Capital growth potential 

Capital growth is the increase in value of a property over a period of time. Investors use a range of strategies to build wealth, and looking for the properties that are most likely to experience significant capital growth, is often high on their radar.

So, how do you find an investment property with solid capital growth potential? Look for locations and suburbs experiencing economic growth. Economic growth creates jobs, which brings more people to an area, which may flow through to the property market via increased demand for housing. Greater demand means more chance of capital growth.

Next, be sure to choose an investment property that is close to amenities such as schools, shopping centres and public transport – when an area is experiencing economic growth, these properties will be in the most demand.

Rental returns

Some investors choose to focus on properties with a high rental yield, rather than just looking at capital growth potential. The rental yield is the rate of income return compared to the costs associated with the investment property. It’s typically expressed as a percentage, and may be calculated as a gross or net figure.

Investors who are following a rental yield strategy will typically look for areas where rents are high compared to the property value. Talk to us as we have access to have access to exclusive property tools to help you locate a suitable area.

Low maintenance costs

As an investor, it’s wise to opt for a low-maintenance property. They not only cost less to keep, but they’re less hassle too. Units can be easier and cheaper to maintain than old houses for example, but keep in mind you’ll most likely have to pay body corporate fees.

Ways to add value 

When choosing an investment property, ask yourself whether there is room for improvement, or ways to add value. You might not renovate it right away, but when you do, be sure to do plenty of research to find out what’s in high demand. Ask your local real estate agents what kinds of property features resonate well with tenants and future buyers in the area.

Choosing the right investment property requires careful research and planning. Luckily, one area you don’t have to worry about is finding the right investment loan for your specific needs. We can take care of finding you a loan product that matches your financial circumstances, while working with your investment goals. Please call us today!

1) Go it alone, or use a property manager?

When you’re a new landlord, managing your own property could have a steep learning curve. Working with a good property manager will not only teach you the ropes, but they’ll do all the hard work for you – like finding tenants, lodging bond forms, collecting rent, doing inspections and making sure things run smoothly. If there are any issues, the tenant will contact them directly, which could save you a lot of hassle. They’ll also keep you informed of your rights and responsibilities, giving you peace of mind that you’re doing things right.

Before choosing a property manager, be sure to check their online reviews or ask them if you can reference check their other clients. Otherwise, ask us! We are well connected and are more than happy to provide a referral to any reputable local suppliers that we may know. Property management costs are usually tax deductible for property investors, so also check it out with your accountant.

2) Familiarise yourself with the legislation

As a new landlord, it’s important to know your rights and responsibilities and adhere to the relevant legislation in your state or territory, even if you use a property manager. For example, in some states, you must provide tenants with a new tenant checklist before they sign the tenancy agreement, and you can be fined for not complying. You can find helpful information about each state and territory’s specific requirements on the TenancyCheck.com.au website, available here. Be sure to also check with your state or territory’s relevant government department.

If you have a Property Manager, it’s their job to help you understand the legalities, so if you’re not sure, ask them to fill you in!

3) Understand the importance of the bond

The bond is a security deposit that protects you if the tenant damages the property, leaves it unclean, or fails to pay rent or bills that fall under their obligation. In these instances, you or your agent may be able to claim the bond money to cover your expenses at the end of their tenancy. The bond is usually about four weeks’ rent, but in some instances, it may be more.

Once the bond is collected, you must provide the tenant with a receipt and lodge the money with your state or territory’s residential tenancies authority (known by different names in each state/ territory). Be sure to check with your local authority about how soon the money must be lodged. This authority will hold on to the bond until the tenancy is up and pay it back to the tenant when the property is vacated, provided there’s no money owing for damages, unpaid rent or other costs. If there is a dispute about the bond or you want to claim compensation for damage that exceeds the bond, you can apply to the relevant tribunal within your state or territory.

Buying an investment property is exciting and rewarding. If you’re not confident about going it alone, you can rest assured that there are professionals out there to help make sure things run smoothly. In terms of finance, we’re here to help you find a loan that meets your current financial needs and ties in with your future investment goals. We’ll compare the market and set you up with a loan that ticks all of your boxes, so please get in touch today! 

It’s easy to resort to “retail therapy” when you need a bit of a pick-me-up, and it’s also easy to overspend on gifts amidst all the excitement of Christmas. But what will really give you a thrill and a sense of satisfaction is reaching your savings goals and using the money to buy an asset that will help you grow your nest egg even further (like a house). Here are our tips for beating the urge to splurge this Christmas.

Establish a budget

The most valuable thing you can do for your bank balance this silly season is to create a budget and stick to it. This is especially important if you are buying Christmas gifts.

Write down all of your income and expenses and set an amount for regular savings. Once you have a budget in place, you’ll know your spending limits, and how much you can afford to spend on things like Christmas presents or summer holidays. You’ll also be able to establish good savings habits – something that’s vitally important when the time comes to apply for a home loan. When creating your budget, set yourself short-term savings goals to stay motivated, plus long-term goals to set your sights on where you want to be financially.

There are plenty of online tools to help you create a budget. You could use a simple Excel spreadsheet or a budgeting app. Wally, for example, allows you to manually log your expenses and store pictures of receipts in a virtual budget journal. The app alerts you when you hit your savings goals or when a bill is due. TrackMyGOALSallows you to set, plan, track and manage your savings goals (we’re thinking a new home could be a goodie!).

Think outside the box

If you want to avoid splurging, you need to think outside the box and make a fun game out of finding ways to save money. The key is to challenge yourself to find ways to feel good without buying stuff you don’t really need. If you’re feeling blue and needing some “retail therapy”, do some exercise instead or head to your local park. The endorphins and fresh air will do you a world of good!

When it comes to Christmas gifts, simple home-made presents can potentially save you a load of cash. Get creative! Make some yummy treats and jazz them up with some pretty wrapping. Get a professional photo done and buy some frames in bulk at wholesale prices. Don’t be shy about ‘re-gifting’ anything you don’t need, just give it to someone else who may enjoy it. The options are endless!

Avoid temptation

It’s important to know your spending triggers and to keep them in check to avoid impulse shopping. If you’re a fan of online shopping and find yourself gravitating towards those advertisements on Facebook, perhaps take a hiatus from social media during the silly season and ‘unlike’ your favourite shopping sites.

Similarly, if you find yourself being tempted to buy things for yourself when you’re out and about buying Christmas presents for your family, it’s wise to avoid shopping centres. After all, if you don’t see those killer shoes in the shop window, you won’t know what you’re missing out on. If you have to go out to buy Christmas gifts or essentials like groceries, write yourself a shopping list and take cash with you. By keeping your credit cards safe from yourself (and locked in a drawer at home), you’ll spare yourself a spending hangover.

If you’d like to explore your home loan options, we’d love to hear from you. Even if you don’t have a huge deposit saved, we may still be able to help you, so please don’t hesitate to get in touch. Remember, you’ll need a good savings history if you are planning to buy a property, so resist the urge to splurge this Christmas! Make some savings goals, change your spending habits and set the wheels in motion for a splurge-free future today!

Interest Rate News

The Reserve Bank of Australia (RBA) decided to keep the cash rate on hold at 1.5% again this month. It’s the 15th consecutive month with no rate change – the RBA last moved rates in August 2016, cutting the cash rate by 0.25 basis points. According to market analysts, it’s unlikely the RBA will make any move to adjust the cash rate at its final meeting for 2017 next month.

Property Market News

Home value increases slowed across the combined capital cities in October. Melbourne proved to be more resilient than Sydney, with dwelling values up 0.5% over the month, compared to Sydney, where they dropped -0.5%. Melbourne also saw stronger growth over the quarter, up 1.9% while Sydney’s prices fell -0.6%.

Dwelling values grew by 0.9% in Hobart in the month of October, and the city also saw the highest change in dwelling value growth over the quarter (up 3.3%). In Brisbane, values increased by 0.2% during the month of October, and 0.6% during the quarter. In Adelaide and Perth, there was no monthly change in dwelling values. Adelaide saw prices rise 0.1% over the quarter, while Perth’s prices fell -0.7% in the three months prior to October 31. Canberra saw prices fall -0.1% last month, but overall they increased 1.1 percent during the quarter.

Record auction numbers in October

Auction volumes across the combined capital cities reached record highs at the end of last month, according to CoreLogic. In the last week of October, the combined capital cities held 3,690 auctions, returning a preliminary auction clearance rate of 67.8%. Melbourne saw volumes reach their highest level on record, with 1,983 properties going under the hammer and 71.7% being snapped up!

The ACT also had a high clearance rate of 77% for 128 scheduled auctions. In South Australia, there were 163 scheduled auctions and 68% sold. New South Wales held 1,395 scheduled auctions, and achieved a clearance rate of 64%. In Tasmania, there were only six auctions, but 60% of properties sold. Half of the 60 properties that went to auction in Western Australia sold, while in the Northern Territory there were 10 scheduled auctions (44% clearance rate). Queensland had the lowest clearance rate for the week ending October 29 (43% for 361 scheduled auctions).

Now the Christmas shopping season has arrived, we know you’ll be busy buying gifts for your loved ones – so it might help to read our article this month about resisting the urge to splurge! Now is also a fantastic time to talk with us about your property purchasing plans, or to see us about a home loan health check, so please give us a call and we’ll be happy to help.

Besides providing a cosy nest of your very own, buying a property can potentially open up a world of wealth building opportunities – for your long term benefit! Whether you’re buying your own home or an investment property, home ownership could be a good move to help you get ahead financially. So get ready to start feathering your nest! Here’s a few reasons why real estate can be used as a powerful wealth generator.

Capital growth potential

Real estate has real potential to increase in value over time – this is called capital growth. That’s because the supply of housing is often insufficient to meet demand, supporting growth in values.

Whether you’re buying your home to live in yourself, or you’re buying a property as an investment to rent out to tenants, capital growth is going to be very beneficial to your financial situation. If the value of your property increases, you could potentially make a nice profit when you sell, particularly if it’s your own home. Alternatively, you could access the capital gains (known as equity) as you go along by refinancing your loan – effectively using the property as a money tree.

Make more investments

Money tree you say! We all know that money doesn’t grow on trees, so how does that work?

If you refinance your home loan you can access your equity, which gives you funds that you can spend how you like. If you’re focused on building wealth, you may wish to use it as a deposit for an investment property. Once some time passes and your equity builds in that property too, you could refinance your loan again and use those funds as a deposit for your next investment, and so on. In this way, your nest egg could potentially keep growing and growing.

This is just a broad outline of how property investment works. We recommend that you talk to a professional financial planner to help you formulate an investment strategy that’s right for you. Just ask us if you’d like a recommendation.

Tax perks

As mortgage brokers, we’re not tax advisors or financial planners. But generally speaking, property investment is a very popular form of investment, mainly because the Australian Taxation Office supports it with tax benefits.

One popular strategy is to ‘negatively gear’ your investment property to reduce your taxable income. Negative gearing is when the expenses associated with owning the property (including interest on the loan borrowed to finance the property) are greater than the income it generates. You can claim any net losses against your taxable income and in this way, reduce the tax you’ll have to pay on the money you earn in your job or by other means – all whilst your property investment makes capital gains. Once again, talk to your accountant and financial planner to be sure that a negative gearing strategy is right for you.

Speak with us about your property plans!

Buying real estate could be a smart move for you financially, whether you’re buying a home to live in or are investing in property to rent out to tenants. We’re here to help you maximise your financial position and obtain a loan that’s suitable for your purposes and goals. Talk to us about how buying a property could benefit you – we’ll help you to determine your borrowing capacity, get pre-approval on your loan and can even help you with insightful property data to assist you with locating and purchasing the right place. Just give us a call and we’ll be happy to chat with you about your plans.