Spring is here! The sun is shining, the weather keeps improving, and with it often comes that urge for a thorough spring clean. With a more stable climate, and Christmas holidays looming in the not too distant future, October is a very popular time of year for home improvements and renovations. And let’s be honest, we’ve all watched a few episodes of The Block and to produce a whole room in just one week looks easy, right? Wrong. Before you get in your car and race down to your local Bunnings or Masters, before you call in the chippy to add that second level, or the bulldozer to dig the family pool you’ve been promising since summer 2010 – here are some quick pointers to make sure your spring spruce up runs on time, and most importantly, to budget. Determine what work needs to be done Take the time to walk around your home or investment property and decide what “needs to be done now” in terms of property maintenance and security, and what would be a “nice to do”. If you have big plans that will require council permission, make sure you ask the experts for input and advice. Use this time to plan what schedule you would like the work to follow, and if you are using multiple tradespeople, what order you need them to work to so that the process is as efficient as possible. Remember, little things can make a big difference. It’s important to decide early if you are after a full blown renovation, or just a simple tidy up. Sometimes doing something quick and easy like changing a light fixture or painting the walls can breathe a big burst of fresh air into your home. Set a budget, then add a little buffer If you’ve never renovated before, it can be difficult to know where to start with estimating your budget. Step one – ask a lots of questions. Use tradie’s expertise to anticipate costs for all facets of the renovation or landscaping. If you’re just doing something small like a paint job, or some planting, think about the costs of materials, and time investment. Write all this down in a clear budget – there are loads of free templates online. Once you agree to your expenditure, it will provide clarity and ensure things don’t spiral out of control. It’s also wise to allow a 10-15% buffer either side of your total projected costs – as a ‘just in case’. With unpredictable weather, or other commitments, it pays to cover yourself should things push out. Secure financing, if you need to Once you set your budget, you will know how much money you need to spend to get set for spring. There are loads of ways you can finance your renovations: dip into your savings (or the bank of mum and dad), take out a home equity loan, redraw from or refinance your current mortgage, use your credit card or take out a personal loan. Which option is right for you will depend on your individual circumstances, and what you want to achieve. That’s where we come in. Please get in touch with us on the details below and we will help you determine which option best suits your needs and serviceability. Once this is done, you are one step closer to calling in the builders and making your renovation dream a reality. Track your spending So you have made a budget, and you have organised the funds. Now, you need to stick to it. We suggest you use a simple spreadsheet to track your expenditure. Remember, your budget needs constant attention. Make sure you continually assess what has been spent on all aspects of the project. Using the spreadsheet will allow you to easily and quickly see when and where costs are starting to blow out – so you can jump on the front foot. Enjoy it The sun is out, you’re investing in your home or investment property, it’s an exciting time and we wish you well! Remember, good planning and sticking to your budget will help to make this an enjoyable and successful experience. If you’re planning to renovate or spruce up your home this spring, we can help with finance options! For more information, contact us today.

We hope you are out and about looking at properties in the fantastic spring weather! Yes, the busy spring property season is well underway – and there’s plenty of great housing stock available. If you’re in the market to buy right now, the good news is that APRA’s recent tightening of controls on investment lending seems to be having a positive effect on home price rises! At its October meeting, the Reserve Bank of Australia (RBA) decided to keep the official cash rate on hold at the record low rate of 2.0 per cent for the fifth month in a row. Market analysts are undecided about the RBA’s next rate move, with some predicting a further rate cut in 2015 and others speculating that there will be no more rate changes until late 2016 – both of which mean, of course, that buying conditions will remain good for quite some time for first home buyers, refinancers and property investors alike! APRA’s new controls have had some effect on interest rates, both for Owner Occupier loans and Property Investment loans. If you’re in the market to buy your first home, upgrade or refinance, you can now access some of the lowest interest rates ever on record as lenders continue to adjust rates downwards to encourage business growth in this area. For property investors, some home loan interest rates have risen slightly, but still remain excellent value and easily accessible to those with an adequate deposit and good financials. Auction numbers were down recently, because of various public holidays and major sporting events. Additionally, with market conditions starting to favour buyers a bit more, private treaty sales are becoming more popular and are reducing auction numbers in some states. Buyers are definitely out and about, however competition at auctions is not as fierce as it was during the autumn selling season – which was unusually busy because of very high interest from investors, particularly Chinese investors. The table below shows the relevant auction numbers for each state and corresponding clearance rates, for the week ending Sunday 4 October 2015: State Number of auctions Clearance rate Victoria 90 68% New South Wales 567 71% Queensland 118 64% South Australia 32 71% Western Australia 10 75% Northern Territory 4 33% ACT 20 54% Tasmania 4 50% As mentioned earlier, there has recently been indications that home value growth is starting to slow down – which will come as a big relief if you are in the market to buy a property, particularly in Sydney. In most markets, home value price movements were very marginal this month, with only Melbourne showing a significant increase of 2.42% over last month and 14.22% over the last year. Sydney showed a marked change in home value price growth, only increasing by a very marginal 0.06% this month, but still showing a rise of 16.72% over last year. Brisbane/Gold Coast home values rose by 0.83% last month and 4.88% over the previous year. Adelaide home values went down by 1.17% last month and 0.30% over last year. Perth was up by 0.50% last month but is still showing a fall in home values of 0.90% over the same time last year. Darwin is also showing declines in home values – down by 0.31% this month and 3.92% since last year. Hobart’s home values fell by 1.93% last month and 0.59% since last year. On the bright side, the Canberra market is starting to pick up again, showing a 1.00% increase over last month and a 0.59% increase since this time last year. With interest rates on the move and becoming more competitive, now is a great time to talk with us about a home loan health check to ensure you’re getting a competitive rate in today’s environment. We’re also very pleased to offer our assistance to those of you looking to build wealth for the future by investing in property. Remember, we’re here to help you with your financing needs according to your personal financial circumstances and goals, so please don’t hesitate to give us a call for a chat today. The information provided in this newsletter is general in nature and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information you should consider the appropriateness of the information with regard to your objectives, financial situation and needs. Information sources: Auction results: www.realestate.com.au. Home values:www.corelogic.com.au Sincerely , Element Finance

With interest rates at all-time record lows, property has recently become very attractive to a wider range of investors. The media is full of articles and commentaries talking about using property to help fund retirement, with many even talking about it as a means to completely replace an employment income so they can quit work early.

Whilst property investment has a proven track record as being a comparatively safe way to build wealth for the future, is it really possible to use property as a means of finding financial freedom and funding your retirement? And if so, how do you go about it?

Here’s an outline of two commonly used property investment plans:

Plan A – Living off the rental income
Many people create an investment property portfolio with the notion that one day, the properties will be all paid off and they will be able to live on the rental income. But if you are planning to fund your retirement this way, you’ll need to take into consideration that this rental income will be subject to income tax and some of it will also be required for property management, maintenance, insurance and rates. In other words, a sizeable chunk of the income your properties produce – around 50 – 60% – will be used up before you can allow for your living expenses.

In theory, it ought to be possible to create a property investment portfolio large enough to cover all these expenses if you start soon enough and plan carefully from the outset. How much income you will need is up to you. Considering you will lose at least 50% of the income to tax and expenses, then if you want an after tax income of $100,000 you will need to plan to have a portfolio of properties that is generating at least $200,000 a year.

Plan B – Living off the equity
Many property investors take the approach that paying off the loan completely is not ideal. Instead, they simply reduce the loan to value ratio as far as they can and then fund their retirement living expenses by borrowing against the equity if and when they need it.

Acquiring funds this way does not attract income tax*, which is one of the main benefits of this plan. However it should be noted that every time you withdraw some of your equity, the repayment amount and interest due on your loans will rise.

As long as your properties continue to experience capital growth and the rental income keeps pace with the rises in your repayments, this plan may seem like an endless cash machine. But if market conditions create a situation where both rents and property values fall dramatically, you may find yourself in a position where your equity declines so much that you can’t borrow any more money, or you may need to start selling off your properties in order to meet your repayment commitments – which may not be ideal.

Of course, selling off your properties to fund your retirement is also a possibility. However, you will need to take into consideration capital gains tax and carefully plan ahead to ensure you have generated sufficient potential funds to meet your needs.

Get professional advice before you start
The truth is that using property to fund your retirement is not as simple as it sounds – there are many variables involved. But one thing is for sure, if you want to use property to gain financial freedom in the future, then you need to have a plan. And the sooner you start to implement your plan, the more likely it is that you will achieve your goal of funding your retirement with property.

Before you take the plunge and start buying up investment properties, it is very important that you get some expert advice to help you formulate an investment plan that is right for you. If you want to be a successful property investor, then it pays to have a team of professionals who can advise you along the way and help you to avoid making costly errors. This team might include a financial planner, tax specialist, property manager and certainly us – a reliable team of mortgage experts.

If you’re thinking of using investment properties to build wealth and perhaps, fund an early retirement, then give us a call now. We can not only help you with the right financing, we can also refer you to some of the experts you will need to create your team of professionals and formulate a firm plan for success. So please give us a call today!

*This article does not constitute tax advice. The information contained in this article is general in nature and does not take into account your personal situation. Tax issues relating to property investment can be complicated and you should always consult an accountant or qualified tax adviser. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice.

Shipping containers as permanent homes are becoming more popular with a couple being completed right here in Fremantle recently. They don’t have to look like boxes either with elaborate contemporary designs easily achieved. Have you seen any great examples? Would you live in a shipping container?

Is Fremantle the perfect city for this?