Houses vs apartments – which is the better investment?

It’s a debate that’s been raging amongst property investors for years – which is the better investment, a house or an apartment? Median price growth over the last ten years would suggest that houses offer a slightly better capital growth rate than apartments, but the difference is so slight that this would hardly sway your opinion on what to buy. So where do we go from here – what’s the better investment in today’s market?

Is the value really in the land?
Many people who swear by their strategy of only investing in houses reason that they do so because land is the most valuable part of the asset. But the truth is that land value is also an important consideration when purchasing an apartment.

In both cases, land value is largely determined by the location of the property. The closer to the city the property is located, the more likely the land value will increase over time. Land values in inner city areas tend to rise more consistently than those in outer or rural areas, so these are important considerations when you are trying to decide what to buy.

Houses have their own land and this can offer the option of future redevelopment and add to the potential resale value. But this isn’t true in every case. You need to consider the location of the house to see if the land will make a significant difference to the eventual sale price.

On the other hand, apartments in the right location will always be highly sought after. Inner city land is more frequently occupied by apartments than houses – and that’s often where the greatest growth potential in land lies. Whilst you do not own the land outright when you purchase an apartment, you do own a share of it, and this can potentially increase the value of an apartment more than for a house that is not so conveniently located.

Consider the costs of holding an investment property
When trying to decide between investing in a house or an apartment, other things to consider include the cost and hassle that goes with maintaining your investment. A house with land requires a lot more effort to maintain – you’ll constantly be mowing lawns and caring for the garden and this can prove to be quite expensive over time.

Apartments are considerably easier and cheaper to maintain in this respect. Any garden areas are usually common areas and as such are maintained by the body corporate. Whilst you do have the expense of body corporate fees, the body corporate is responsible for much of the maintenance that goes with owning an apartment and saves a considerable amount of money and inconvenience for investors.

In addition to a garden, a house often has higher maintenance costs all round. Unlike an apartment, you are solely responsible for all of the costs involved. You will need to maintain both the interior and exterior of the house, the roof, fences, garden, driveway and more. Whereas, with an apartment, most of your ongoing maintenance costs will be on the interior of the property.

Choose a property that will be popular when you rent or resell
Over the past ten years, national median house prices have increased by 81 per cent and national median apartment prices have increased by 72 per cent. But these figures probably don’t show you a very good picture. In every market, there have been cases where apartments have clearly outperformed houses and vice versa.

There will always be demand for both houses and apartments. Some people, particularly families, will prefer a house. Others will prefer to live in an apartment. The trick to successful property investment is to do extensive research to assess each opportunity on its individual merits.

Smart investors look for two key financial drivers when selecting an investment opportunity – rental returns and capital growth. Choosing a property in the right location can be an important factor in providing both these elements of a good investment, whether it’s a house or an apartment.

Locations close to the city, business districts, employment centres, education facilities, entertainment and transport are always highly sought after. This makes them easy to rent and easy to sell. Apartments in these areas often provide a more affordable entry point and could offer a better investment opportunity than a house of the same price in a much less desirable location. The most important thing is doing your research to determine which investment option will give you the best returns.

Whether you’re planning to invest in a house or an apartment, we’re here to help you with the financial considerations involved and help to ensure that you’re making a good financial decision. We’ll also help you structure your finances and get the right loan for your personal circumstances and financial goals. So don’t procrastinate another minute, if you’re considering making a property investment in 2015, give us a call!

Savvy buyers look to buy off the plan.

article_3According to Master Builders Australia, the next three years should see in excess of 200,000 new properties under construction. With all these new developments under way, opportunities to purchase units and apartments off the plan also look set to increase.

Buying off the plan can offer some significant advantages, particularly for first home buyers and property investors. In most states, buying off the plan incurs considerable stamp duty savings. And potentially, capital growth on the property can occur prior to settlement as most developers offer lower prices and financial incentives to get in on the project early.

If you’re a property investor, buying off the plan can also have some extra tax advantages. You may be able to claim depreciation on your tax for items like fixtures and fittings, so some of the costs can be recouped over time. (But this does differ from person to person according to your circumstances, so it’s important to consult with a tax professional to find out more.)

Many people are put off by the idea of buying a property that hasn’t been built yet. There seems like a lot of things that could go wrong! However, buying off the plan gives you the opportunity to negotiate with the developer on price, what’s included and how the finished product will look, so it may give you a more satisfactory result than buying an established home. 

How to come out ahead when buying off the plan.
Developers need fast, early sales to get a project off the ground – so it pays to get in on the project at the start. Together with stamp duty savings and government incentives, this could put you well ahead on the value of the property you’re buying.  But there is no guarantee that the price you pay will reflect the market value of the property when it’s completed.

To make sure you pay the right price, you will need to do some homework about the area you are buying in. Consider other developments in the area and the number of new properties that will be coming on to the market at the same time as yours. Over supply could reduce the value of your property so you should check with the council to see what other developments are underway, talk to some local real estate agents and seek professional advice.

Additionally, when buying off the plan, the right choice of property can make your purchase worth more than the others in the same development whilst actually costing the same amount. Carefully consider all the plans in the development before making a choice  – you should take the time to check out the property aspect, views, access and so on. This could help to maximise your profit potential.

Research the developer and builder.
It is wise to choose an experienced developer with a good reputation in the industry. Ask to see some of the other projects the developer has completed and talk to the property owners if possible. You can also visit the company website and ask for financial information about the developer’s business. Once satisfied about the reputation of the developer, ask for the license number of the builder that will be used to construct the property. You can then run a check on local government websites to make sure the builder is qualified to complete the project and has no outstanding disciplinary actions or prosecutions against his business name.

Understand the terms of the contract.
When you buy off the plan, you are buying a property that does not yet exist and may take as long as two years to complete. In an off the plan contract, you are provided with plans and specifications of what the developer intends to build and construct as the finished product. 

The contract should provide highly detailed plans that include specifications for every item involved, from a floor plan layout with measurements in millimetres, to specifications for the fixtures and fittings, right down to the name and model number of the appliances that will be installed in the kitchen. Also make sure your contract includes specifications for all common areas, lifts, gardens and car parking and specifies additional costs like annual strata fees.

Off the plan contracts must also include a ‘sunset clause’ which defines the amount of time the developer has to complete the project. Make sure the time allowed is realistic, an 18 month sunset clause is common, so you should be wary of longer dates.

It’s important that the words of the contract match your understanding about what you will be getting for your money. Before signing or leaving your deposit, it’s a good idea to go over it with a legal professional who understands property law.

Make sure of your financing before you sign the contract.
With up to two years between placing your deposit and settlement, it may be tempting to postpone organising the finance until after you’ve signed the contract, but this could result in you losing your deposit if finance cannot be arranged.

Many lenders provide long term loan approvals for off the plan purchases. Talk to us early about organising your finance for an off the plan purchase or any other property investments, to make sure you’ve got yourself covered!

The importance of research for property investors.

article_2One of the biggest mistakes people make is believing that any property is a good investment opportunity. Many operate under the misconception that there will be little or no risk to their money if they invest it in bricks and mortar, but a successful investor will be the first to tell you that not just any pile of bricks will do. They’ll also tell you that you should never believe what the salesman tells you – and that’s because a sound strategy and doing your own thorough research are the keys to success when building wealth through property investment.

What should you research first?
The first thing you need as a property investor is a sound investment strategy based on your personal financial situation and your personal risk profile. To create this, you will need to research your financial position by consulting qualified professionals that you can rely on to provide you with an honest assessment and sound advice. 

Engaging a team of experts at each stage of the investment journey will reduce your risk of making costly errors. When it comes to advice, it’s important to differentiate between free advice and sound, unbiased advice. Who you trust is important, so you should research every person you deal with very carefully. 

As an industry accredited Mortgage Broking professional, you can rely on our advice to be sound and unbiased. We put your interests first and we will also refer you to other professionals we trust to help you along your investment journey.

People you can’t trust to give you unbiased advice are the people who have a vested interest in influencing the purchasing decision you make – vendors, sales people, property spruikers, developers, investment seminar organisers, vendor’s real estate agents and so on. These people’s only goal is to part you from your hard-earned money. 

You should also be wary of advice from people who are not educated about the market or don’t understand your financial position and objectives.  There’s always someone you know who has to put their .20c worth in, but you should take everything they say with a grain of salt.

Research your property markets
Once you’ve got your strategy, finances and a team of advisors sorted, the next step is to locate your first investment property. As mentioned earlier, not just any property will do. A common error is assuming that all property will enjoy capital growth – but property prices can go down as well as up, so you’ll want to research the property market you choose, before you take the next step of choosing an actual property to buy. 
Smart investors know that Australia is not just one property market. For example, in this financial year, capital growth in median house prices in Sydney and Melbourne has far outstripped capital growth in all other capital cities. Remember, you don’t need to invest in property close to where you live – you can choose a property from anywhere in the country. 

Research which areas have the most capital growth potential. For example,  find areas where population growth and demand for housing looks set to outstrip housing supply during your planned investment period, as this will help to ensure prices go up and not down.

Research which property to buy
No two suburbs or streets are alike in any property market. The property market you choose will have pockets of property with more capital growth potential than others. You need to research your chosen area to find these pockets – they’ll be areas where public transport links are close or will be established soon. They’ll also be close to amenities such as shopping centres, business centres, parks, schools and hospitals. 

Generally speaking, to support capital growth potential, you need to make sure your investment property is going to be popular with prospective tenants and will be easy to sell when the time comes for you to cash in your investment. Avoid areas where the crime rate is increasing and look for areas on the improve – those adjacent to popular or trendy suburbs are a good place to start.

Research the value of the property you choose
Once you find a likely investment property, the next thing to do is make sure you’re not paying too much for it. You can research the value of the property by getting it valued by an independent professional valuer. You can also compare the recent sale prices of similar properties in the area to do your own valuation. Once you ascertain the correct price for the property you wish to purchase, negotiate hard to get it for the lowest price you can.

Make sure your research is ongoing
Once you purchase your investment property, you’ll need to review and assess it annually to check that it is achieving the level of performance required to meet your investment strategy. That means performing tasks like researching its performance in the marketplace with regard to capital growth, and researching the rental market to make sure you are getting the maximum rental returns. 

Last but not least, you’ll need to keep a constant eye on your financial position and the loan market. We can help you assess when the time is right for you to access the equity in your investment property to make your next purchase and also help you to make sure you’re accessing the best loan  product for your needs.

If you need access to reliable property market data, ask us for assistance. We can also refer you to the right people to assess your tax position, legal requirements and more. Remember, the first thing you need to research is your financial position and that starts with your mortgage broker. So why not give us a call to chat about your investment plans today?

Get ready for the spring auction season!


article_1Interest rates are now at their lowest point for several decades. Property listings are up – despite the traditionally quiet winter months – and auction clearance rates and private treaty sales are higher across all capital cities than they’ve been for some time. All indicators that the spring auction market is going to be fast, furious and very competitive!

Be ready to move fast on a good opportunity. After a long period of sluggish growth and backsliding, consistent increases in median house prices over the past twelve months have convinced a lot more vendors to put their property on the market for sale. And whilst we may be looking at vastly increased housing stock levels this spring, we’re also looking at a very competitive loan market that makes it possible for a lot more people to buy property.

Being in a position to move quickly when you identify a property you wish to purchase is more important than ever before. To make sure you’re ready to go when the right property comes into view, there’s a few things you can prepare ahead of time. 

Financing. Whether you’re a first home buyer, up-sizing or down-sizing, or in the market for an investment property, getting your financing pre-approved is key.

We’re here to help you analyse your financial position, so you’ll know exactly what you can afford to spend. This will help you to narrow down your search to properties you can actually afford, saving time and a great deal of frustration.

When you arrive at the auction, knowing how high you can bid ahead of time will help you formulate a bidding strategy that will give you a better chance of success. And as auctions have no cooling off period or a ‘subject to finance’ clause in the contract, getting your finance pre-approved could help you avoid making costly mistakes.

 We’ll also help you identify exactly the right loan for your needs and personal circumstances – as no one wants to end up compromising their lifestyle and cash flow to meet mortgage repayments. There are lots of different loan options available and selecting the right one could not only facilitate your next property purchase, but ensure you are comfortable with your repayments and in a great position to buy more property in the years to come.

Professional advisors. Purchasing a property is not a simple process. There are a number of important steps you need to take and professional people you’ll need to consult with. Lining up your professional advisors before you begin your property search will save you time when you identify your opportunity and enable you to move quickly so you don’t miss out. To make sure your buying process is smooth and hassle free, ask us for a referral for:

  • Building and pest inspection companies local to your search area, so you can get the formalities out of the way fast when you identify a property to buy
  • Professional valuers – so you’ll be able to set a limit for the property when bidding
  • Buyer’s agent – particularly useful if you’re not confident about bidding at auction
  • Solicitors and conveyancing professionals.

Create a buying strategy. Spring is promising to dish up a string of ‘Super Saturdays’ when as many as 1,000 auctions could be held in any capital city in any given weekend. Unless you’ve prepared yourself well by creating a buying strategy and doing your research to narrow down your search, you could find yourself in the daunting situation of looking through hundreds and hundreds of property listings every week for one you like. If you’re not careful, you could spend all your time searching the listings and none of it inspecting properties!

Talking to us will help you set a budget. From there you need to decide which suburbs to look in. If you’re looking to purchase a home, you’ll need to consider your lifestyle and select the suburbs that meet your needs with regard to your work, children’s schools or perhaps near to family and friends. 

If you’re an investor, you’ll want to focus on the capital growth potential of the suburbs you choose. Bear in mind that your local market may not offer the best opportunities – Sydney and Melbourne have already enjoyed speedy capital growth over the last 24 months, so you might want to consider other areas that are yet to take off.

Line up your Buyer’s Agent. Getting advice from an experienced Buyer’s Agent may be very beneficial to you, whether you’re buying a home or an investment property. They can help you formulate your buying strategy, search the listings for suitable opportunities to view, organise property inspections, negotiate a price and close the deal. 

If you simply don’t have the time or experience to effectively perform these tasks yourself, a Buyer’s Agent could save you a lot of time and money and help to ensure you don’t miss your perfect opportunity whilst buying conditions are good. If you’re an investor, there’s a good chance the cost of a Buyer’s Agent will be tax deductible – and two heads are better than one, you can cover more ground more effectively with some expert assistance.

If you’re excited to get started on your spring property search, don’t hesitate to give us a call. When we meet, we’ll help you to get organised and do what’s necessary to ensure you’re in the very best position to buy when you find the perfect place.

September 2014 Newsletter

Welcome to our September newsletter

It looks like we’re in for a flying start on the spring auction season this year, with some of our property markets remaining surprisingly active during the traditionally quiet winter months.

This unusually high activity has been stimulated by the Reserve Bank of Australia keeping the official cash rate on hold at 2.5 per cent for over a year, creating a very competitive loan environment with some lenders offering their lowest interest rates ever. What’s more, analysts agree we can expect these market conditions to continue well into next year, with the RBA citing “a period of stability on interest rates” in its first September meeting.

While property market activity has remained high around the country over winter, Sydney and Melbourne have been outperforming other capital cities. Over the last quarter, Melbourne’s median house price surged 6.4 per cent to $523, 750. In the last week of winter alone, there were a massive 888 auctions held in Melbourne with a clearance rate of 71%.

Sydney’s property market has also been running hot, with median house prices rising by 5 per cent to $650,000. In the last week of winter there were 796 auctions held with a clearance rate of 81.8%. 

In other capital cities, growth in median house prices has been much slower with only Canberra showing growth above 2 per cent. The auction activity has also been much slower, but winter activity has still been strong with Canberra experiencing a clearance rate of 72.4%, Adelaide 66.1%, Brisbane 47% and Perth 46.2% in the last weekend of August.

In other property news, building approvals for new home constructions has risen by 9.4 per cent over the past year. This brings the number of new dwelling starts to a record 194, 652 this year. Master Builders Australia has also forecasted that a further 200,000 new properties will come onto the market over the next three years.

Large numbers of new properties coming onto the market should help to keep house prices somewhat in check, however high levels of investor activity in the Sydney and Melbourne property markets are driving more rapid capital growth figures there than in other capital cities.

Spring will bring many opportunities to enter the property market for first home buyers, investors and those just looking for a change of residence! Analysts are predicting a string of “Super Saturdays” where we can expect the number of properties up for auction to top 1000 in most capital cities.

Now is a great time to get your finances sorted in time for the busy spring selling season. The loan market is currently offering some of the most competitive rates on record, so give us a call today.

Sincerely , Nick Foale

Increasing rent the right way

When was the last time you evaluated the rental value of your investment property? To keep up with market trends, it pays to review the rental value of your property on a regular basis. If it’s been a while and you feel you need to get more out of your investment property, here’s some useful information to help you increase rent the right way without upsetting your tenants.

article_3Evaluate the market to decide a fair rental value

You may have an idea of how much rent you would like to receive for your property, based on what your mortgage and ownership costs are. Unfortunately, rents are determined by several factors including demand for your property, the amenities it offers and the state of the local rental market.

The easiest way to determine a fair rent for your property is to ask the advice of a qualified independent real estate agent in your area. They will be able to give you a fair indication of what similar properties in your area are yielding in rent. Make appointments with more than one real estate agent and ask them to come to your property to give you an evaluation.

It also pays to research the market yourself. Look up online listings to compare other rental properties with your own. You can also attend open days of rental properties in your area to see what amenities they offer for the rental price and how your property compares.

Update your property’s amenities

Tenants these days look for updated appliances and amenities when considering a rental property. If your property’s hot water system is ancient or the heater is inefficient and costs a lot of money to run, for example, then tenants will not be prepared to pay a premium price for your property. Make sure all the basics are up to date – are the carpets worn out? Have the drapes and blinds been replaced in the last 5 years? Is your property properly insulated? Does it have a decent cooker?

Also remember that regular maintenance expenditure is tax deductible and making sure your property is properly maintained will help you to obtain the maximum rental price. Conduct regular maintenance and your tenants will be more accepting of any rental increases you may decide to implement.

Upgrade with a renovation

If you want to take your rental property into the next rental bracket, you’ll need to do more than make sure your amenities are up to date and your property is properly maintained. Find out what the more luxurious properties in your area are returning in rent and decide if it is worth the expenditure to renovate your property to take it into the next rental bracket.

Two key areas to focus on when renovating your investment property are the kitchen and bathroom. Your renovation doesn’t have to be expensive, mind you. A stylish renovation of both kitchen and bathroom can be achieved on a budget with good design.

Look at adding luxuries to increase rental values. Install a coffee machine, a dishwasher or a split level air conditioner, for example. You can expect to raise the rent on your property by $10 – 20 per week for each luxury appliance that you install, provided they are modern and new.

Wait until the lease expires

During a fixed lease term, the rent cannot be increased unless you have included a clause in the lease saying that it can. Most standard leases do not include these clauses and that means you will have to wait until the end of your tenant’s current lease to increase the rent.

In a market where rental prices are rising rapidly, opt for a shorter lease term of 6 months. Alternatively, include rent-rise clauses in the lease if it is to apply for longer than a year.

When the lease is approaching the end of its term, send your tenant a written notice that you will be increasing the rent and state the new amount. In most states, you are required by law to give at least 60 days notice in writing of a rental increase, so send out your notice before the lease expires.

If your tenant wants to renew their lease, they must agree to the increase in rent. If you raise the rent in small increments at the end of each lease, the tenant will be much less likely to leave than if you raise the rent by a large amount. Review the rent on your investment property whenever a lease is due to expire or every time a tenant leaves.

Remember, owning a rental property is a business investment. The most successful property owners have a business plan and use property management professionals to help them manage their investment. Property management costs are usually tax-deductible and getting professional advice and assistance from a reputable property manager can save you thousands and make the work of managing your investment property simple. If you need a referral to a reputable real estate agent or property manager, please let us know. We’ll be happy to help.

Top tips for auction success

So you’ve done all the legwork and located the perfect property purchase. The problem is, if the property is going to auction, finding the right place to purchase is only half the battle. The auction process can be a scary and emotional experience, for both buyers and sellers alike. But if the numbers of auctions conducted this spring are anything to go by, you can expect to be thrown in the deep end of the auction process if you’re looking to make a property purchase. Here’s a few important tips to help you succeed at auction.

article_21. Get a valuation

A lot of time and heartbreak can be saved by understanding the true market value of the property you want to purchase prior to auction day. Remember, the guide price advertised by the real estate agent is likely to be much less than the property actually sells for. Getting an independent valuation from a registered valuations expert or a lending institution will help you to get a realistic price and prevent you from wasting money, time and effort pursuing a property you can’t afford.

2. Make inspections prior to the auction

Inspecting a property several times before purchase is always a good idea. But in the case of an auction, if you are really serious about purchasing the property you should consider having it thoroughly inspected by a building inspector as well as a pest inspector before deciding to attend the auction.

This is because an auction purchase is unconditional, and you will have no opportunity to complete these inspections afterwards. Going to auction without completing these inspections is risky and could result in you overpaying or having to pay extra to complete repairs after purchase.

3. Know the rules

The rules of auctions vary from state to state and auction to auction. If you are seriously interested in a property you should obtain the contract of sale and/or auction contract from the real estate agent or auctioneer and give it to your solicitor to review prior to the auction.

This will give you a clear understanding of the auction conditions, so you can prepare yourself for auction day. These documents will provide you with information such as the number of days to settlement, the amount of deposit required, exactly what is included in the auction price, the rules of your particular auction and so on.

By bidding at the auction, you agree to the terms of sale. However it is possible to vary the auction terms beforehand on the advice of your solicitor and with the agreement of the vendor. Reviewing the contract prior to the auction will give you the opportunity to ask for changes.

4. Get your financing in place

If you win at the auction, you will be required to pay a deposit on the spot so take along your chequebook. The deposit is usually 10% of the purchase price of the property, but may vary so you should remember to check the auction contract.

Additionally, the winning bid at an auction is a binding contract. That means you should have your financing in place before you bid at the auction, so talk to us as soon as you find a property that you’re interested in buying. To be financially prepared, you will need a written loan approval in hand as well as your deposit.

5. Set a bidding limit before you go

With your property valuation and written loan approval at the ready, you should be well prepared to set your bidding limit before you go to the auction. Remember this is your walk-away price and you should stick to your limit even if the auction bid goes as little as $1,000 over. Setting a bidding limit is one thing, but sticking to it during the heat of the moment may prove to be a bit tricky!

Remember that going over your limit may involve over-extending yourself financially and may also be risky in terms of securing the additional finance later. If you’re at the auction and the bidding goes over your limit then stop bidding immediately and consider leaving the auction to stop yourself putting your hand up again.

If you reach your maximum bid and the property is passed in, you may be offered the opportunity to negotiate with the vendor over price. If this is the case, remember your limit still applies.

6. Get familiar with the auction process

The capacity to bid with confidence is important when attempting to secure a property at auction. Attend as many auctions as you can prior to your auction day so you are fully familiar with the auction process. Some real estate agents recommend that you attend as many as 15 or 20 auctions, so you can eliminate the possibility of failing through inexperience on the day.

Make notes about the strategies implemented by the winning bidders. Take notice of the price a property is advertised for and the price it actually sells for. Talk to other bidders about their opinions of the auction and ask questions of the auctioneer so you understand how they identify bidders.

If you don’t feel comfortable bidding, consider engaging a professional purchasing agent. It may also be possible to get a more experienced friend or family member to bid on your behalf.

With these handy tips, you’ll know exactly what to do to be a success on auction day. Remember that bidding at an auction is not as difficult as it may first appear. And whilst the auction process may appear to favour the vendor, you can make it work in your favour if you have the know-how. The first step in succeeding at auction is having your financing in place, so talk to us today.

Thinking of getting a granny flat?

In recent years, there has been an increase in the number of granny flats being built across the country. Traditionally, the granny flat was a great way of taking care of ageing parents, but these days the benefits are many, not least being a great way to add value to your home, or for adding additional rental income.

article_3What is a granny flat?
A granny flat is a popular Australian term used for a secondary dwelling on your property. They can be free standing structures, attached to your home, or rooms inside your home that are converted to separate accommodation.

Generally speaking, granny flats are usually smaller than the primary home on the block, because most councils restrict them to being only 60 square meters in size. They also must be self-contained, which means they must have their own entrance, bathroom, kitchen, bedroom and living areas. Most council’s regulations regarding the definition of a granny flat include:

• Granny flats can only be built on residential zone properties
• Granny flats must have unobstructed pedestrian access
• The block must be at least 450m2 to build a granny flat, and
• The owner of the granny flat must also be the owner of the primary dwelling.

Why would you build one?
The major benefit of building a granny flat on your property is the potential for extra rental income. With rental housing becoming increasingly scarce in capital cities, a granny flat can be a solid source of revenue for property investors and home owners alike.

In some suburbs of Sydney, a granny flat can generate as much as $450 per week – however in most other cities you can expect to receive between $150 – $350 a week depending on the size and location. In most cities, a two bedroom granny flat can achieve a similar weekly rent to a two bedroom unit.

If you are a property investor, building a granny flat and renting it out could be an inexpensive way of increasing your income yield. But it could also be a great way to generate extra income from your own home, particularly if you’re looking for ways to pay off your mortgage sooner and it has the added benefit of adding value to your home.

Before making a decision to build a granny flat on your property, it’s probably a good idea to talk to some local real estate agents to assess the demand for smaller properties in the local rental market. If you want to make an income, you need a ready supply of tenants willing to provide it. A real estate agent can tell you how much rent you might expect to receive for a granny flat in your suburb.

Making it happen
The most ideal properties for building a granny flat are corner blocks, because both dwellings on the property can have their own street frontage. This minimises privacy concerns and will make your granny flat much easier to rent. So if you’re looking to purchase a property and considering a granny flat to help pay off your mortgage, you should look for a corner block or one with front and rear street access.

The next step is to check with the local council to be sure that building a granny flat will be permitted on your block. Remember that to build or extend a property anywhere in Australia, you will need a permit. In some areas of Queensland, it is only permissible to build a granny flat if a family member will be living in it, and in some built up areas, housing density restrictions prohibit them entirely.

You should also carefully consider the costs of building your granny flat before making a commitment. You can get in touch with local builders and specialist granny flat construction companies to get a ball park figure. Alternatively, if you have a large house you can convert rooms inside the home into separate accommodation, which could be an inexpensive alternative to a free standing building.

Get your financing in place
It is important to have your finances in place from day one if you are embarking on any kind of construction or renovation project. Constructing a granny flat won’t cost as much as building a new home, so you may be able to finance it by accessing your equity, or perhaps by increasing or refinancing your current loan. Alternatively, you may be able to take out a construction loan to fund the project.

If you’re considering building a granny flat or doing any kind of renovation on your home, just give us a call. We’ll be able to determine how much you can afford to spend on your project and help you get your budget and financing in place before you begin, so the whole process goes more smoothly.

Do I need a building inspection?

You spend a lot of time and effort searching for the perfect property to buy. When you find the right one, it can be very exciting and you can even fall in love! Buying a property can be a very emotional decision, so it is important to get professional advice to ensure you remain sensible and objective. A building inspection report is therefore a very important part of the decision making process when it comes to purchasing a home or investment property.

article_2Why do I need a building inspection?
Paying for a fully comprehensive building inspection report is a great way to ensure you are buying the best property for your budget and not purchasing a property that will require endless repairs and expense. It should provide you with an evaluation of the current condition of the property, all of its components and the items that are installed in the house.

There are three good reasons why you should get a building inspection report before you purchase any property:
1. To know in advance if there are any problems with the property, so you are able to budget for repairing them.
2. So you can use this information to negotiate a lower price for the property.
3. To find out if there are any major structural problems that may put you off purchasing the property entirely – like a roof that needs replacing, for example.

Getting a building inspection report is also a great way to stay sensible when you’re getting caught up in the excitement of purchasing a home. You’ll be able to enter into negotiations knowing the present condition of the structure of the house including the foundations, subfloor, roof void and external roof – things that might be expensive to repair.

A building inspection will also review other elements of the property including visual inspections of structures such as sheds and pergolas, interior plumbing, electrical and air conditioning systems. If you want to be really sensible, you may also request that the building inspection include a condition report on things like windows and doors, flooring, ceilings and walls and other temporary fittings.

When should I get one?
Ideally, a building inspection should be performed before you sign a Contract of Sale, or prior to auction if that is going to be the method of sale. In other kinds of sales, it is standard practice to insert a clause into the Contract of Sale stating that the purchase is subject to building and pest inspection reports.

That way you have the option of asking the vendor to address the problems and pay for repairs prior to the purchase being completed, or renegotiate the price of the property to allow for the repairs that must be performed.

It’s important to remember that a proper building inspection report must be performed by a professional – a licensed builder, surveyor or architect. You can source these professionals through businesses who specialise in providing building inspection reports for homebuyers, or ask us and we may be able to help you with a referral. Whoever you use should provide you with a report that complies with the Australian Standard (A4349.1).

What should I expect from the report?
When a building inspector comes across a problem that may be an important defect or even a structural problem, they will recommend you seek further advice from a professional specialising in that area before proceeding with the sale. Usually, they will not provide you with a quote on the repairs.

The building inspection cannot cover everything and so it may also be a good idea to get a pest inspection as well. Problems like termites often cannot be detected by the naked eye, so this is particularly important in areas where termite activity is high.

You should also remember that a building inspection is not a method of preventing future problems occurring with your home. It is inevitable that you will have to budget for maintenance and repairs as a normal part of home ownership. A building inspection will only give you a report on the current condition of the property so that you can make an informed decision about whether or not to buy it.

For more information about locating a reputable company or qualified building industry professional to perform your building inspection, please get in touch. We maintain relationships with many professional companies relating to the purchase of your home, so please don’t hesitate to contact us if you require any assistance.

Conveyancing explained

If you are going through the property buying process for the first time, you may think that conveyancing is just another formality and expense that complicates the purchasing process. In fact, a good Conveyancer simplifies the process for you, explains the (sometimes complicated) legal requirements of buying a property and most importantly, protects your legal interests.

article_1In this article we will take a look at the process of conveyancing. ‘Conveyancing’ is the term used for the legal and statutory processes required to effect the transfer of the title of ownership of real estate from one person to the other. The preparation, execution, verification and lodgement of the very numerous legal documents required to actually make your new house yours, are all part and parcel of the conveyancing process.

Because these processes can be detailed and time consuming, it is recommended that you choose a reliable Conveyancer or Conveyancing Solicitor to do the work for you. Although this is not a legal requirement, a professional Conveyancer will have the experience and specialised knowledge you need to navigate the specific regulations, laws and requirements unique to your state and local area.

What will a Conveyancer do for me?
A reliable Conveyancer or Conveyancing Solicitor will protect your interests during the transaction and make sure everything runs smoothly. In addition to ensuring your deposit is kept safe in an escrow account, they will conduct searches and inquiries on the property on your behalf. They do this to discover if anything affects the property, such as proposals by government departments, illegal buildings, boundaries, outstanding rates or taxes, liens against the property and to discover any other issues you may need to be aware of.

It is recommended that you appoint a Conveyancer or Conveyancing Solicitor early on in the purchasing process so they can guide you through the legal requirements. They will immediately commence the preparation of all the necessary documents required to facilitate the sale and final settlement.

What documentation is involved?
Although there are a lot of details to cover off during the process of transferring a property title, a typical conveyancing transaction involves three stages where you may need professional advice:

• Before the Contract of Sale is signed
• Before completion of the transaction
• During/after the settlement of the Contract of Sale.

In addition to the title searches and background research your Conveyancer will conduct on the property, your Conveyancer will make sure the Contract of Sale is correct and that it lays out all the property details and conditions that have been agreed upon by you and the vendor.

In many states of Australia, the transaction will also require a Vendor’s Statement. In this document, the vendor is required to disclose any details of the property which may affect the sale. This can include body corporate fees, special conditions, encumbrances, taxes and rates and anything else that may affect the price or your decision to purchase. Your Conveyancer will investigate this document and verify the legal aspects of each detail against their research to ensure the vendor has made full disclosure.

Another important part of the process is the Transfer of Land. It includes all the particulars of you and the vendor and is submitted to the relevant state revenue office in your area, where it will be stamped after the payment of stamp duty and then lodged in the Land Titles Office.

Please note that the laws, procedures and documents involved may vary depending on where the property is located. A good Conveyancer will explain the meaning and importance of each process to help you completely understand what’s involved.

How do I find a reliable Conveyancer?
As we all know, the best way to find a reliable professional is to ask people you know. We will be able to give you a referral to a Conveyancer or Conveyancing Solicitor, but you should probably check out several and compare prices. Here’s some questions you should ask prospective Conveyancers:

• What type of property do you specialise in?
• What will it cost?
• On settlement day, what time frames can I expect?
• How will you communicate with me, and how often?

if you need to get started on locating a reliable Conveyancing professional, or you’re on your way to your first home purchase, please give us a call. We’ll be happy to help.