Property Investment

It is funny how humans are so different from one another yet so similar at the same time.

Take purchasing your first investment property for example. Each of us will have different criteria by which we will make decisions, a different financial structure and a preference of locations.

However, each will experience the emotions of fear and uncertainty.

Leading agent Madeleine Hicks of Madeleine Hicks Real Estate Everton Park believes that many first time investors can over research or over think their options.

“Some investors do so much research that they in fact scare themselves out of property investment,” said Madeleine.

Don't Let Too Much Information Kill Your Property Dreams

“Often we can see all the reasons why property investment makes sense yet one article as to why shares out perform property or a bad tenancy story can shelve the property investment for months, sometimes years and on occasions, forever,” explained Madeleine.

“I always recommend that a buyer undertakes research and ensure due diligence when making a decision. The fact is that to the inexperienced too much research can confuse and lead to procrastination,” concluded Madeleine.

Madeleine’s tip for property investment include:

  • Buy your first investment property local – you know the local market.
  • Understand negative gearing
  • Understand taxation benefits
  • Buy something that appeals to tenants
  • Buy peace of mind
  • Brand new property will generally make a great first investment.
  • Make sure you are buying reasonable value property

Madeleine Hicks can be contacted on 0413 733 617 or 3355 6845 for all your property investment needs.

Great gardens add value to your property.

A good idea when designing your garden is to add a focal point or feature. This can be a water feature, shaded sitting area, artwork or artefact.

These days there are many options available over the internet, in garden centres and even salvaging something unique from the tip.

Contemporary sculptures, large pots, collections of pots, screens and the use of metal are some ideas.

When renovating for profit it is important to get the floor plan right.

Consumer’s tastes and expectations change over time and what was a modern floor plan in the 60’s isn’t any longer.

Here are some tips for getting the floor plan right.

  • Minimum TWO BEDROOMS – by adding an extra bedroom you will add value.
  • ADD AN ENSUITE – gone are the days where families survive around the one bathroom. It still happens, however it isn’t the preferred option. Where possible add an ensuite bathroom or shower.
  • LAUNDRY indoors. Most buyers prefer an indoor laundry as opposed to the old “wash shed” out back.
  • LARGE OPEN KITCHENS – Buyers like large open kitchens with plenty of bench space.

Here’s a challenge. How fast could you pay your mortgage off? The sad realisation hit me earlier in the year that I’m not likely to get rich anytime soon. I know – why did I even think that would happen?

The only path to financial freedom is going to be to make sacrifices – some pretty big ones – and slash the mortgage as soon as possible. Then compound interest and investing will be able to actually earn us money. The sooner the mortgage is gone, or at least significantly reduced (given the size of mortgages these days!), the more money we will have to enjoy life.

Yes, it can be a little boring trying to pay a slab off the mortgage. But once you owe a lot less you’ll be able to use that spare money to do things that you want, instead of feeding it to the bank all the time. If you’re in deposit saving mode, the tips below will also be helpful.

#1 Stop Spending. Sounds simple, but do you find yourself wondering where all your money went? Does it leak out of your wallet like a bucket with a hole in the bottom? We’ve tried budgeting before but it just seemed too complicated. After a couple of weeks we’d get bored and the whole thing would go out the window. So now we’ve just decided to stop spending on pretty much everything – except the essentials, and a couple of luxuries we just can’t live without.

#2 No new clothes. In fact no new anything. Terrifying for some, I know. But we’ve decided to put a ban on buying any new clothes for two years, and most other goods too. I already have enough threads to dress the people of a smallish nation so it really shouldn’t be too much of a challenge. It’s just the boredom factor, really. Second-hand op-shop bargains are allowed and it has become surprising to see what you can actually find, if you have the time to look. And given we’re not heading out to pubs and cafes anymore, we have to do something with our time.

We’ve got little kids so obviously they can’t wear the same clothes for two years, unless we put bricks on their heads. But we’ve made it known that we welcome all hand-me-downs, and have also made a habit of perusing the op shops and second kids’ clothing markets. It’s amazing how many near-new clothes you find for just a few dollars, or items that even have the tags still attached.

#3: Lose the pay TV. It’s a luxury that is costing you a pretty penny. With the growing number of channels on free to air, there’s a lot more choice for nix on the box these days. And if you do the sums, you’ll probably find that even hiring a few DVDs a month is a lot cheaper than pay-TV. If there is something you must watch – sport for example – try to arrange to see it at a friend’s house who has got pay TV. As a last resort head out to the pub to see it – but be careful your beer bill doesn’t cost you more than your monthly pay-TV would have!

#4: Join the library. Now that you’re not watching as much pay TV you might have more time to read books – and you can do it for free from your local library. Check out their DVDs and CDs too. If your library doesn’t have what you want you can ask them to bring it in from another public library. In many areas this is free. In others they’ll charge about $2 or $3 to do it. Recently my three-year-old wanted me to get him a Gruffalo audio book. Instead of buying it, we asked at the library, and they got it from another library for us. We had to wait about two weeks, but it provided some great anticipation for my son, and cost us nothing.

#5 Quit the gym. Go for a walk/run/ cycle/swim instead. Now we are coming into spring, there should be ample chance to get out and about and exercise without having to pay for it. If you need motivation, try to arrange with a friend to exercise with. Make a date for something active, such as tennis, swimming or walking.

#6: Ditch the car. Get a bike, or opt for two feet and a heartbeat. I don’t mean sell the car, I just mean avoid using it when possible. Of course if you have two cars and think you can survive with just one, it might be worth offloading your second. Otherwise keep your fuel costs down by jumping on a bike when you can or for very short trips, walk. We have a Christiana trike, which is great for carting the kids around and also for heading to the markets on a weekend. If you live in an area where there are organised car pooling groups, it might be worth checking them out as an alternative to owning your own car.

#7: Entertain at home. Going out can be pricey, especially if you are buying alcohol too.

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Entertaining at home can be just as much fun, and stress-free (and cheap) if you ask everyone to bring a little something to contribute. If you do head out for a meal, look for cheaper restaurants where you can BYO alcohol for a low corkage fee.

#8: Home brew is a go-go. Since my hubby started home brewing a year ago, I reckon we’ve saved a small fortune in beer. If you’ve got a green bent, it’s potentially better for the environment too, because you’re reusing the bottles and not paying for all that heavy ready-made beer to be shipped about. If you are a wine drinker, try to save money by buying wine in bulk.

#9: Holiday close to home. Look for cheap options, such as camping, staying in caravan parks, or house-sitting for friends and family. Try to get something with kitchen facilities where you can make most of your meals – eating out can be a significant cost of holidays.

#10: Grow a few vegies. It can be pretty simple to grow some herbs in the garden (or pots) and a few basics such as spinach, lettuce and tomatoes. Pottering about watering and weeding them can also be relaxing after a stressful day at work.

#11: Babysitting circle. If you’ve got young kids, considering swapping babysitting services with friends. We have a magnet system where we use magnets as payment. Each family starts with four magnets. We often babysit the kids in their own home, in the evening. So one parent stays at home with their own children, while the other minds the second family’s children. It works a treat. You can arrange for the circle to work with several families or you could have your own arrangements with a couple of different families, as we do.

#12: Limit your mobile phone calls. If you’re bursting out of your mobile phone plan each month it might be time to examine your habits. Can you limit your conversations or cut down your texting to save money? Or could you email or skype someone instead?

#13:  Pre-made is pre-paid. Go for fresh with food where you can. Don’t get caught out buying pre-made things such as soup. It’s pretty easy to chuck a few vegies in a saucepan along with some stock powder and boil it up. Pre-made sauces (the add meat and vegies variety) can also be an expensive choice that could be replaced with a few basics such as stock powder, cornflour and garlic. It’s always good to make sure you’ve got a few basics in the fridge or cupboard so you’re not tempted to get take-away – even if it’s as simple as tinned fish, a cheap packet of pasta and sauce, or baked beans on toast as a stopgap.

#14: Buy a water bottle – and use it. Buying bottled water is crazy when you can refill from a tap. And resisting soft drinks, juice and flavoured milk will also save you plenty of money over time. Drink some water and eat an orange instead. It’s a lot cheaper, and better for your waistline too.

#15: Pack your own. Whether it’s work or an outing, there’s no doubt that food brought from home is going to be cheaper than lunch on-the run. It can get a bit tedious at times, so allow yourself to go really wild on occasion and buy takeaway. Otherwise bring your own and watch your mortgage start to be whittled away.

Original story by Carolyn Boyd, a property journalist and keen follower of Australia’s housing market.

WARMER weather will combine with other favourable conditions to fuel the appetites of potential property investors, according to Australia’s largest independently owned mortgage broker.

The latest Australian Bureau of Statistics housing finance report saw the value of investment housing loans drop for the first time in four months in June 2010 by a seasonally-adjusted 3.6 per cent to $7.3 billion, the lowest value reached since February this year.

However, this compared favourably to $6.5 billion in June last year.

Many market commentators say this buyer group had been holding back until the election was over and the traditionally strong spring selling season begins. They won’t have to wait much longer.

Mortgage Choice senior corporate affairs manager, Kristy Sheppard says that according to RP Data, Australia typically sees higher than average property activity from September through to November.

“This year should be no exception, despite a possible lag effect from the hung parliament,” she said.

“There are already more properties on the market than usual at this time of year.

“That is good news for prospective investors, as is property prices plateauing in many areas and dropping in some; rental prices increasing; strong population growth continuing; consumer sentiment rising and the sharemarket continuing to be unpredictable.

“Housing undersupply is a serious issue in Australia and ABS building approval figures show a fall for a third consecutive month in June to reach the lowest level since August last year.

“Hence, many investors believe the long-term potential of property as a stable asset class is excellent.

“With fewer new properties there is bound to be a pick-up in rental price growth — we are seeing that happen already.

Spring will see investors warm to real estate

“Australian Property Monitors Rental Market Report for the June 2010 quarter shows that from April to June, rental prices for houses rose nationally by 0.7 per cent, bringing annual growth to a relatively small, but very encouraging, 3.1 per cent.

“The unit market was stronger, with rents increasing nationally during the last quarter by 3.5 per cent, bringing the annual growth rate to 4.2 per cent.

“This bodes well for people who research the property market thoroughly, have a long-term strategy in mind and investigate all their finance options so they make a sound investment decision.

“Prospective buyers must be aware that lenders have tightened loan assessment criteria for investors as well as owner occupiers.

“Many have limited their loan to value ratios to 90 per cent of the purchase price for both buyer groups, with some going even lower.

“Also, genuine savings are essential, whether in the form of a cash deposit or existing property equity.

“Both buyer groups will need to plan ahead to satisfy their chosen lender’s requirements.

“Preparing for rate movements is also vital to the planning process.

“The cash rate will probably remain stable for the next couple of months but many lenders are signalling that funding costs may force them to raise borrowing costs independently of the RBA’s rate cycle.

“It will be interesting to see how many Australian investors spring into the property market over the next quarter and what effect, if any, lender rate rises will have.”

Source: www.goldcoast.com.au

The level of household debt in Australia has risen over the past three decades from less than 50 per cent of household disposable income to about 150 per cent.

Ric Battellino, the Reserve Bank of Australia deputy governor, has sought to allay concerns that this indebtedness means we face a risky unsustainable outlook. He said that 75 per cent of household debt was held by the upper 40 per cent of income-earners.

The bank’s governor, Glenn Stevens, had earlier given the RBA’s estimate of Australia’s dwelling price-to-income ratio, which found that dwelling prices in capital cities were typically 4.8 times disposable household incomes – about half the ratio put by the doomsaying international survey Demographia.

The Commonwealth Bank chief executive, Ralph Norris, was asked after the bank announced a $6 billion profit last week whether the housing doomsayers were nuts.

”I wouldn’t go as far as to say they’re nuts but I think that it’s very easy to make assertions based on averages,” he said. ”You come to a different view when you look at the fact that the incomes based around averages are not relevant to the average person that has a mortgage.

”So you know, we’re in a situation here where, in my view, the housing market in Australia is healthy.

”There will obviously be variations in price and we shouldn’t be surprised if there are, you know, drops of 5 per cent or 10 per cent, as there are obviously increases in value.

”But I think the range of value is not going to be anything that suggests a bubble and a collapse of the housing market in Australia.”

Deutsche Bank issued a research paper last week suggesting Australia’s house prices were not as vulnerable as doomsayers argue.

While acknowledging that on many comparisons Australia had a high house price-to-income ratio and high levels of household debt, the Deutsche Bank economists Phil O’Donaghoe and Adam Boyton argued the vulnerability of Australian housing was ”overblown”.

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”The housing market is perhaps the most common vulnerability we are asked about in the Australian economy,” the said.

”Combined with the role played by the US housing market in the financial crisis, investor awareness and suspicion of this key asset class is perhaps understandable.

”But we have long held the view that a broader assessment of the Australian housing market offers a more sanguine conclusion.”

The Deutsche Bank report noted that mortgage debt obligations in Australia were fully recourse loans and borrowers’ mortgage obligations extend beyond the mortgaged property, therefore providing a greater incentive for repayment relative to the United States.

Battellino suggests the strongest evidence on the sustainability of household debt was the low level of arrears. This was evident again this week in housing repossession data.

Repossession actions lodged in the NSW Supreme Court for the first six months of 2010 totalled 1198.

There were 3800 last year and 4000 during 2008. The peak year was 5300 in 2006.

Foreclosures in the US rose 4 per cent from June to July, exceeding 300,000 for the 17th month in a row, according to RealtyTrac.

The number of foreclosure activities, which incorporates all phases of foreclosure including default notices, scheduled auctions and bank repossessions, totalled 325,229 in July.

Lenders seized 92,858 properties last month, the second highest monthly total since RealtyTrac began tracking repossessions in 2005. Total foreclosure activities reached 1.65 million in the first six months of 2010.

Deutsche Bank noted that Australian house price concerns were ebbing. ”The pulse in housing finance has moderated in line with rises in the cash rate. The housing cycle points to a steady moderation in price pressures.

”Elements of the market which had been described by the RBA earlier this year as demonstrating elements of ‘considerable buoyancy’ have moderated. Auction clearance rates have also slowed.” From a peak of 72 per cent at the end of last year, auction clearance rates had fallen by last month to 61 per cent, Deutsche said.

Story by Jonathan Chancellor www.domain.com.au

 A new survey confirms high-income property investors have returned to the Australian property market with the intention to buy, a considerable shift from the same time last year. There has been a nine per cent increase in demand by investors looking to buy a property at the upper end of the market, according to the realestate.com.au’s Consumer Insights Report (Buy).

Twenty-five per cent of investors were searching for properties to buy in the $500,000 or more price range, up from 16 per cent in April 2009.

General manager of sales and operations for realestate.com.au Peter Wright says the research findings paint a promising picture of the property market.

“The report revealed one in two property seekers now believe the market is rising – a result not observed for two years,” he says. “Of those who believe the market is rising, the perceived reasons for growth include a seven per cent increase in investors returning to the market (35 per cent), a shortage of properties (54 per cent) and a growing economy (40 per cent).

Confidence returns for property investors

“Investors were also one of the top three homebuyer groups (39 per cent) that have sought pre-approval for finance with the intention to buy or build. First homebuyers and investors were also more likely to say they had thoroughly researched the market – up by 16 per cent and eight per cent from the last wave respectively,” Wright says.

The report also showed that investors were more likely to be male, aged 50 to 64 and living in high income households, while female investors were more likely to be younger, aged 25 to 34 years (30 per cent), compared to males (21 per cent). Both male and female investors were more inclined to come from double income households (54 and 50 per cent respectively).

The report is an in-depth survey that delves into the psyche of the Australian property buyer, covering topics such as buy, rent and share. The survey ran from May 31 to June 3 with 4082 Australians taking part.

Source: Australian Property Investor

Don’t let the slow real estate market keep you from having the home of your dreams. You don’t have to move, you just need to improve. And this is the perfect time to do so.
Never before have all the stars been so perfectly aligned to facilitate the remodelling needed to give you your perfect palace. Materials costs have been lowered to increase sales, building contractors have reduced their fees to attract more clients, and interest rates are the lowest they have ever been. If you’ve ever wanted to tackle a home improvement task, this is the time to do so.
Here are five good places to start:
1. Kitchen Remodel

— If your kitchen is tired and run down, this is a great time to remodel it. Cabinet manufacturers are pricing more competitively, granite prices have fallen, and contractors are itching to work. The contractors that were busy building homes during the housing boom are now fighting each other to get the kitchen remodelling jobs, and the homeowner is the one who wins. Since it is the kitchen that is said to sell the home, the improvements you make now will benefit you greatly when the market turns around and you put your home on the market.

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2. Bathroom Remodel — No longer just a place to shower and shave, bathrooms have been elevated to spa status. If your bathroom doesn’t measure up, this is a fantastic time to bring it up to date. Popular improvements this year include heated flooring, natural materials such as stone and wood, multiple shower heads with massaging jets, higher counters with vessel sinks, and soft colours with mood lighting for that ultimate spa experience.

3. Bedroom Addition — There is always great value in adding another bedroom to your home. Whether you create an ultimate master retreat, a welcoming guest room, or a home office, the extra room will always increase your profits when you go to sell. The long line of craftsmen needed to implement a room addition are all willing to bargain now to get your job. From the architect to the contractor, to the carpet salesman, they are all offering the best deals in years.

4. Decks — Outdoor entertaining is a huge trend with homeowners, and adding a deck is a great way to welcome your friends to the great outdoors. From a simple square deck to a multi-level masterpiece featuring an outdoor kitchen, materials and labour costs have come down to make this an ideal time to take on that outdoor living project.

Story by Barbara Green – http://www.housingwatch.com
Barbara Green is The Design Diva and owner of Sensibly Chic Interior Design. She creates one of a kind interiors that reflect your taste, lifestyle and budget.

S&P credit ratings expert confirms the strength of the housing sector but questions the benefit of high home prices for society

A managing director of a credit ratings agency responsible for scoring the quality of Australia’s mortgage debt has questioned the social impact of the nation’s soaring house prices, even while she confirms the strength of the sector.

Standard & Poor’s managing director of rating services Fabienne Michaux said the strength of Australia’s mortgage quality is a success on the capital markets but the high valuation of homes underlying the debt presents a long-term risk to the basic fairness in society.

“The social implication of house prices in the longer term is a key issue,” she said. “One of the things people were proud of was that (Australia) was fairly egalitarian and even and everybody had basic rights to housing and basic education and good healthcare.”
“Those are the sorts of things that start to chip away when you’ve got people who can’t afford to actually to find somewhere to put a roof over their head.”

 

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The median national city median home price was $468,000 in May, according to RP Data-Rismark, following years of nearly uninterrupted increases in value, driven by a shortage of available new land, a cumbersome building approvals process and tax incentives that reward owners to purchase and hold second homes.

There is an estimated 200,000 home shortage in the nation, expected to worsen as a recovery in building stalls. Ratings agencies such as Standard & Poor’s grade the quality of the mortgage debt that is repackaged and on-sold by local lenders to institutional investors.

While confirming the strength of assets underlying Australia’s residential mortgage backed securities market, which has issued $352 billion since 2000, Ms Michaux noted home owners are unwise to take too much satisfaction in becoming property millionaires.

“Ultimately the utility of the house is still that you’re living in it,” she said. “When you pass it on, it’s still one house. If you’ve got two kids you’ve got half a house each.”

Story by Chris Zappone Fairfax Digital

I’ve been thinking lately of setting up the lounge in the toilet. The dining room table too, and maybe the kitchen, if I can squeeze it in. There’s the obvious matters of hygiene to overcome but at a pinch, you can always do at least some of the ho-hum toileting stuff in the old kitchen sink, as shown by New York Post editor Col Allan when he was on Aussie shores.

In this chilly weather it’s been easy to sort out where the warmest, sunniest part of the house is. Yes, the smallest room in the house is also the brightest, while the places you actually want to spend time in (for longer than it takes to read the morning news or a trashy mag) are darker and cooler than a cave.

In an old house it’s easy to think ‘well that’s how they did things 100 years ago’. But the loo in question is actually in a newish rear extension that also houses the south-facing kitchen and dining area. Someone needed to give that draughtsperson a compass and show them which way was north.

It’s little wonder that we have one of the highest environmental footprints in the world (per capita) if this is how we continue to design houses. Short of hanging out in the toilet all day, or the bedrooms (which also face north), enticing though it is to sleep until lunch, the only way to get warm in the “dark zones” that are the living areas is to really crank up the heater. Last power bill? $600. And that’s not even including the gas for the main heater, so you can probably factor in another few hundred dollars there. If the house design is hurting my hip pocket, it’s also sucking up a more natural resources than it has to.

The place I’m talking about is a rental. If it was mine I’d be tempted to call in a builder to sort the mess out. But realistically, it’s much harder and way more expensive to fix something once it’s built rather than just plan it well in the first place.

Admittedly it doesn’t help  that it’s a home with gorgeous old high ceilings, up near which there’s probably a metre-thick blanket of warm air floating, hovering enticingly above our heads. But I can live with them, they look great and help keep the house cool in summer, even though they’re not recommended in modern green homes.

But a home that takes advantage of the lower-in-the-sky winter sun and baths the living areas in warmth is high on my wish list at the moment. Building codes such as BASIX in NSW have done a lot to raise awareness amongst home builders that the direction you face your main living areas is important. But it seems there’s still a fair way to go.

It makes sense that as energy prices rise over time, home buyers will also be prepared to fork out more for energy-efficient properties that keep them comfortable and cut their utility bills. We’re not there yet … but we can only hope the day comes soon. Then many more homes would be designed with such basic but vital things as the path of the sun in mind.

Carolyn Boyd is a property journalist and keen follower of Australia’s housing market.

She writes for domain.com.au