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.

 

equity3Many 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:

AllianceCorp_Consultation_

 

As you near retirement, you probably hear more and more about relatives and friends of friends who have secured their retirement fund in property investment alone. Though it sounds unrealistic, the fact is that property investment is one of the easiest ways to secure your financial future and make your golden years truly golden.

retiree

Here are seven great reasons why you should get involved with property investment right away:

1. Secure Your Financial Future

Regardless of whether your retirement year is one, 10 or 20 years away, you’re probably already thinking about your financial future and all the fun activities you want to do. You’ve calculated your salary up until that point and have looked at the pension amount you’ll be receiving, and even if you have a substantial inheritance coming your way, it all might not be enough.

If you want to improve your financial situation or prepare for retirement, property investment can help you fill up the cracks where salary and other incomes fall short and quell any lingering fears you have about the future. Did you know, for example, that a mortgage-free retired couple in Australia will need approximately $46,766 in income to live comfortably, says the Australian Bureau of Statistics? Or that the average actual pension income of most retired couples is actually about $23,353?

2. Pay the Tax Man Less

No one especially likes paying taxes, but if you’re making about $80,000 per year, then you’re paying the tax man over $20,000 in taxes alone. Wouldn’t it be more beneficial for you to invest that money in property?

accountant

The truth is that the government actually encourages property investments and offers incentives for investors. If you play your cards right, you might only end up paying about 25 percent for your investment property. The tenant and government will pick up the rest. Talk to an accountant for help filing taxes.

3. Pay off a Home Loan Quickly

Much like their credit card payments, most mortgage payers often feel that paying the minimum monthly balance is best. You don’t incur any fees, and you can use your money elsewhere, but by owning your home sooner, you’ll be lifting a huge financial burden off your back.

outside houseTypically, mortgage payments take about 10 to 20 years to be fully paid off. By then, you’ll have paid for more than you originally purchased the home for because of all the interest that has built up. Building equity in investment properties can later be used as a down payment for a mortgage, and you’ll get it much quicker.

4. Create Multiple Income Sources

This step is always easier said than done. Of course everything would be much easier if you had more cash coming in, but getting those new streams to come in can be difficult if you don’t know where to start.

manykeys

Start easy. Begin by building your property portfolio and letting your equity grow. Then begin to balance your debt. If you need a property manager or accountant, now would be the time to seek help because things might get confusing. Select one section of your investment properties and focus your efforts on paying down the debt on the remaining properties. While you’re doing this, collect rental income.

This is a great start for launching new streams of income.

5. Create More Wealth and Security for a Better Lifestyle

Investment properties are one of the best sources of equity or wealth in Australia, and they’re one of the few businesses that almost anyone can get involved with. When you think about the possible wealth in investment properties, it’s enough to almost turn your head. You can change you and your family’s entire way of living from the profits of a property.

oldpeepsincar

Historical growth figures taken over the years have consistently shown that if you purchase two investment properties for approximately $400,000 each, hold on to them for seven to 10 years and then sell them, you could get double for what you paid for them.

After selling costs and any taxes, you could be sitting on an extra $700,000. Imagine the possibilities!

6. Fund Your Retirement

Retirement is supposed to be a time of enjoyment and relaxation. After 40 years of working five days a week, you deserve a break. Now is the time to do all the things you’ve wanted to do and go all the places you’ve dreamed of. The last thing you want to do worry about money.

This is probably the biggest fear of many people reaching retirement. They worry they won’t even have enough to live comfortably, let alone enough to travel. Property investment is probably the most effective way to secure your financial future.

Self Managed Super Funds are a great way to get started with investing. You’ll want to begin investing long before you hit your retirement age to insure your money accumulates, so start sooner rather than later.

Ten years is long enough to hold onto a property and sell it for more so give yourself at least that much time. You can also space out the properties and sell them at different points in your retirement to boost your income. Watch the market if you’re doing this. You never know when it might take a dive. You can also sell your growth properties for cash flow positive properties.

7. No Other Investment is Safer

Property investment actually creates more millionaires than any other asset class. It’s considered the safest form of investment.

This is because property almost always has a constant growth factor. If you have a quality residential property in a good neighbourhood, you will more than likely produce high-consistent capital growth.

What’s better is that you’re always in control of your property. You can make all the decisions and direct the returns any way you want. Even if you own the single worst property, it will still increase its value over the years. You will be able to charge more for rent and be able to generate new income streams.

Best of all, the equity you earn can be invested in bigger, better properties and you can continue to grow your portfolio even as you move further and further into retirement. Your future will never look dull.

AllianceCorp Property Experts have the professional know-how and skills to turn your investments into the most profitable by tapping in to our years of industry knowledge and dedicated to working with you to build wealth.

Get in touch with one of our Property Coaches now to arrange your complimentary and obligation free consultation. The best time to invest is always as soon as you are able, because every moment that you’re not investing in your future is a moment less that you have!

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