Australians love investing in property, and it’s no wonder why. The property market offers a myriad of opportunities to potentially grow wealth, irrespective of one’s professional background or skillset.

However, there are certain habits that successful property investors often have in common. Let’s take a look.

They are proactive about self-education

In order to stay ahead of the game, seasoned property investors are proactive about self-education. They understand that the property market is ever-changing, and that one must keep up to speed with developments in order to succeed.

As a result, successful investors understand the economic factors that drive markets and the way market cycles work. They can recognise when the market is shifting and act early. And they can seize opportunities where possible.

If you want to be a successful investor, you need to become an avid learner. Here are some ideas:

• Listen to podcasts
• Devour books, investment magazines, and blogs on the topic
• Do property investment courses online or through a local learning institution.

They make the most of professional help available to them

Smart property investors understand that while it’s important to nurture their own knowledge, they can’t know everything. Everyone has limits.

The key to success is to leverage the abilities of exerts in their field. Mortgage brokers, real estate agents, financial planners, accountants, conveyancers, buyers’ agents, property managers – all of these professionals are resources to be drawn on in order to make smart property investment decisions.

They review their investment loans regularly

The right investment loan for you today may no longer suit your needs in a year’s time. Successful property investors continually review their loans to make sure they still measure up.

In this way, clever investors can identify new opportunities along the way. For example, they may refinance their loans to include offset accounts and redraw facilities to save interest, or they may set up lines of credit to renovate their investments.

They have vision

Experienced property investors look past the current market movements to see the big picture. They understand the nature of property cycles. Sometimes it pays to buy and hold property; other times it’s best to flip. Having vision is what sets the successful investor apart from the mediocre one.

They also plan for contingencies. Buying an investment property comes with financial benefits, but there is risk involved. For example, what happens if the tenant falls behind in rent or something major needs to be repaired? What if the property’s value falls? Smart investors plan ahead and have strategies in place for these kinds of challenges.

Like to know more?

Whether you’re a seasoned property investor with a multi-property portfolio or a rookie investor, we can help you achieve your financial goals. We’ll line you up with the right finance for your specific needs and future aspirations. Please get in touch.

Spring has arrived and we are supercharged for a bumper season in the property world. Dwelling values have been creeping up in many markets and auction clearance rates have been higher recently too. Interest rate reductions and changed lending rules have fuelled increased buyer activity, though stock volumes remain low. Overall, the housing recovery looks set to continue.

Interest rate news

At its September meeting, the Reserve Bank of Australia (RBA) decided to leave the official cash rate on hold at 1% pa. The move follows rate cuts in June and July.

While this month’s decision was widely anticipated, economists say there could be more cuts by the end of the year, potentially starting in October. Recently we’ve seen some lenders slash fixed interest rates on both owner-occupier and investor loans.

Given rates are on the move, now is the time to review your finance. It may even be worth considering fixing your home loan – speak to us about your options!

Home value movements

Property prices are continuing to rise, up 1.03% across the combined 5 capital cities in August. Prices in Sydney and Melbourne continue to trend higher. Sydney recorded a month-on-month change of 1.57%, while Melbourne’s property values grew by 1.40%. In Canberra, prices increased by 0.79%, while in Hobart they rose by 0.51%. Brisbane saw modest growth (0.2%), while Perth and Adelaide experienced falls of 0.51% and 0.24% respectively.

In recent weeks, we’ve seen auction clearance rates soar in many markets. In fact, auctions across Australia’s capital cities reached a two-year high in August.

Property market activity

Ready for a spring property purchase?

If you’re considering buying this spring, speak to us about organising your finance. Given that stock volumes are low, there’s bound to be strong competition amongst buyers, but having pre-approval in place may give you a competitive edge. Get in touch today so we can get it sorted!

Do you know what happened after the Reserve Bank cut the cash rate in June? Tens of thousands of Aussies took the Treasurer’s advice to “shop around and get the best possible deal”. Mortgage brokers around the country have recorded spikes in their home loan, investment loan and refinance borrower enquiries following the announcement.

The moral of the story? Now is the time to review your home loan. Here are four signs you may be overdue for a check-up.

You’ve been with the same lender forever

Interest rates are at historic lows and competition between lenders is high. That means there are plenty of red-hot deals out there, particularly given the recent cash rate cuts.

If you’ve been with the same lender for years, chances are you’re probably missing out on a better deal elsewhere.

You have no idea what a redraw facility or offset account is

Most home loans nowadays come with money-saving features like offset accounts and redraw facilities. These tools allow you to save in interest and potentially pay off your loan sooner.

How they work

Offset accounts

With this set up, a transaction account is linked to your mortgage. Any money deposited is offset against your loan balance, reducing your interest payable. Example: you owe the bank $400,000 and you have $50,000 in the offset account. Interest will only be calculated on $350,000.

Redraw facility

With this loan feature, you can make extra repayments on your mortgage and save on interest. Best of all, you can still access the funds in future should you need them.

Your personal circumstances have changed

What’s changed since you took out your mortgage? Are you earning more money? Have your living expenses changed? Do you have different financial goals?

All of these elements need to be taken into consideration when choosing the right home loan for your needs.

You’re drowning in debt payments

If you’re struggling to cover multiple debt repayments, debt consolidation could be the answer. This strategy involves refinancing your mortgage and using some of your equity to pay off the other debt.

The benefits are:

• Home loan interest rates are lower than other types of credit
• You’ll only have one repayment to meet
• You can spread the repayments out, so that they’re more affordable
• You may be able to make additional repayments and knock off your debt sooner.

While debt consolidation is not right for everyone (in some instances, you may end up paying more in interest over the course of the loan), it’s at least worth investigating.

Like to know more?

If the alarm bells are ringing, we can review your home loan and outline whether it’s still right for you. You may be better off with another loan that ties in with your current financial situation and goals. Please reach out – you have nothing to lose and everything to gain.

Rentvesting has become increasingly popular in recent times. Last year, research from the Property Investment Professionals of Australia (PIPA) found that one third of first-time buyers opted to become ‘rentvestors’, rather than homeowners.

Here’s what you need to know before deciding whether rentvesting is right for you. But first, let’s look at an age-old question.

 To rent or buy?

If you’re wondering whether it’s cheaper to rent or buy, the answer depends on where you buy and your individual financial situation.

Domain Group compared weekly mortgage repayments on a median sale price to median rent for both houses and units in the year to April. The research found that in many capital city suburbs, rents were higher than mortgages (find out where it’s cheaper to buy a property than rent).

But what if you didn’t have to choose between renting and buying. What if you could have the best of both worlds?

What is rentvesting

Rentvesting is where you rent where you want to live and buy where you can afford. Simple.

Pros

A leg up on the property ladder

 If, like most first-time buyers, you can’t afford your dream home straight away, rentvesting gives you options. It allows you to get started in the property market with a smaller deposit and work towards buying the home you want, or to build your investment portfolio.

Lifestyle perks

Want to live in a trendy neighbourhood that’s out of your price range? With rentvesting, you can. Live the lifestyle you want, and invest elsewhere.

Flexibility

Renting gives you increased flexibility to move around if your circumstances change.

Tax benefits

What’s really great about owning an investment property are the tax perks. Most of the property expenses can be offset against your income.

Cons 

No FHOG

If you decide to buy an investment property rather than a home, you won’t be entitled to the First Home Owner Grant and stamp duty exemptions or concessions. These are for first time owner-occupiers.

Added responsibility

Being a renter and a landlord at the same time means you’ll have multiple expenses to cover. In addition to paying your rent, you’ll have costs including council rates, body corporate (if applicable), property management fees, maintenance, other running costs, and of course, your mortgage repayments. Keep in mind that if your investment is tenanted, the rental return may cover some, if not all, of these expenses.

You won’t own your home

Renting means you won’t be able to make the property your own. You also won’t have control over how long you can stay. Leases usually tend to be 6 or 12 months, so you may end up having to move regularly.

Capital Gains Tax

If your investment goes up in value, you may be subject to Capital Gains Tax when you decide to sell.

Steps for purchasing your first investment property

Step 1: Talk to us about your borrowing power and get pre-approval on your finance

Step 2: Formulate your investment strategy (it’s a good idea to talk to a financial planner or accountant)

Step 3: Create a purchasing budget, factoring in all the costs associated with owning an investment property

Step 4: Do your research (for things like capital growth potential and rental yield)

Step 5: Once you find a property, organise building and pest inspections

Step 6: Get us to finalise your investment loan.

Like to know more?

If you think rentvesting is right for you, we can help you explore your finance options. We’ll hook you up with a competitive investment loan that’s right for your needs. Please get in touch.

It’s been an exciting few months in the property world, with plenty of chatter about a potential market rebound. Back-to-back interest rate cuts, looser lending conditions and increased confidence following the May federal election have seen buyers returning to the market. In July, five of the eight capital cities recorded a slight rise in dwelling values, so if you’re a prospective buyer, now might be a good time to dive in and seize the moment.
Interest rate news
At its August meeting, the Reserve Bank of Australia (RBA) decided to leave the official cash rate on hold at 1% pa. The decision follows rate cuts in June and July. The majority of economists believe there will likely be another cut later in the year to 0.75% pa.

Most lenders have adjusted their interest rates to reflect recent cuts by the RBA, but it’s still worth shopping around. Some lenders are passing on bigger discounts than others.

Home value movements
Housing values appear to be stabilising, with five of the eight capital cities recording a modest rise in value in July. In Sydney, prices increased by 0.22%, while Melbourne saw values rise by 0.18% during the month. Values also climbed in Brisbane (0.24%), Hobart (0.27%) and Darwin (0.42%). Perth, Adelaide and Canberra all saw prices fall (by 0.53%, 0.34% and 0.32% respectively). In other news, capital city auction markets recorded the highest preliminary clearance rate in over a year (70.6%) in July.

Property market activity

* Monthly Home Values figures as at July 31, 2019
* Australian auction results, clearance rates and recent sales for the week ending August 4, 2019

Gearing up for a Spring property purchase?
If you’re in the market for a new home or investment property this Spring, we can line you up with the right finance for your needs. Contact us to arrange pre-approval today!

Sincerely,
Mike & the Element Finance Team