your overall long term returns. No one can predict the market entirely, and no one knows which way housing prices will go. Sure, we can make educated guesses and watch trends, but the housing market remains an educated process and requires people to try to predict. The only real factor that will make a difference to your eventual wealth is your time in the market, not the time when you entered the market.

To find out more, register here for your complimentary and obligation free session with one of our property experts:

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RP Data – Rismark Home Value Index Release

The June RP Data Rismark Hedonic Home Value Index finished the financial year only slightly into double digit growth figures, with capital city dwelling values moving 1.4% higher for the month after posting a 1.9% decline in May.

Capital city dwelling values have shown a 1.4 per cent capital gain over the month of June 2014, with all cities apart from Adelaide and Darwin recording a rise in dwelling values. According to RP Data research director Tim Lawless, the strong result has partially reversed last month’s 1.9 per cent fall and provides a -0.2 per cent decline in dwelling values over the June quarter.

Annual_Change

Over the 2013-2014 financial year the top performing cities for capital gains have been Sydney and Melbourne where dwelling values are up 15.4 per cent and 9.4 per cent respectively across each city. The Brisbane housing market, where conditions have generally remained relatively sedate, is now gathering some pace with dwelling values moving 7.0 per cent higher over the past twelve months, the third strongest result of any capital city. On the other hand, the index results show that the softest performances over the past year have been recorded in Hobart (2.5 per cent), Canberra (2.9 per cent) and Adelaide (2.9 per cent).

Over the current growth cycle, capital city dwelling values are up 15.5 per cent, with Sydney recording the most significant capital gain at 23.1 per cent growth since the end of May 2012. Adelaide’s housing market recorded the least significant capital gain over the cycle to date, with dwelling values rising by 5.6 per cent.

According to RP Data’s Tim Lawless, the recent volatility in the month-to-month Index reading is likely to be a seasonal factor. “The last time we saw a negative quarterly movement in our combined capital city index was May last year. The recent reduction in capital gains is likely a correction from the strong market conditions reported over the first quarter of the year.”

Dwelling_Changes

“Looking through the monthly movements, the trend in performance is much more important. It shows that the quarterly rate of growth peaked across the Australian housing market in August last year at 4.0 per cent. Since that time the rate of capital gain has generally trended towards a more sustainable level. The slowdown in dwelling value appreciation will be a welcome relief to policy makers and those seeking to buy into the housing market,” Mr Lawless said.

Changes_12months

From a total returns perspective, Sydney once again stood out as having provided the most outstanding performance. Combining the capital gain with the gross rental yield over the year has provided Sydney home owners with a total return of 20.2 per cent over the financial year. Melbourne, Darwin and Brisbane have also recorded a total gross return in excess of 12 per cent over the year.

Rolling_Changes

Across the different price segments of the housing market, the broad middle -priced sector of the market is now showing the highest rate of annual change. Dwelling values at the most affordable end of the capital city housing markets have moved 8.8 per cent higher over the past year compared with a 10.3 per cent capital gain across the most expensive suburbs and a 10.6 per cent increase across the broad middle fifty per cent of the capital city market.

Looking at rental markets, gross rental returns are currently recorded at 3.9 per cent for capital city houses and 4.6 per cent for capital city units. The yield environment is lowest across Melbourne where gross yields are averaging just 3.4 per cent for a typical house and 4.3 per cent for units. Darwin continues to show the highest gross rental yields at 6.1 per cent for houses and 5.9 per cent for units.

Screen Shot 2014-07-08 at 12.21.29 pm

Mr Lawless said, “With interest rates remaining low for the foreseeable future, it is doubtful that housing values will start to slide, at least not at a macro level. What is more likely is that natural affordability constraints will start to dent buyer demand, as will the low rental yield scenario’s that are very much evident across the largest capital cities of Melbourne and Sydney.”

Other indicators such as clearance rates are holding relatively firm which, according to Mr Lawless, further reinforces the notion that the housing market isn’t set to show a market correction.

Over the month of June, clearance rates strengthened and are generally around the high 60 per cent mark across the capital cities week on week. Average selling and vendor discounting rates also levelled out at relatively strong readings, and listing numbers remain relatively tight.

“Activity across RP Data valuation platforms has also held firm at relatively high levels suggesting mortgage demand isn’t dropping off just yet,” Mr Lawless said.

Originally published as Australia’s capital city dwelling values ends 2013-2014 financial year 10.1 per cent higher.

New apartment sales are on the rise in Brisbane and the demand is growing.

According to an article by Venessa Paech (realestate.com.au 11 June 2014)

bris_appt_3

Lachlan Walker, Director of Place Advisory Director, said the sales rate was well above historical averages and that demand is showing no sign of slowing down. A new report from Place Advisory showed that there were a total of 1,225 new residential apartments for sale at the end of March 2014. This number of apartments will only supply the market at its current state for less than six months.

“With new apartment sales remaining strong and supply having fallen to an historical low, it’s evident there is a continued undersupply of new off-the-plan stock in inner Brisbane,” Lachlan said.

While some commentators have implied that the Brisbane market is likely to be oversupplied in the near term due to the proposed pipeline of apartments, in our opinion the majority of these projects will never actually make it to the open market, hence the undersupply will endure in the near term.

There is indeed a substantial pipeline of proposed apartments, today numbering 22,000, but this has existed now for more than six years and is to be expected of a city whose population is set to double in the coming years.

“In reality, the lending hurdles and the banks’ tight purse strings will ensure only feasible residential projects enter sales and marketing and evolve into the construction phase.”

There are many reasons that these rental properties become popular, these include affordability, smaller households (demographically), and different choices in lifestyle options. These properties  are clearly becoming more popular for their affordability and lifestyle options which appeal to a growing range of families and people looking to rent.

bris_apptOwner-occupiers returning to market

Investors have been active in Brisbane’s new apartment market but the rise of the owner-occupier appears to be happening. “The re-emergence of owner-occupiers is a positive sign for Brisbane’s market – it’s evidence of the continuing improvement in sentiment, as well as the improvement in market conditions, which is creating an urgency amongst buyers,” Mr Walker said.

It was seen that two-bedroom apartments accounted for more than half of the total transactions over the March quarter, while one-bedroom sales represented 40% of sales.

The most popular price range seen for dwellings was $350,000 to $450,000.

According to the Place Advisory report the best performing projects in Brisbane during the quarter were;

  • Abian with 108 sales
  • Broadway on Anne with 58 sales
  • Southpoint with 46 sales
  • Proximity with 45 sales
  • 38 High Street with 44 sales

“Going forward the inner south will be the area to watch – there is high demand from buyers in the inner south and it has a high potential for change,” said Mr Walker.

bris_appt_2One Toowong development is giving away free scooters (including registration and a helmet) to buyers of their one-bedroom apartments to underscore the lifestyle advantages of living in a transport and amenities hub. Bruce Goddard, a marketer from Place Projects said that “Residents of this development won’t need a car. It epitomises the concept of inner city living which the council is advocating, and which more and more people are gravitating towards.

These results reflects a real growing demand for convenience and accessibility from renters in the inner city hubs. Brisbane will be one to watch as the demographic changes and the rental and property market shifts to accommodate them.

AllianceCorp Property Experts provide free education and guidance to help you build a successful and sustainable property portfolio. Get in touch with us today and arrange your free consultation and find out how we can help you to maximise your borrowing and buying power or book your FREE consultation with a Property Investment Coach below

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In the last couple of weeks we’ve seen solid results from the Sydney and Melbourne markets. This was to be expected, with the strong demand for key properties continuing to keep prices strong at auctions and across the unit and housing market as a whole.

But what about the Brisbane property market?

Brisbane_property_2

The capital of the Sunshine State is in the middle of a recovery period – something that started late last year following a long period of inactivity after an overheated market drove up prices from 2001 to 2008. Brisbane’s prices appreciated by about 230% over that 7-year timeframe alone!

So this time, even though the values of properties are expected to lift, it’s only expected to be a mild shift – potentially up by another 11%, with attached properties at a mid-tier level predicted to rise by up to 19%. As a potential investor or someone who’s looking to expand their portfolio in the Brisbane area, what are some things that you need to consider? A recent report by Michael Matusik has suggested that the normalising of interest rates could spell a slowing of dwelling prices, and a reduction in dwelling prices expected if home loan rates rise to over 7%.

Brisbane_property

There will always be a demand for property in liveable areas, and Brisbane’s property market continues to be an area bolstered by its many attractive traits as a city, including stable population growth, good job creation, solid household incomes, comparative affordability, good renovation activity and positive infrastructure delivery. Yet the Brisbane recovery is more about being able to see how prices will shift and what it means for you the investor (or potential investor).

What is known through looking at demographics is that Brisbane has an ageing population, many of whom will be looking to downsize and/retire in the next decade. This type of age shift could fuel an increased demand for attached homes in a smaller style to suit the buyers. From this, as area that could see growth is in the retirement market, as more people look to make a lifestyle shift. Baby boomers will be selling to downsize and change up to meet their lifestyle needs, and Matusik has predicted that the resale of baby-boomer homes may exceed demand, including the demand that comes from from people looking to upgrade.

Brisbane Property InvestmentThe demand in the Brisbane property market for new apartments to rent is likely to be subdued for a few years, at least until the excess supply is absorbed – Brisbane is flooded with new stock, with record numbers of new apartments being built across the inner city. An interesting area to watch will be rental prices in new and established apartments across the inner city, and also the number of first homebuyers entering the market, both as investors and as residential buyers.

It’s clear that there are several factors behind market shifts and keeping abreast of the changes is an important factor in a successful property investment strategy. At AllianceCorp we keep a close eye on Lifestyle and Demographics in an effort to stay ahead of unexpected changes.

Brisbane is a market that we’ll really be looking closely at over the next few months to see how it goes, and we always advocate being as educated and prepared as you can when you’re considering creating an (or expanding on your) investment portfolio.

Whether you’re looking to purchase a new property or wanting to add to your portfolio, AllianceCorp can help you to work out what your options are by looking at your financial position, and then providing advice based on our combined years of industry experience and industry know-how.

Come to our next workshop or book  your complimentary and obligation free consultation with on of our Property Experts and find out how you can manage to build a passive income flow through property investment.

Renovation_2Here is Part Two on how to add value by renovating your property. Read on to see my Top Ten Strategies for improving the power of your portfolio with these simple renovations.

1. Facelift
The front of the house is often the first thing that people see, either in a drive-by viewing or through advertising pictures. By improving this section of the property you’re setting yourself up for a good boost in value. All it might take could be cleaning the roof, tidying the front garden and painting rough spots, washing the house, fixing broken locks or windows or adding a garage or carport. People really gain confidence when a house looks cared for and well maintained, and you don’t get a second chance at a first impression.

front of house 2. Landscape
Although not technically linked to the house itself, the gardens and yard are just as important in adding cosmetic appeal to your property and increasing the value. An external makeover can include some new turf, a couple of well-placed shrubs or trees or even a good clean of the driveway. You might consider making an appointment with a professional landscaper and making some changes based on their advice. Many only charge a small fee for an hour’s consultation but more for plans and drafting. You might start out with a smaller budget and work towards spending more in this area once you have taken care of major items. If you have an apartment consider installing a living wall or something else to maximise the available space.

People value privacy in a home, so at the front and rear of the property you want to ensure you’ve got a good fence and/or trees and shade. Families will find this especially important, so consider this as part of making your home more renter-friendly.

awesomekitchen3. Kitchen
A poorly designed kitchen can make the difference between a good sale price or no sales at all. It could have something to do with the success of Master Chef but no matter the reason, people are placing a well planned, space-efficient, modern and open-plan kitchen/dining area high on the list in their ideal homes. The price for a kitchen renovation may not be the lowest when it comes to value add strategies but it is worth it.

4. Bathroom
You’ve got options here: you can either tackle a complete bathroom renovation or you can revamp your existing one. You can also consider adding an extra toilet or move the existing one to make your bathroom larger. There’s heaps of options and you can consider things like opening your bathroom to an outdoor area, creating a wet room, adding underfloor heating, different tiles…
The options are endless. It is one of the hardest working rooms in the house and is something that deckprospective tenants will consider strongly when looking for rental properties.

5. Add a Deck or Terrace
Creating an outdoor space – especially in an inner city area or somewhere that will benefit from the extra room – has the potential to add big value to your home. You should, as with any building renovation, ensure that you conduct your due diligence and choose a reputable builder who will do the job to your specifications.

6. Add A Home Office
So many people arhomeofficee making a shift away from traditional working arrangements and are spending two or three days a week working from home. With the advent of cloud spaces and online accessibility, the importance of a home office has grown in the eyes of buyers.

That’s why adding a home office can really pay off for you as a homeowner. You need to consider adding a space that can be closed off and has the wiring for a good internet connection and data cabling.

7. Green Your Home
solar-cells-4aWho wouldn’t love insulation, solar hot water and a rainwater tank in a property? More and more buyers are environmentally conscious, and adding features like this will certainly improve the attractiveness of your home to prospective renters. Consider the initial cost as an investment in your future, because although ‘green’ options can be initially expensive, they do pay off in the future.

8. Paint
It’s such a simple thing to do and adds so much visual appeal to your property! A nice idea is a feature wall or touching up the bathroom, just make sure you choose a neutral colour palette so that your home will appeal to a wide range of people.

9. Floors
A really nice and effective renovation idea is to update the flooring of your property. Timber floors are a great choice and there are some cost effective solutions like floating floorboards or solid timber floors – these double up as great insulation too. Polished concrete is a really popular option and includes some great flexibility in including underfloor heating for your property.

10. Space and Light
A great and really cost effective option is to add more space and light to your home. This can be done in a number of ways, like adding sliding doors into your home, opening up an outdoor area by knocking down non-load bearing walls and adding stacking doors or by installing a sky-light. An abundance of light and space in a home is always a great selling point.

sliding doors

I hope you’ve enjoyed this two part series on adding value to your home. AllianceCorp Property Experts have an experienced and dedicated renovations team who are qualified and trained in advising and executing value-add renovations for our clients. We are experienced in working with our clients to identify an ideal budget, and then we can actually provide the resources and project manage the renovation to your specifications.

If you’re looking to buy the time is now, and our Property Coaches would love to talk to you about how we can help you get the most from an investment portfolio.

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

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This is the first in a two part series designed to help you add value by renovating your home in a simple and cost effective way. I hope you’ll pick up some tips about how to add value your house, either when selling or when renovating to increase value. These are fixes that can be applied to an established property to increase the worth, both to renters for the liveability, and in a valuation situation.

RENOVATED

So why renovate? For starters it’s a great way to remodel and add value to your property in a cost effective way.  You might have purchased a property in a great neighbourhood that needs a bit of work, and now you want to increase the value of that investment so that you can add value to your overall portfolio. Whatever the reason, it’s a great way to get money back on your investment. I’ve created this guide that has a few steps to consider on the way.

In Part One we’re going to learn about the things to consider before you begin a value add renovation, and in Part Two we’re going to look at the various options for renovations and adding value.

What’s Your Budget?

This is, unsurprisingly, very important. It’s essential that you decide upon a budget and then stick to it. In doing so you ensure that you come in at a figure that’s going to prove cost effective for your renovation.  The best way to figure this is out is to work out the value of your property and then limit your budget to around 10 per cent of the value. So if your property is valued at $400,000 you’d be best to limit your renovation to $40,000.

Plan It Out

It might be worth getting a builder and/or architect to draft up some plans or at least consult with you on what you want to get done. That way you’re able to get a couple of second opinions from different people. Be up front and work out who is going to be able to do the best work for you, do you research and ask questions if you don’t understand. That way you’re not going to be faced with surprises.

Pay Your Way

Sadly, builders aren’t free. You’re going to need to fund your renovation somehow, and one of the best ways to pay for your renovations is with savings. That way you’re not going to be paying interest on any work that is done, which makes that sweet payoff all the sweeter. That said, it may take several years to save up an appropriate kitty, and you want to get this done when it works for you, not five years from now. So you can consider withdrawing equity out of your home loan – but take care, as the interest can mount up over the years and you can end up paying more than your original outlay.

builders

Other finance options include topping up your existing home loan, taking an extra home loan or paying for the renovations with credit card. Whatever options you plump for, you have to make sure you do your homework and figure out the best option for your situation. Also, get experts to have a look over whatever figures you have and provide independent advice. It might be handy to bring in a financial advisor or a professional serviceperson to take a look at the figures too.

Get Started!

You might be full of ideas about what to do and how to do it, so read on to improve your knowledge and come back tomorrow to learn my ten tips for adding value to your home in Part Two!


AllianceCorp Property Experts have an experienced and dedicated renovations team who are qualified and trained in advising and executing value-add renovations for our clients. We are experienced in working with our clients to identify an ideal budget, and then we can actually provide the resources and project manage the renovation to your specifications.

If you’re looking to buy the time is now, and our Property Coaches would love to talk to you about how we can help you get the most from an investment portfolio.

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

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