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Property 2010

Tuesday, March 9th, 2010

Interest rates are on the rise again, I just got my notice in the mail. Since just before Chistmas my monthly repayment has increased by around $300. It would make anyone wonder whether investing in property is currently worthwhile. The economy has certainly taken a lot of us for a wild ride but investment is still a necessary part of your future financial security. Learning as much as you can about investing and creating your own wealth will be of benefit to you and your family, we can no longer rely on government resources as we have in the past.

Is property still a valuable source of financial security? Does it still offer the same rewards as it has in the past? Is it a viable way to create wealth in our current economy?

Yes, property is still looking good. Australia is still struggling to keep up with it’s population growth, there are still not enough properties to go around, this is a plus for property investors. Tighter lending criteria in the banking industry is another plus if you are considering using property investment for wealth creation.

The housing market runs on a 7-10 year cycle with many properties doubling in value during this time, so be prepared to wait, using a buy and hold strategy. Taking advantage of increasing equity over that time (by buying more properties) can assist you in building a healthy property portfolio that will help fund your retirement. Learn as much as you can about the property market and the area you wish to invest in, study the various strategies open to you and find the one that suits you best. Read books, attend seminars or look into various homestudy programs any or all of these will assist you in making the most out of your chosen investment strategy.

Some questions to consider and answer when thinking about property investment in 2010…

  • Is negative or positive gearing better for you?
  • What are the benefits of an interest only loan?
  • What is the best way to purchase the property, in your name, in a trust or in your spouse’s name?
  • What are the investors important checklist criteria when choosing a property?
  • What do renters want?

These are just some of the points to consider, the answers may vary depending on your situation and your goals. Getting expert advice is always a good idea. Property is still a worthwhile investment in 2010 providing you do your research, know what to look for and are making an educated informed decision.

Have an Impressive Day

Teresa and the Team at

AustraliaWealth.com.au

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Residential Property for Wealth Creation

Thursday, January 7th, 2010

Residential property is low risk and offers good returns it is tax effective and can be easily managed by most investors.To build a successful property portfolio devise and stick to an investment strategy.

There is a simple formula that is used by many successful investors and has been for as long as property has been available. The simple formula is to buy income producing property that is financed appropriately to achieve maximum tax benefits while you are working. As the value in the property rises and your cash flow increases you are able to refinance, puchase another property and increase your net worth.

Many property investors use a buy and hold strategy to create wealth over time reinvesting the equity to create more wealth. With long term property investment, initial price, interest rates and timing are less significant as time is on your side.

If you want to be successful in property investing it’s a good idea to seek advice from experienced successful property investors. Be responsible for your own education there is plenty of information available.

One strategy to use is to first buy your own home, be patient and allow some equity to grow as well as paying as much as you possibly can onto your mortgage.

Then use the equity in your home to secure an investment property. The best type of loan here is usually a fixed rate paying interest only but do your research first to see if this will be your best option. Look for a median-priced property in a good location and in a region that has long term sustainable growth (large town or city). Make sure the property will meet your needs as well as a tenants.

As cash flow and values continue to increase you can buy more properties using the above method and build a property portfolio. Budget carefully, make sure you know how to utilise all the tax benefits available to you, set reasonable rents and maintain your properties.

When you are ready to retire you are then in a position to sell one or two properties to reduce or pay off your debt and have rental income to continue to maintain the properties and provide you with retirement income.

Fear can stop you making the most of your life but knowledge acquired and then used can help you create wealth and a greater lifestyle for your family. It is best to understand that wealth does not happen overnight but with careful planning and commitment true solid wealth can be achieved. Take responsibilty to learn all that you can especially from those who have already achieved what you desire.

Have a productive day

Teresa and the Team at

AustraliaWealth.com.au

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Know Your Market

Thursday, December 17th, 2009

 Investors need to understand the market they are investing in, whichever one that may be. It is important to research facts, data, potential profit and loss as well as fees and charges, rather than rely on speculation or observation, if any of theses are overlooked you place your capital at risk.

Some facts associated with property investing are outlined below,

  • Demand for housing is determined mainly through demographic changes. These changes include:- population growth (increased migration, higher birth than death rates), changes in household size (through divorce, children leaving home).
  • The rate of new dwellings being built is increasing - an analysis conducted by the Commonwealth Treasury estimated that the demand for housing will increase to 200,000 per annum by 2010 while new dwellings are expected to reach only 150,000 to 160,000. Add to that a shortage of available land and the result is an imbalance between supply and demand that can only result in Australian property values increasing.
  • Affordability is always an issue.                                                                       When is the right time to enter the market?                                                   The answer to that is always, ‘Now is as good a time as any’. What you must do though is look at ways to organise your finances and understand what way is going to work best for you.

The Government has extended first home owners grant assistance into the first half of 2010 to encourage entry into the property market so if your in a position to take advantage of this. Another option you may consider is to buy and rent. This strategy means you buy in an area you can afford with the intention to rent the property out, the property has the potential for capital gain over time and can often offer a high rental return. Meanwhile you rent in an area that suits you for location and work, with the freedom to relocate as desired. The idea is to get into the market now and stay there for the long term. If, as a buyer you can combine solid research with a medium to long term outlook you will find many opportunities offering good capital growth.

So don’t get discouraged by listening to reports of economic turmoil a few wise men in the past have created massive wealth in similar times, just be open to finding the right oportunity for you.

Power Thought

I am open to the opportunities that are always around me.

Repeat this thought often.

Teresa and the Team at

AustraliaWealth.com.au

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The Potential in your Equity

Sunday, December 6th, 2009

It’s quite common these days for Australians to use the equity in their homes to create wealth, let’s go over a few of the ways property can take you on the road to a financially secure future.

Property Investment Strategies

  • Buy a second property, then another
  • Upgrading your home every few years
  • Renovating
  • Redeveloping
  • Paying off your mortgage quickly
  • Buy commercial property
  • Joint venture property purchases

Determine what type of strategy you are more comfortable with as they all involve different amounts of commitment and investment. A combination of strategies over time could provide you with variable returns that balance out well. Your choices will of course be in relation to your circumstances and depend on whether you have more time or money available, whether you are after capital growth or cash flow.

One of the common forms of investing for many Australians is using the equity in their current home to buy a second property, then once the equity is sufficient in the second property, buying a third. Income can be obtained through rent which will also assist in paying off the mortgage as well as providing taxation benefits. It is possible to build up a substantial real estate portfolio using this method.

If buying another property seems daunting or out of reach investing in your own home could still give you financial benefits and get you started. Making any amount of extra payments on your mortgage will reduce the amount of interest you have to pay and you will pay your loan off a lot sooner. Loan products can vary quite a bit though, so check yours thoroughly and make sure you understand the terms fully.The added benefit here is that you will be creating more equity which can be a great asset to you in creating wealth. Many Australians have become financially independent through property investing and it is possible for you too.

Power Thought

I am creating wealth in my life.

Repeat this to yourself often

Have a very Happy Day

Cheers

Teresa and the Team at

AustraliaWealth.com.au

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Property Selection Criteria

Tuesday, December 1st, 2009

Successful property selection lies in choosing good properties – ones that will rise in value significantly and rent out easily as well. How do you choose a “good” property? The most basic thing to remember is that you are buying an investment property – not a family home. This means you must meet the needs of those likely to rent in that area, features that appeal to tenants may not appeal to you. Aim to buy for the potential tenant not for yourself. These people are your target market, identify the target market meet their needs and you will never be short of tenants.

Consider the following four points when choosing property:-

  1. Price ~ The best investment properties are not always the most expensive. The best properties tend to be in the lower end of the market it is much more stable and it has the most demand for both buying and renting. There are always buyers and renters in this price range, so find the median price in the area (the price in the middle – half sell above, half sell below) and buy in the lower half.
  2. Age ~ Whether you buy an old or new property can depend on your needs as an investor both can be good investments. There are a few areas to consider before you decide – depreciation for tax benefits, maintenance is usually less in newer properties, location is vital to ensure escalating rental returns and property values and visually appealing to tenants.
  3. Position ~ The location of a property is one of the key elements of successful property investing. You want an area that has a good reputation you may choose either end of the market but an area with growth potential, new developments and suitable amenities is important.
  4. Management ~ Once you have chosen a property you need to decide how you are going to manage the investment. There are two choices: manage the property yourself or employ the services of a professional property manager. There are pros and cons in both choices, if you do it yourself you save the 6% to 10% management fee but you must deal with the tenants yourself and any problems that arise.  Professional management cost you a little but they will also take care of any issues that arise. It is often a good idea to have some distance between owners and tenants.

Keep these points in mind when looking for property, continue to learn as much as you can to maximise your investment potential and you are on track for creating wealth.

Power Thought

My future is determined by the choices I make – I choose wisely

Repeat this to yourself several times today

Cheers

Teresa and the Team at

AustraliaWealth.com.au

Reference

Jamie McIntyre What I Didn’t Learn in School but Wish I Had, Homestudy Program

Photo

Julie A. Wenskosk’ s portfolio is:

http://www.freedigitalphotos.net/images/view_photog.php?photogid=73

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Keep Your Mortgage!

Saturday, November 28th, 2009

photo_8651_20091012Getting rid of the mortgage is every homeowners dream but that doesn’t always mean it’s the best move.

Several things should be considered if you’re in a position to pay off your home loan. It can sometimes be more profitable to keep your mortgage account open and just keep making the minimum repayments. There is always a chance the equity you have in your home will be needed, if so and if  your loan has a redraw facility, then you have easy access to funds and the extra cost for a new loan can be avoided.

Also, there are costs associated with paying out your mortgage so it’s not a bad idea to keep it going unless you are 100% sure you will never have a use for the funds again. Even if you only keep a small amount of, for example, $1000,the interest payment on that would only be around $6- at today’s rates and you would also have access to funds for investment when ever you’re ready.

Reducing your loan when interest rates are high by making extra repayments, when you can is a good idea, it will lower the total  interest payment. This is especially good to do at the beginning of the loan when your payments are mostly interest, an extra principal payment per month added on to your regular payment can make considerable difference.

If you’re in a position to use this as a wealth creation strategy be sure not to go beyond what you can comfortably manage to repay. Whatever investment method you choose you should always do your own research, make sure you’re aware of all the costs involved and get independent advice.

Power Thought

I am growing towards wealth.

Repeat this to yourself often

Cheers

Teresa and the Team at

AustraliaWealth.com.au

Photo

Danilo Rizutti:

http://www.freedigitalphotos.net/images/view_photog.php?photogid=851

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What You Should Know Before You Buy Property

Sunday, November 22nd, 2009

photo_5299_20090314One of the most important rules to follow when buying property is to make your profit when you buy.

It’s a good idea to establish some criteria to follow so you know exactly what to look for.

Following are a few tips from Jamie McIntyre’s homestudy course that will get you headed in the right direction.

1. Get to know your local real estate agents

Getting to know the agents in the area you want to buy, if you can, will give you an idea about how they operate. Different agents use different strategies so find one that understands what you are doing and what your criteria is. If you want them to take you seriously don’t waste their time, let them know what you want and only make serious offers. If they understand you mean business, and they know what you are looking for the right agent will work with you to achieve what you want.

2. After an auction

One of the best times to buy property is after it has been passed in at auction.

If a property is passed in at auction buyers will realise they must, unfortunately, lower their expectations. It is often the right time to get a property at the price you want to pay.

3. Timing

There are seasonal times in the year when the property market is more active. Buying in the off season is when you are more likely to get a bargain. The off seasons tend to typically be around:

  • November, December, January
  • July
  • Holidays – Easter and Christmas

4. Work in progress

Roadworks or other major constructions can often put a lot of buyers off buying in that area. If you can see past the noise and dust to what the finished work will be you may see it adding value to the property down the track.

5. Before listing

If you can find a property owner ready to sell, but before they list with an agent, you will have cut out the agents commission and possibly lowered the price considerably. You have to be proactive to find this type of opportunity but if you keep your eyes and ears open the opportunities are out there.

6. Special Levies

This applies to units where the body corporate is raising levies. Some owners may not be able to afford the increase and may be keen to sell. Keep your eye open for units that are having work done on them the work will often create a need for this increase and you may be able to negotiate a good deal for yourself and an owner.

These six tips from Jamie will give you an idea of a few ways to think about and approach buying property. Of course they are not exhaustive and we encourage you to continue to increase your knowledge base in this area if you want to succeed, beyond your wildest dreams, and create wealth through property.

Power Thought

I am destined for success

Repeat this to yourself several times today

Cheers

Teresa and the Team at

AustraliaWealth.com.au

Photo

Tom Curtis: http://www.freedigitalphotos.net/images/Yorkshire_g136-Conisbrough_p5299.html

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Increase the Value of your Investment

Thursday, November 19th, 2009

We have already established that investing in the Australian property market is a great way to create wealth for yourself and your family let’s now look at adding value effectively.Bali001

If you want to add value quickly then you will know that renovating will certainly do that but you must keep the cost low yet still achieve a significant lift in value. Australians love to renovate and do-it-yourself can be very rewarding it can also be disastrous without some guidelines to follow.

When you are dealing with an investment property especially profitable, effective renovations are not always easy to achieve. Be very careful before you purchase a property in need of repairs that you know exactly what you are dealing with, budgets can easily be blown away in this area.

Here are some general rules to follow to help you decide if a renovation project is going to be worth your while. Please remember when renovating an investment property that you must not become emotionally attached, this is not your home, it’s business and you’re in it for profit.

Rule No.1…The best returns are obtained when you improve the cosmetic appearance of the property for the least expense.

Rule No.2…Gaining value in property renovation is most likely to occur in a rising property market. So you have to be careful you don’t become trapped at the end of the property cycle.

Rule No.3…If you are planning to sell your renovated properties, make sure you have an understanding of property prices. This ensures you don’t spend needlessly on unnecessary improvements, while at the same time you can maximise your profit potential.

Rule No.4…Take advantage that many people don’t have the time or inclination to renovate. These are your target market because these people want to live in or rent a property that is in good condition – one that they don’t have to do anything to. Having said this, most renovated properties are sold to busy couples or investors.

Rule No.5…Bear in mind that many people do not have the skill to renovate with style on a budget. Improving your skill in this area will increase the amount of value you can add to a property at the least expense. Experience makes this task less arduous and risky.

Rule No.6…If you are planing to renovate, ensure you have a flexible loan set up that allows you to access money as you need it. A revolving line of credit is one of the best ways of accessing your money through a loan facility.

Rule No.7…Before beginning the whole process make sure you have a budget for the renovations and a plan of what you intend to do. Once settlement has occurred you do not want to waste time or money trying to orgasnise quotes and tradesmen when this could have been organised prior to settlement date.

Never enter a property agreement unless you are sure the transaction is going to be profitable. This means you need to be very confident you know all the cost involved in buying, selling and renovating the property.

References

Seven Rules of Renovation  part of What I Didn’t Learn in School But Wish I Had, Homestudy Program by Jamie McIntyre with Leigh Barker, CPA PNA ACIS SIA(Aff)

Today’s Power Thought

‘I am open and receptive to new avenues of income’.

Repeat this several times today.

Have an awesome day

Teresa and the Team at

Australia Wealth

www.australiawealth.com.au

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What to Look for when Choosing Property

Wednesday, November 18th, 2009

Select properties in suburbs where the market is rising, don’t waiSeychellest until you hear about it in the media look for the following characteristics yourself:-

  • Strong demand for both owner occupied and rental properties.
  • Supply is diminishing, land in the area is limited.

The difference between supply and demand drives the market in property just like any other market.

Buy a property that is structurally sound make sure you check the following points before making a decision:-

  • No structural work required.
  • No electrical or plumbing work required.
  • Only cosmetic work that can be done quickly with little expense is necessary.

Look for properties that have been renovated within the last 20 years and that are close to amenities for easy rental.

If buying a unit or apartment:-

  • Make sure it is in a good building.
  • Check the body corporate details and make sure they are easy to work with especially if you want to renovate.
  • If possible choose a building that has been renovated, it will give an indication of the possible resale value.
  • Be aware that unit prices can vary in the same building due to different features, facilities or views.

Check all external surfaces:-

  • Including balconies, windows, doors and any concrete slabs.

Look for a property that may have a special feature:-

  • Good lighting and space.
  • View, size or parking.

Obviously you are looking for a property that is going to appeal to tenants and buyers. Location and the type of property will give an indication about what features are important to have available in the area you are looking in. Take the time to select carefully making sure the costs to get the property ready to resell or to rent out are going to fit within your budget.

And now the most important points to ensure you purchase a profitable investment:-

  • Capital growth potential and
  • Cashflow.

Do the necessary research and take the time to look at a number of properties until you find the best property you can.

Today’s Power Thought:-

‘Every thought I think is creating my Future”

Repeat this to yourself several times today.

Cheers

Teresa and the Team at

Australia Wealth

www.australiawealth.com.au

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Property Investment Strategies

Tuesday, November 17th, 2009

There are three basic property strategies successful investors use to build profitable portfolios :-

  • Buy and hold
  • Buy, renovate and hold
  • Buy, renovate and sell

Buy and Hold

If you consider this a method that would suit you it is important to choose the property wisely. It has been recorded that the Australia property market doubles every seven years however  Home2making a wise choice when you purchase will ensure consistent and high growth over the long term. This is an excellent method if you are happy to create wealth over time and should form at least  part of your property portfolio.

Buy, Renovate and Hold

If you choose this method then make sure you follow some fundamental rules for renovating to add value without over spending. Adding instant value by carefully chosen improvements to a property will also increase its rental return. However it is possible to lose money with this method if you choose a buy a property that needs or you decide to do expensive time consuming renovations.

Buy, Renovate and Sell

If this method excites you I can understand why, it can be a way for you to make quick profitable returns but it also requires that you understand some basic principles. The same rules apply as above with regard to buying wisely and how you choose to renovate, also emotion must be left out of the equation. If you hold the property for less than one year the capital gains tax is more than if you hold it longer so take that into account when doing your figures.

Note: Always be aware of the tax you will be required to pay when selling an investment property.

Power Thought

‘I prosper wherever I turn’

Say this several times throughout the day to help keep you focused and positive.

Teresa and the Team at

Australia Wealth

www.australiawealth.com.au

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