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.

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.

They’re designed to get you to make a purchase quickly and deny you the opportunity to evaluate the purchase properly and compare other options.

Hard sell sales tactics often include aggressive or forceful language and usually use strong psychological pressure to convince you to buy. Sometimes it is not immediately obvious that you are being given the hard sell – the salesman will pretend to be your friend and behave as if they are helping you out!

So how do you avoid being pushed into a purchase by a hard selling salesperson? Here are five tips to help you come out on top.

1. Learn to say no.

Saying no is surprisingly difficult for some people. We’re all brought up to be polite and delivering a flat no can seem rude. The hard sell practitioner is fully aware of this and uses your good manners to their advantage to create an opportunity to make their sales pitch. Always be polite, but be firm when saying no or they will continue to pester you until you buy something.

Learning to say no to such people is vitally important. Make the word ‘no’ your default response until you are sure you have all the facts and are in a position to make an informed and considered decision.

2. Beware of people bearing gifts.

Another common tactic, and one that is frequently used by property sellers and developers, is to reinforce your natural tendency to avoid saying no by giving you a ‘free’ gift. They know a gift will make you feel more obligated to say yes because we are all conditioned to reciprocate when given a gift.

For example, time share companies will often offer you a ‘free’ weekend away in return for attending their seminar, then try and pressure you into buying while you’re there. Or a property developer may offer you a ‘free’ furniture voucher to get you to attend an open house, then pressure you into signing a contract on the spot.

Always remember that when you accept a gift that is described as ‘free’, you are placed under absolutely no obligation to make a purchase or return the favour. Say no firmly and take your ‘free’ gift home without feeling guilty about it.

3. Keep your emotions in check.

High pressure sales tactics also take advantage of your negative emotions. They play on feelings such as fear, greed, vanity, guilt, ambition, frustration, anxiety and even loneliness. Gratification of any of these emotions is a strong motivator and makes us very susceptible to impulsive purchasing decisions that we may regret later.

When making any large purchase, it is important to be able to put your emotions aside and think logically and practically. Before you even consider looking at a home or car to purchase, protect the integrity of your decision making process by working out a budget and a buying strategy. Avoid impulse purchases by giving yourself a cooling off period when you can take the time to sit down and calmly consider the pros and cons.

4. See the bigger picture.

When emotions are running high and you’re under pressure to make a decision, it is a good idea to step back and take a wider view of the situation. Resist your impulse to purchase by taking a few deep breaths and asking yourself “What will happen if I don’t make the decision to purchase right now?”

After a few minutes have passed, more sensible considerations will come to the fore. Such as can you afford it? Does it meet your needs? Will it give you the return on your investment that the salesman has promised? Are you paying the right price? Could you get a better price by waiting and negotiating a bit more? These are the bigger picture questions that need to be answered before you make your decision to buy.

5. Do your own research.

Every property developer, real estate agent and car salesman will tell you their deal is fantastic, that buying their product is a ‘no-brainer’. They may even show you data or statistics to back up what they say. Never trust the word of a hard sell salesperson, always verify the facts for yourself. Remember, if it sounds too good to be true, it probably is.

When making any large purchase, particularly a property, the importance of conducting your own thorough research cannot be overstated. It may be time-consuming, but it is not difficult to go online and check you’re paying the right price, how likely it is that the investment will appreciate in value and what are the likely rental yields. If you are buying off the plan, or from a developer, always take the time to verify the value of the property on completion and hire an expert to help you if necessary. Do not take the developer’s word for it.

Remember, the objective of the hard sell salesperson is to make you buy now in order to take away your opportunity to consider things properly and perhaps decide not to make the purchase. The harder the sell, the more reason you have to go away and carefully research their offer.

Talk to a professional finance broker today.

One of the ways unscrupulous salespeople make their money is by selling you expensive finance. No matter how attractive the offer or how insistent the salesperson, you should never sign up for finance on the spot. It is very easy to be distracted by the price of that great car or perfect house and forget to be diligent about your financing deal – this is a major mistake that could end up costing you a lot more than you think.

Finance contracts can often have restrictive terms, unfavourable interest rates and hefty exit fees. Car dealership finance for example, is notorious for failing to take into consideration your complete financial circumstances, so you could end up with financial hardship or may actually find yourself unable to make your car repayments. This could be disastrous for your credit rating and leave you struggling to get any kind of finance in the future.

No matter the urgency, always take the time to talk with a mortgage or finance broker about your finance needs. We will help you to determine exactly how much you can afford to borrow and make sure you obtain the most favourable interest rate and finance product available for you and your needs, taking into consideration your personal financial circumstances and goals. Call us today.

It sounds simple, right? In fact, buying a property off the plan can be a lot more complicated than it may first appear. In this article we give you five tips on how to get it right.

What is buying off the plan?
Buying off the plan means signing a contract with a developer to purchase a property that has not yet been built. Instead of inspecting a completed home, you choose the property by inspecting the developer’s designs and plans, or by visiting a demonstration home or show room. Apartments are the most common type of off-the-plan property purchase, however you can often buy units, duplexes and townhouses that are a part of a larger development.

Tip #1. Do your research.
Putting down your deposit on a property that proves to be worth less than the original agreed purchase price could be a disaster, as you may not be able to get the finance you need to complete the sale. That’s why it is vitally important to do your research very carefully to ensure you’re buying a property that will have the value you expect when the purchase is completed.

To be sure you get it right, you should research the suburb’s capital growth rates and rental yields. You should also find out how many other, similar developments are planned to find out how this will affect sale prices, clearance rates and vacancy rates in the area.

Tip #2. Reference check the developer.
Choosing the right developer is just as important as choosing the right property. Everyone has heard stories about dodgy property developers and the way to avoid being caught out is to reference check them carefully.

Do a background check on the developer for bankruptcy, criminal record, complaints with your local building authority and ask to speak with previous clients. Ask the developer how long they have been in the industry, how many projects they have completed and visit their previous work to inspect the quality. Find out what professional industry associations they have.

Most importantly, ask the developer to provide proof of their financial status. You don’t want to run the risk of the developer going into liquidation before the property is finished.

Tip #3. Be sure of what you’re buying.
When buying off the plan, it pays to be very thorough and detail minded. You need to determine exactly what you are going to be getting for your money, so ask a lot of questions about what is covered by the purchase price and what isn’t. You should be careful to ensure that everything your developer agrees to provide is written down in the contract. Be as detailed as you possibly can in every respect.

Tip #4. Get a solicitor to check the contract.
Because they are so very detailed and comprehensive, contracts for off the plan purchases can be complex and lengthy. To make sure everything is correct, take the contract to a solicitor you can trust to check it carefully. Read it yourself and ask your solicitor to explain anything you don’t understand before you sign on the dotted line.

Tip #5. Pre-inspect prior to settlement.
Another thing that you must remember to include in your contract is a pre-settlement inspection. This will give you the opportunity to go in and check that everything the developer has agreed to deliver is there in the property. You can also take along a building inspector to help you check for defects or finishes that are not up to standard. If everything is not in order, you can delay settlement until the developer rectifies the problem. Including a pre-settlement inspection in your contract is essential to protecting yourself from having to take possession of an uncompleted property. You don’t want to hand over your money until you are completely satisfied you’re getting everything you’re paying for.

If you’re considering buying off the plan, it’s also a good idea to get pre-approval on a loan before you sign the contract. You can then keep this up to date whilst the property is being constructed to be sure you can get finance when needed. We’re here to help you crunch the numbers and make sure it’s the right purchase for you, so please call us today.