As you scroll through the listings and your eye wanders across all the gorgeous homes in Australia’s most idyllic holiday spots, you’ll also notice the breathtaking prices they command during the peak season. If you’re a property investor, you may find those high price tags make it very hard to resist the idea of investing in a luxury holiday rental property yourself. But is it really going to be a good money spinner?

Three things make a profitable holiday rental property. The right location, the right property and a luxurious fit out that brings your guests back time and time again. So what do you need to do to get set up for a high-yield holiday rental investment?

Choose the right location.

Yes, it is easy to make big dollars from a property by the sea in the height of summer, but you need to look at the total potential rental return across the entire year. Making a decent profit from a holiday rental investment requires a location that will attract holidaymakers all year round, not just in summer.

Ask yourself: what does the location have going for it as a holiday destination year round? Try and choose a location that offers people something special. Australians love the great outdoors and if your investment property is in a location of great natural beauty, it’s likely to be a winner.

A destination that is under three hour’s drive from the nearest capital city and international airport will not only attract local guests, it will attract people from interstate and maybe even overseas. If there is also a regional airport nearby, then all the better.

Choose the right property.

When choosing a property for a holiday rental investment, the first thing you need to take into consideration is the property’s accessibility to the local attractions and tourist hot spots. For example, if you’re investing in a property at a beachside location and want a maximum rental return on your investment, make sure it’s actually close to the beach and not on the other side of town near the highway entrance and the take-away food drive-thru.

Be careful to choose a property that offers a resort-style atmosphere. Avoid anything that is too suburban or ordinary in favour of a property that offers something different, like good views and wide open spaces.

Consider a property that offers plenty of room inside, with at least one sitting room separate from the kitchen living area. It should also have a separate laundry and wet area and of course, plenty of bedrooms. For a luxury holiday rental, a decent outdoor area is a must and a swimming pool will be a major attraction if you can manage it.

Set your property up to attract high paying guests.

Setting up your holiday rental property so that is practical and hard wearing is a good idea, but the trick is to do it in a way that looks luxurious, stylish and expensive so you can attract the highest paying guests. If you want to make the most profit from your investment, you need to make your place look absolutely fantastic in your online advertising photos and make sure it excites and delights your guests when they walk through the door.

Holidaymakers paying top dollar expect better levels of comfort and luxury in a holiday house rental than they do from their own homes. They will expect to find a good dishwasher, a great cooker and a large fridge in the kitchen at the very least. A modern flat screen TV and Wi-Fi is a must.

Your guests will also expect a king-or queen sized bed in the master bedroom and at least one other room with a double bed. Flexible sleeping options that will help them reduce costs by sharing with more people or another family are also a good idea.

Keep the decor simple, stylish and eye-catching – ask a local decorator for advice if necessary and try to create a look that compliments the location. Don’t be tempted to use your holiday rental property as a depository for all the old furniture the family doesn’t want. Red flags are outdated TVs, daggy curtains, garish duvet covers, cabinets with trinkets, clunky second-hand lounge suites, too many ornaments, ugly brown wood shelves, nanna-style light fittings, and horror of horrors, industrial or pub style wall-to-wall carpet.

Combining tourism and hospitality with your property investment can be a great idea if you do it right. If you’re considering buying an investment property in a holiday hot spot, let us know and we’ll help you crunch the numbers to see if it will be a good investment for you. Getting your finance right can make a big difference to your bottom line when investing in any kind property, so call us today to discuss your plans.

At its 2016 Melbourne Cup Day meeting, the Reserve Bank of Australia (RBA) decided to keep the official cash rate on hold at 1.5 per cent for November. The decision was widely expected by analysts and forward predictions are for no further RBA cash rate cuts in 2016.

The RBA may not have cut rates this month, but you can. Many lenders have indicated that interest rate changes do not only depend on RBA changes to the cash rate, but also on other market factors and their actual costs. So if you’re a home owner and looking to refinance to save interest, call us regularly to check the latest home loan interest rate that is available for you.

The RBA last cut rates in August and May this year, which brought the official cash rate to its lowest level in history. As a result, home loan interest rates are very competitive and the good news for home buyers and property investors is that it looks as though they will remain low for quite a while.

That means buying conditions are great this spring. Property market activity is heating up, particularly in Melbourne and Sydney, with plenty of housing stock for buyers and investors to choose from. For the week ending October 30, Victoria held 727 auctions and achieved a clearance rate of 76%, whilst Sydney held a whopping 1309 auctions and achieved a clearance rate of 77%.

Activity in other markets indicated that buyers are possibly being a bit more discerning about prices. Queensland held 417 auctions for the same period, which is quite high, however they only achieved a low clearance rate of 39%. South Australia held 179 auctions with a clearance rate of 69%, ACT had 93 auctions with a clearance rate of 70%, Western Australia – which is not a big auction market – held 75 auctions with a clearance rate of just 37%. Northern Territory only held 6 auctions with a clearance rate of just 17% and Tasmania 10 auctions with a clearance rate of 33%.

Rises in home values appear to have slowed across all markets during October. In Sydney, home values only rose by 0.62% and in Melbourne, they rose by just 0.78% despite strong activity from buyers in both of these markets. Brisbane/Gold Coast showed an increase of 1.10%, Perth 0.78%, Darwin 2.20%, and Canberra 0.40%. Adelaide showed a decrease of 2.39% as did Hobart, which showed a decrease in home values of 2.05% for the month.

Opportunities are plentiful for first home buyers, next home buyers, refinancers and property investors right now. We’re here to help you make the most of low interest rates and the excellent spring property buying conditions, so please give us a call to chat about your plans. We’ll help you get the right home loan for your needs, with the most competitive interest rate available for you from Australia’s leading lenders. Christmas is also approaching fast and if you’re looking to buy a big ticket item for yourself or your family, we’ll be happy to help you with your finance needs for that too, so please give us a call today.

We recommend that you seek independent financial and taxation advice before acting on any information in this newsletter. It contains general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances. Your full financial situation will need to be reviewed prior to acceptance of any offer or product. Interest rates are subject to change without notice. Lenders terms, conditions, fees & charges apply. Information sources: Auction results: www.realestate.com.au. Home values: www.corelogic.com.au

Both choices give you a huge range of options, but it’s a decision that could be very important to your future prosperity. So will you choose a brand new property – perhaps buy one off the plan or build the home of your dreams? Or would you prefer an established home in a location you love? To help you decide which one is the right choice for you, in this article we’ve provided you with five good reasons to consider buying a new build and five good reasons to think about buying an established home.

Why buy a new build?

1. Lower maintenance costs.

One of the most attractive things about a newly constructed property is that they are brand new. You don’t have to worry that the hot water heater is about to wear out or you’ll have to come up with the money for a new roof next year.

Of course, a property with no maintenance issues means no maintenance costs – at least for the first few years – which will be very appealing to landlords everywhere. It’s also a big bonus for first home buyers and anyone who can expect cash-flow to be tight in the first few years of home ownership.

2. First home buyer grants and other incentives.

In most states of Australia, there are grants and other government incentives to assist first home buyers when they buy a new build home. These incentives may include the first home buyer’s grant and/or stamp duty savings. It should be noted that these benefits do vary from state to state so to find out more, please visit the government website here.

3. Tax benefits for investors.

If you’re a property investor there could be some tax benefits whether it is a new build or an established home. One of the things you may be able to claim on your tax is depreciation on certain aspects of your property and its contents. These tax benefits tend to be greater and easier to claim on a new build property where the building, fixtures and fittings are all new than with an established property where they may be a number of years old.

For more information about how to claim depreciation tax benefits on your investment property and find out exactly what you can claim, please talk to an accountant or visit the ATO website here. If you don’t have an accountant who knows about property investment, just ask us for a referral.

4. Higher rental yield potential.

People love to live in a brand new property where no one has ever lived before. New build properties make attractive homes because they usually come with all the latest mod-cons, great insulation and the latest energy efficient appliances. You may even find that tenants are willing to pay more rent for a new build property than they would for a similar established home, simply because they know the actual costs of living there will be less.

5. Build the home you really want.

Building your own home, buying off the plan or purchasing a newly completed home may allow you to obtain a home that better suits your needs and lifestyle. It’s a great way to get that dream home you’ve always wanted! Whilst it is often possible to renovate an established home to meet your family’s unique requirements, designing a new one specifically for your purposes may provide better value for money and may be a much more attractive idea to some.

Why buy an established home?

1. Renovate or extend to add value.

Unlike a new build property, an established home may give you the opportunity to renovate or extend which could help you to instantly add value and increase your equity. This can be a very effective wealth-building strategy if you do it well.

2. Be sure you’re not paying too much.

One of the problems with buying a new property off the plan or building your own home is that it is difficult to know exactly what the value of the property will be when construction is completed. This represents a risk because it is possible that you may end up paying more for the property than it is actually worth.

With an established home, it is much easier to obtain an accurate valuation at the time of purchase, so you can be more confident that you are paying the right price. You also get the peace of mind of inspecting the finished property before you buy it.

3. Location.

Building a new property depends on the availability of vacant land for the development. This is most often found on the outskirts of cities. Established homes are more likely to be easier to rent and easier to sell because they are usually located in areas where people actually want to live, which tends to make them more popular with both tenants and property buyers.

4. Historical charm and outside space.

There are people who love a character home and would quite simply prefer to purchase an older, established home rather than a new build. It can be argued that these homes could have better capital gain potential because they are each a piece of history that is unique and becoming increasingly rare. It is also true that land allotment sizes used to be much larger, providing buyers of older established homes with bigger gardens designed to accommodate families with children and pets.

5. Move in sooner.

You never know for sure how long it will take to build a new home. Unforeseeable circumstances can often cause frustrating delays and even something as simple as bad weather can add months to the project. On the other hand, you can buy an established home very quickly. The entire process of locating the right property, buying it and moving in could take as little as three months, maybe even less.

Whether you’re considering buying a new build or an established home, we’re happy to help you weigh up the merits of your choice of property. We’ve helped many first home buyers, next home buyers and property investors to make wiser property purchasing decisions and of course, choose the right home loan to help them make the most of their personal financial circumstances and achieve their goals. If you’d like to find out more about how we can help you make the right choices, just give us a call today.

Many people think that interest-only home loans are only for serious property investors with aggressive purchasing strategies. However, all kinds of property buyers can apply for an interest-only loan and there are a lot of clever ways you can use them to your advantage.

As your mortgage and finance broker, we’re here to make sure you understand the different uses of loan products and how they may apply to your personal financial strategy and purchasing goals. In this article we talk about the pros and cons of interest-only products to help you decide if it’s time to say hello to interest-only.

The Pros

Smaller loan payments.

During the interest-only period of the home loan, your monthly loan payments would be lower than with a principal and interest loan. This is because your payments only need to cover the interest on the loan. Great if you want to reduce your expenses!

Free up cash.

Lower loan payments mean you could use your available cash for other purposes that may be financially beneficial. You could use the money to pay off debts to help save money on interest, make other investments to build wealth for your future, fund a loan to purchase another property or to make home renovations to increase your property value and equity position.

Tax deductible for property investors.

Want to save money on tax? The interest on an investment property debt is usually tax deductible for property investors, as long as you follow the ATO rules. That means an interest-only loan could very beneficial if you are a property investor because it could help you to maximise your tax deductions and cash-flow. Unfortunately, if you are using an interest-only loan product to purchase a home as an owner-occupier, you will not receive any tax deduction for interest.

Benefits are ongoing for the life of the interest-only term.

With an interest-only home loan, you can often choose an interest-only term from 1, 3, 5 or 10 years. This can be very beneficial for tax minimisation strategies and financial planning purposes. It could also be very beneficial for people buying a home on a tight budget as it can help you to plan your finances for the first few years you own the property as well as keep your loan payments lower.

Make payments on the principal when you have extra cash.

Many interest-only home loans allow you to make payments on the principal of your loan if you want to. This means that you can still build equity in your property by making a repayment on the principal of the loan when you have the extra cash.

The Cons

It’s possible that you may not build any equity.

Interest-only loan payments do not help you to build equity in your property because your loan payments do not pay down the loan principal. That means you will be relying on property prices to rise to gain equity (unless you make extra payments as mentioned above).

When the interest-only period ends, the loan will revert to a principal and interest loan and your loan payments will increase unless you make other plans.

If you decide to take out an interest-only loan, you should be careful to plan ahead for what you will do at the end of your interest-only period. At that time, you will have to decide whether to renegotiate another interest-only term, allow the loan to revert to a principal and interest loan, refinance the loan, or sell the property to pay off your debt.

An interest-only loan will cost more in interest over the life of the loan than a principal and interest loan.

Very few people keep a loan for the full 25 years, but you should be aware that the cost differentials between an interest-only loan and a principal and interest loan can be quite significant when calculated over the entire life of the loan. For example:

• With a normal principal and interest loan for $500,000 at 4.78% p.a. based on an LVR of 80% over 25 years, the total cost of interest on the loan would be$357,766 over the 25 year period.
• On an interest-only loan for $500,000 at 4.78% p.a. based on an LVR of 80% over 25 years with an interest-only period of 10 years, the total cost of interest on the loan would be $440,443 over the 25 year period. This means that the interest-only loan could cost you an additional $82,676 in interest compared to a 25 year principal and interest loan.

You may miss out on a golden opportunity to pay down the principal while interest rates are low.

Is a principal and interest the right loan for you considering that interest-rates are now at all time lows? Sometimes it can be worth paying more now to save money later. Paying down as much as you can off the loan principal now could mean that when interest rates do rise, you will be paying those higher interest rates on a reduced loan amount. Of course, a reduced loan size could mean lower loan repayments and/or paying less interest in the long-term.

Ask us if an interest-only home loan could help you to achieve your goals.

As your professional mortgage and finance brokers, we know about the pros and cons of all home loan and finance products. We’re here to help you understand the different financing options available and give you expert advice on how you can be clever about applying them to help you achieve your goals. Everyone’s personal financial circumstances and goals are different and you can be sure we’ll take the time to listen and understand what you want to achieve. If you’re considering using an interest-only home loan, please get in touch. We’ll help you decide if it’s the right option for you.

If you have no experience with buying a property, you may find it difficult to know if you have done everything right. The good news is there’s no need to do it on your own. With the right team of business professionals on your side you can make the whole process go a lot more quickly and smoothly, prevent expensive mistakes and maximise the full financial benefits of making your property purchase.

So what kind of professional support might you need? Here are five business professionals that can be worth their weight in gold to every property buyer, whether you’re buying your first home, your next home or a property investment.

Building & Pest Inspector

When you’ve chosen the area that’s right for your property purchase, you should take the time to find a Building & Pest Inspector who knows the area well before you even start your property selection process. When you find a property that you’re interested in buying, having your experienced Building & Pest Inspector lined up will help you to move on it quickly and with the appropriate caution.

The word ‘caution’ is an important word to use here because not every property is as good as it looks to the untrained eye. The rule of thumb when purchasing a property is always to take a good look before you leap. Many unwary home buyers have fallen in love with what they think is the perfect home, only to find out later that it has expensive maintenance issues.

Solicitor / Conveyancer

A solicitor or conveyancer is required to attend to the legal formalities and prepare all of the documents you need to transfer a property into your name and ensure your settlement day goes smoothly. Their role is to be the champion of your legal interests during the purchase process and that’s why choosing a good one is important to your success.

First of all, your solicitor will be invaluable in helping you to understand the terms, conditions and contents of any contract that you will be required to sign. If you are intending to purchase at auction, they can explain the auction rules and conditions. If you are building a new home, or if you are purchasing off the plan from a developer, an experienced solicitor will know what you need to be careful about, what to include in the contract of sale to protect your interests and help to ensure that you end up getting exactly what you are paying for.

Accountant

A good accountant can be a huge bonus when purchasing a property, particularly if you’re a property investor but also if you’re a first home buyer or an owner occupier. That’s because understanding your own financial position is the most important part of the property purchasing process. It helps you determine your buying power, identify and plan for any potential cash-flow difficulties and ensures you understand and can cover all the expenses.

A good accountant who is experienced with property purchases will help you to maximise any tax benefits you may be entitled to receive. If you are planning to invest in property, it is a good idea to consult an accountant about what the tax benefits will be in your particular case and get advice about how to maximise them before you even begin.

Real Estate Agent/s

It’s a great idea to find out who are the best real estate agents servicing your chosen property market. Even though a real estate agent’s primary purpose is to represent a seller in a property transaction, the really good ones will also be willing to lend you their expertise in locating the right property for you – even if they don’t have it on their books right now.

As a buyer, you will not pay a real estate agent for any services they provide to you, as the seller is responsible for paying their fees. However, good real estate agents will want to meet you and keep in touch with you because you may be a prospective buyer for one of their future customer’s properties. They will take the time to discover your needs and take an interest in what kind of property you are looking for, making a note of your approximate price range and when you want to buy. When an appropriate property becomes available, they will contact you to see if you are interested. This can help you stay on top of new properties coming on to the market in the areas that are of interest you.

Mortgage & Finance Broker

There are thousands of home loan products available and finding the one that is exactly the right fit for your personal financial circumstances and goals can be a confusing process. If you approach a bank directly, they will only tell you about their own products. If you go online to do your own research on all the options, you could be there for days and still be in the dark about which finance product is the best one for you.

Some people just pick the loan with the lowest interest rate they can see and never even find out if a different type of loan product could have saved them more money in other ways.

A professional mortgage and finance broker is here to help you sort through all of these aspects of choosing a loan. Our job is to find a loan that is exactly the right fit considering your short and long-term goals, how much you can actually afford to borrow and what you need to get out of your loan in terms of features and benefits.

Consulting a mortgage and finance broker is usually free of charge. We’re even happy to have an informal chat with you if you just want to test the waters about getting a loan. Expert credit advice could make a big difference to your financial well-being both now and in the future – it’s not only about your finance needs right now.

If you need help meeting the right professionals for your property purchasing team, we’ll be happy to provide you with some referrals. As mentioned, we’re also happy to give you whatever information you may need about loan products and their uses. So please feel free to call and chat with us today.