Approach Property Investment as a Business
Sep 15th
Residential rental property investment should be approached like any business decision in that you are making decisions as to where to invest your funds. Like any business decision there are certain rules that you should follow:
1. Make sure the property is appealing to tenants, remember that although you are not going to live in it, if it appeals to you it should appeal to them.
2. Most investors would not invest thousand of dollars in an investment without checking some basic facts, such as, pest and building inspections, the current state of the rental market in the area of the property. vacancy rates, average rents, zoning and Local Government Regulations should be checked.
3. If the property requires some work you should obtain quotes from professionals rather than try to estimate the costs yourself. If a lot of work is required make sure that you allow for the loan repayments during the period that the property is not tenanted.
4. Understand the real after tax costs of owning the property. Many investors fall into the trap of estimating the after tax costs and not realising that these after tax costs usually only occur after they have lodged their tax returns. Remember that you will have to pay the interest, rates, insurances etc before you claim them as a tax deduction. In this regard bear in mind that it is possible to apply to the ATO for a variation of the amount of tax deducted from your wages to account for these expenses.
5. Do your homework, ensure that the financing is the best loan to suit your needs and that you are aware of the true purchase costs including stamp duty and legal fees to ensure that your borrowings are sufficient to cover your needs. Do not forget to enquire as to whether land tax may now apply to you.
6. If you are buying at a distance or interstate you must ensure that you have researched the market in which you are buying. Be aware of rental guarantees to ensure that these guaranteed returns have not simply been added to your purchase price.
7. Be aware of the rent that you are prepared to accept. Many a property has sat idle for long periods because the owner was holding out for a higher rent. This is particularly relevant if you have borrowings to support.
8. Make sure that the property is adequately insured. Also consider taking comprehensive Landlord Insurance in the event that the property is damaged by tenants.
9. Do not manage the property yourself. Most landlords do not understand the rights and obligations of tenants, the tenancy application procedures to ensure suitable tenants, the operations of the tenancy tribunals, bond lodgements and the relevant inspection and termination procedures. Most Landlords would dread the thought of having to undertake an eviction. We can ensure that your property is professionally managed at all times to take on these tasks for you.
(By: Elders Mona Vale Real estate 26/09/08)
It’s a buyer’s market: RP Data
Sep 6th
With home values tracking sideways, many buyers may see now as the right time to step back on the property ladder, new research from RP Data has found.With home values tracking sideways, many buyers may see now as the right time to step back on the property ladder, new research from RP Data has found.According to RP Data’s latest Home Value Index, home price growth is expected to slow over the coming few months, which is likely to be seen as an opportunity for many buyers. RP Data’s national research director Tim Lawless told The Adviser that as house prices start to stabilise, there will be more stock to choose from and vendors will be discounting their asking prices by more than this time last year.“Basically, all these factors will work together to create a buyer’s market where vendors have less leverage in the negotiation process,” he said.“In line with the soft residential market conditions, we are likely to see continued weakness in building approvals and housing starts which is bad news for housing supply which remains well beneath the level required. Housing finance approvals have been trending downwards for owner occupiers, however the stability in interest rates and improving economic conditions should start to see some improvements in the number of home loans being issued.”
(By:Jessica Darnbrough, Monday, 06 September 2010)
Homebuyers have spring in their step
Sep 4th
More than 100,000 Sydneysiders are waking from winter hibernation ready for a spring home-buying spree that experts predict will jump-start Sydney’s property market.Real estate agencies are anticipating a record flood of inquiries in coming weeks.They predicted buyers would unleash in October, a late spring bloom brought about by a recent positive turnaround in economic and market sentiment, albeit delayed by the continued stalemate in federal parliament.MORE than 100,000 Sydneysiders are waking from winter hibernation ready for a spring home-buying spree that experts predict will jump-start Sydney’s property market. Real estate agencies are anticipating a record flood of inquiries in coming weeks. They predicted buyers would unleash in October, a late spring bloom brought about by a recent positive turnaround in economic and market sentiment, albeit delayed by the continued stalemate in federal parliament. The build-up of buyers is like a coiled spring, Sam White from Ray White told The Daily Telegraph.
He said agents were anticipating more than 100,000 Sydneysiders would go head-to-head for limited property in the next three months, with roughly 24,000 homes expected to change hands.”Spring will see the usual spring rush, but perhaps even more so because people are getting much more confident about the market,” he said.Last spring brought the biggest quarter of sales since 2002, helped substantially by the mad scramble from first-homebuyers making the most of an increase in the Federal Government’s First Home Buyer’s Grant.
With a distinct lack of first-homebuyers this spring, agents believe their place will be taken by investors and families wishing to upgrade.Laing+Simmons general manager Leanne Pilkington said a shortage of available property would ensure Sydney house prices rose.”Underlying demand remains strong and the critical supply shortage will continue to buoy prices across all grades of property,” she said.”The spotlight this spring may well be on more affordable suburbs in Sydney’s west and southwest.”
McGrath chief executive John McGrath said spring would also be a “strong selling market” with more listings and growing buyer confidence courtesy of an improving economy.
With luck, recently engaged couple Alana Rose Bognar and Nicholas Horder will be off the house-hunting merry-go-round just as the market hits its stride.They have their hearts set on a postcard-perfect Paddington cottage that goes up for auction at 9.45am today.Having searched for the past four months they have noticed an increase in the number of properties being listed. “Winter has been pretty quiet but we have seen a bit more come into the market in the past month,” Ms Rose Bognar said.
(By: Andrew Carswell and Vikki Campion, From: The Daily Telegraph, September 04, 2010 12:00AM)
Growth will push rates to 9%: BIS Shrapnel
Aug 22nd
Serious inflationary pressures are expected to challenge any new government before the next election scheduled for late 2013, and may push cash rates up to 6.5 % and housing rates out to 9%.Serious inflationary pressures are expected to challenge any new government before the next election scheduled for late 2013, and may push cash rates up to 6.5 % and housing rates out prescription drugs online without prescription to 9%.BIS Shrapnel’s Long Term Forecasts 2010-2015 said economic growth will accelerate by an average of 3.8% per annum over the next three years, while unemployment will drop to below 4%. These tightened labour markets and household spending will drive up inflation, the forecaster warns.BIS Shrapnel says the current housing shortage is a “major problem” because it inflates mortgage debt, increasing household sensitivity to rising interest rates and unemployment and widening the current account deficit. A housing shortage is also a major influence on rising CPI due to its impact on rents.According to the report, expected weaker population growth will take the pressure off future growth in demand for housing in the short term, though the current undersupply problem is not likely to be addressed through the current cycle because mortgage rates remain at what BIS calls neutral levels.BIS said the combination of significant pent-up demand, strong rents and yields, rising incomes and an easing in funding for property developers is expected to drive a recovery in activity over the next two to three years.However, BIS Shrapnel senior economist, Richard Robinson, said this will not last. “Minimal slack in labour markets, a recovery in consumer spending and, subsequently, business investment, will quickly see the re-emergence of capacity constraints from 2011/12,” Robinson said.Due to ongoing labour shortages and a synchronisation of construction cycles, BIS expects inflationary pressures to build over 2011/12 and 2012/13, which will force the RBA to push up rates and the market to enter into a “controlled downturn” over the 2013/14 period.
(By: Ben Abbott, 24 Aug 2010)
Brokers save refinancers cash
Aug 11th
Seven out of ten refinancers that used a mortgage broker saved money on their mortgage, according to a new report.
Seven out of ten refinancers that used a mortgage broker saved money on their mortgage, according to a new report.Mortgage Choice’s latest survey of refinancers has revealed that 45% used a mortgage broker to assist them with said refinancing, and that over half of those people saved more than $150 per month. 61% of those who used a mortgage broker changed loan product and lender, compared to just 26% who did not use a mortgage broker. Plan Assist’s Senior Loan Advisor, Anton Hamer, commented that considering more than one lender brought considerable financial benefit.”Interestingly, of those who changed loan product and lender, 78% benefited from a lower rate,” said Hamer. “In comparison, only 56% of those who stayed with the same lender and changed loan product saw their interest rate decrease. Borrowers need to shop around and explore their many options.”Four out of five respondents refinanced their loan with a bank, with 83% of these choosing a major bank. 8% chose a non-bank lender, 6% a credit union, 2% a building society, 2% said ‘other’ and 2% were unsure.Out of all those surveyed, over two-thirds locked in a reduced interest rate upon refinancing, thereby lowering their minimum repayment level. Of these, 42% reduced it by one percentage point or more. Far and away the most common reason given for refinancing was to switch to a cheaper loan, with nearly a quarter of respondents citing this reason – although 10% refinanced to fund a renovation and 9% to buy an investment property.
(By: Kevin Eddy , 11 Aug 2010)
Video Lesson 3
Jul 16th
Video Lesson 2
Jul 16th
Lesson 2: Rich Dad Poor Dad Revisited
Old Thinking
Get good grades, get a high paying job, work hard, live below your means, save money, get out of debt, build your super.
New Thinking
Learn to build businesses (property investing is a business too!), learn how to invest and create your own freedom. Seek passive income and let go of seeking security.
Video Lesson 1
Jul 16th