In Australia, it’s possible for just about anyone with a deposit to invest in property, whether you are a low-income earner on a tight budget, or a well-off with loads of disposable income. Interest rates are very low at the moment and home prices are more affordable than they’ve been for a while. So, if you’ve been thinking about property investment, it may be a good time to get started.
Rentvestors are often motivated by a desire to maintain their current lifestyle, while still wanting to get on the property ladder. The solution? To rent where they want to live and invest in more affordable suburbs elsewhere.
This type of investment strategy can help you to grow a deposit to enable you to buy a home where you’d prefer to live later, but talk to a professional financial planner to ensure it will work for you. Capital growth is an important factor in Rentvesting, so it’s also important to research your property investment carefully and locate an up-and-coming suburb where this is more likely to happen quickly.
‘Mum and Dad’ investors
This is a common way of describing a conservative type of investor. ‘Mum and Dad’ property investors will typically have paid down their family home loan and be ready to access the equity to build more wealth for the future. They’ll often be growing their portfolio slowly and want to have only one or two investment properties in addition to the family home.
Each investor’s strategy depends on their goals and how comfortable they are with risk. If you are a conservative investor, you may opt for ‘set and forget properties’ that are easy to maintain and likely to deliver moderate long-term capital growth. This approach helps to protect your capital while making “extra” money.
Short-term investors (property flippers)
Buying, renovating and selling quickly is the name of the game for flippers. The idea is to buy a property in need of some TLC, but no major structural work. This takes careful research and it pays to have a team of builders and property inspectors to help you make the right property purchasing choices.
Property flippers manufacture capital growth by renovating. For this type of strategy to work, you need to be willing to invest considerable time and energy into the project and have a very firm grasp of both your budget and building costs.
It’s important to note that when property prices are falling, flipping can be a very risky business. If you fail to get your budget right, it could be very easy to end up with a property that’s worth less than you spent on buying it and renovating it.
Investors who do it as a business (long-term)
This type of property investor takes a professional approach and work as though they are operating a business. They often have a significant, diversified portfolio that includes both residential and commercial properties, and plan to continually purchase more properties.
Sophisticated investors are up to speed with things like value movements in the property market and maximising their tax advantages. They usually seek professional advice from a qualified accountant to support and inform their activities and decisions.
Investors who do it as a business buy, when home values fall rather than allow market variations to keep them up at night. They are usually careful to set up financial buffers to protect themselves throughout the peaks and troughs of a property cycle.
Get a professional broker on your team
No matter what approach you take to property investing, the right finance solution is critical to your success and can potentially make a big difference to the profit you make. We’re here to ensure your mortgage and loan structure is suitable for your investment strategy, personal financial circumstances, needs and goals. Feel free get in touch to find out more.
17 Jul 2019
Great news for homeowners and property buyers this month. Home loan interest rates have fallen again. If you’re in the market for a home or want to invest in property, now is a good time get pre-approval on a competitive home loan.
Interest rate news
At its July meeting, the Reserve Bank of Australia (RBA) decided to cut the official cash rate for the second month in a row, bringing it to just 1% p.a. – a new historical low. Many analysts agree there will likely be at least one more RBA rate cut this year, which would bring the official cash rate to just 0.75% p.a. and some are predicting it may even fall as low as 0.5% p.a.
Most lenders passed on the RBA rate cut to home owners last month, bringing interest rates on many standard variable rate home loans to just 3.6% p.a. or lower.
Home value movements
During June, Melbourne and Sydney both recorded slight home value increases for the first time since 2017 and Hobart also showed an increase. However, national property values dipped by 0.2% on average across the month, and there were sharp falls in Brisbane, Adelaide, Perth and Canberra, which could be an indicator that the property market correction is not quite over yet.
It seems likely that the re-entry of property investors to the market was responsible for the rise in home values in our biggest markets, last month. Tim Lawless, a market analyst from CoreLogic, said that “the removal of uncertainty surrounding changes to negative gearing and capital gains tax discounts [following the Federal Election] has boosted confidence.”
Property market activity
If you’re in the market for a bargain, see us about a pre-approval!
Even though winter has arrived, there are still many homes up for sale and it may be a great opportunity to negotiate on price. It pays to enter negotiations armed with a pre-approval on your home loan. If you’re in the market give us a call, we’d be happy to help.
Mike & the Element Finance Team
15 Jul 2019
How you use your income and available credit can make a huge difference to your lifestyle, so it’s very important to get it right. That means getting reliable, ongoing advice and support from a professional credit advisor you know and trust.
Your mortgage and finance broker can help you with all your big purchases, throughout every stage of your life – from your first home, to an investment property, or even a new car or funding for your small business. Here are some of the benefits of maintaining a long-term relationship with your broker.
Deal with one person who understands you.
When you first meet with us, we take the time to understand your personal financial situation and your goals for the future. That not only means we work with you to help you make a good decision about a loan for what you need right now. It also means we work with you to ensure the decision you make is a good one for your financial future.
Whenever you need to make a big purchase or an important decision about a loan moving forward, your broker will be ready to help. We’ll keep all your paperwork on file and ensure we understand your goals, and that will save you a lot of time and hassle.
By contrast, when you go direct to a bank to get that first loan, they are only concerned about that one loan – not with what happens next. So, every time you need assistance with a new loan, you’re forced to start the whole process from scratch with someone new – which can be very frustrating and time consuming.
Maximise your income and available credit.
If you don’t have the benefit of advice from a trusted professional, how do you know you’re using your income and borrowing power to its full advantage? The last thing you want to do is waste money or miss out on opportunities to secure the home and lifestyle you really want for you and your family.
A long-term relationship with your broker gives you support to maximise your income and improve your financial situation as you progress through your life stages. This knowledge and positive support will help you to achieve the lifestyle you want and make realistic plans to use your income and borrowing power wisely to support your lifestyle in the future.
We’ll even work together with your financial planner, accountant or other professional advisors to help you achieve your financial goals and we won’t charge you for our time.
Support to achieve financial independence.
Banks tend to be strictly transactional. They just provide the service you ask for and you usually only hear from them again when they’ve got another product they want to sell.
By contrast, your broker is here to protect your interests. You can expect to hear from us regularly with any important information that is relevant to you, when the opportunity arises to save money, or to support you in taking the next step in your wealth building journey.
Manage your loans and stay on top of your financial situation.
As you progress through the different stages of your life, your financial situation will change. A common example is when you and your partner have a child and your income temporarily reduces from two salaries to one.
We will always be on hand to help you manage life stage changes and issues. A bank will not necessarily support you personally, which can be worrisome.
Call us for a chat today.
If you’re looking to buy your first home, purchase your next one, invest in property or refinance your home loan just let us know. We can even help with competitive car loans if you want to take advantage of the fantastic EOFY car salesthat are on right now. We love helping you with your lifestyle purchases, as well as achieve your home ownership and wealth building goals, so please get in touch today.
If you’re looking to rent out or sell your home, identifying the right market for your property and making it appeal to them, will help you to maximise your profits. So how do you go about it? Use these tips for identifying the most profitable target market for your property and ways to spruce it up to increase its appeal.
Find out who wants to live in your area
The first step is to research who is currently living in the area and who may want to move there in future. Is the area popular with families, or does it appeal more to young professionals or retirees?
A simple way to find out is to touch base with a few real estate agents, to see what kind of customers they have looking for property in your area. Real estate agents often have waiting lists of buyers and renters, so it can be useful to get to know them and form a good working relationship with them if you want to buy or rent out property.
Investigate what kind of properties are in high demand
Next, find out which properties are moving fastest in your area. Are they apartments, two or three-bedroom homes, or new developments? Is the demand highest from high or low budget purchasers and renters?
Finding out the kind of customers moving into your area will also fuel ideas about how to make your property more appealing, so you can maximise your sale price or rental return
An easy way to find out is to browse local real estate agent websites to check prices and how long similar properties to yours stay on the market. Again, if you have a good relationship with your local real estate agents, you can simply give them a call and ask them.
Consider making some changes
Once you’ve discovered the kind of buyers or renters who want a property in your area, you can focus on making yours more appealing to them. Renovations can add value to a property in more ways than one!
If you decide to do some renovations, be sure to talk to us about finance before you start. Here are some ideas of the kind of features that may be popular with different demographics. It should be noted that these days, people prefer clean, recently renovated bathrooms and kitchens. Most of the ideas below can be improved or added cost-effectively and can make a big difference to a sale price or rental return.
|Demographic||Features they may desire|
|Families||Easy clean flooringGood cooking facilities/dishwasher|
Plenty of storage/laundry space
Secure outdoor facilities for pets
|Independent young people (under 35)||Trendy décorWi-fi and the latest gadgets|
Low-maintenance courtyard or garden
|Mature independent (over 35)||Energy-efficient featuresEasy clean décor/flooring|
Plenty of storage spaces
|Elderly couples (downsizers)||Entertaining areas for family and friendsSecurity features|
Don’t over capitialise!
When renovating, it’s important to budget carefully and spend wisely to ensure you don’t spend too much and you get the outcome you’re looking for.
For example, if you purchase a house for $400,000 and spend $100,000 doing it up, you’ll want to ensure the end value of the property is worth more than $500,000. You’ll also want to ensure the renovations make the property much easier to rent out or sell – for example, there’s no point putting in a swimming pool if renters and buyers in your area are not interested in having one.
Get a professional on your team.
If you need property market data about prices or rental returns, just ask us. We often have great information to share or can point you in the right direction to find what you need to make informed decisions.
Targeting the right market is often the key to maximising your returns and profits. And if you’d like to renovate, we can help you create a budget and explore your finance options. Please get in touch today if you’d like to find out more.
03 Jul 2019
EOFY is fast approaching and the car sales are on. But buyers beware! It’s easy to get so caught up with grabbing a bargain, that you forget to look for a great deal on your car finance. There’s no need to run the risk of being caught out with the wrong finance choice.
We’re here to help you get fast, competitive finance for your car and other lifestyle purchases, as well as your home and property investment loans. But what if you’ve already been caught out? What if you’ve been stuck with a whopping car finance interest rate for quite a while? The good news is that you can refinance an existing car loan, with our support.
Here’s some of the benefits of talking to us about your car finance.
Lower interest rates
This is one of the most popular reasons why people want to refinance a car loan. Interest rates on car finance can vary widely depending on where you get it. For example, car dealership finance is often a one-size-fits-all package and since their activities are not regulated, they can set their rates higher than the rest of the market if they want. Similarly, there are specialist lenders you may not know about, who often offer better car finance deals than those offered by the big banks.
When someone offers you a car loan, it pays to ask us to see if you could be getting a better deal elsewhere – one that’s tailored to your personal financial circumstances and goals. Our service for a market comparison is free and if we think the deal you are being offered is a good one, we’ll tell you to take it.
More manageable repayments
If your car loan repayments are sky-high and you’re struggling to meet them, you may want to consider refinancing. By changing terms from three years to five for example, your regular repayments will reduce and become more manageable. It’s important to know this may mean you pay a bit more interest overall, but that may be better than suffering financial hardship or selling your car.
Access different features
Refinancing has the potential to get you better features on your car loan. For example, you may be interested in a loan with a redraw facility. It lets you make extra repayments to reduce the interest you pay, but still access those funds if needed. Different lenders offer different packages, so ask us to shop around and find one that’s suitable for your needs.
Finance the balloon payment
You can get a car lease or loan that gives you the option to make lower repayments and pay a balloon payment at the end of the loan term. If you need help with that, we can potentially arrange a refinance that lets you pay off the balloon payment, instead of having to come up with a lump sum.
To ensure your loan suits your current situation
Life happens and things may have changed since you originally took out your car loan. For example, you may have started your own business and you now use your vehicle primarily for business purposes. If that’s the case, we can potentially do a refinance so that you can take advantage of any tax breaks available. We’ll even work with your accountant to help you maximise any tax benefits if necessary.
Why choose us?
You can rely on us to put your interests first. We offer tailored finance solutions for both new and second-hand vehicles and have access to a large panel of lending specialists, including some you may not be able to access through other outlets. We’re also happy to check any car finance you’ve been offered, just so you can be sure you’re getting a good deal. So, don’t wait to speak to us about your car finance, call us for a chat today.