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.

July 2013 Newsletter

Welcome to our July newsletter

With the Reserve Bank of Australia (RBA) still assessing the effects of previous rate cuts, the central bank decided to leave the official cash rate on hold at a historical low of 2.75 per cent.

The RBA last cut the cash rate – by a quarter of a percentage point – in May, having made four cuts in 2012.

At the RBA board’s July 2 meeting, governor Glenn Stevens said global financial conditions “remain very accommodative”.

“The easing in monetary policy over the past 18 months has supported interest-sensitive spending and asset values and further effects can be expected over time,” Mr Stevens said.

“The pace of borrowing has remained relatively subdued, though recently there are signs of increased demand for finance by households.” Continue reading “July 2013 Newsletter” »

February 2013 Newsletter

Welcome to our February newsletter

Just as many leading economists predicted, the Reserve Bank of Australia decided to leave the cash rate on hold at 3.0 per cent at its February meeting.

As the effects of last year’s rate cuts continue to filter through the Australian housing and financial markets, the Reserve Bank decided to err on the side of caution.

“Sentiment in financial markets has continued to improve, with risk spreads narrowing and funding conditions for financial institutions becoming more favourable,” Reserve Bank governor Glenn Stevens said.

“The inflation outlook, as assessed at present, would afford scope to ease policy further, should that be necessary to support demand.”

The central bank’s decision comes on the back of some encouraging news in both the residential housing and mortgage/lending markets. Continue reading “February 2013 Newsletter” »

January 2013 Newsletter

Welcome to our January newsletter

With the New Year upon us, it?s time to reflect on 2012 and think about what we wish to achieve over the coming 12 months.

The New Year is the perfect time to evaluate your past decisions and assess your plans for the future.

Whether you?re looking to build an investment portfolio this year, renovate your existing home, or simply stay on the financial path you paved in 2012, planning is essential.

When creating your mind map for the year ahead you will need to consider a few factors from the year that was.

First off, the cash rate took a tumble in 2012, and this is expected to remain relatively low for the foreseeable future. In December, the Reserve Bank lowered the official cash rate to three per cent ? the fourth reduction for the 2012 period.

With the cash rate now currently standing at record low levels, there are plenty of savings available, with many lenders opting to pass on some, if not all, of the December rate cut to borrowers. Continue reading “January 2013 Newsletter” »

December 2012 Newsletter

 

Welcome to our December newsletter

Mortgage holders and home buyers received an early Christmas present this year, with the Reserve Bank slashing 25 basis points off the official cash rate and taking it to an all-time low of just 3 per cent.

In terms of interest rates, it has been a good year for borrowers, with more than 125 basis points cut from the cash rate over the past 12 months. In fact, we haven’t seen a cash rate this low since September 2009.

So, while the news came as little surprise to many leading economists, home owners and potential buyers have an extra reason to celebrate this festive season.

Several lenders have been quick to pass on the rate cut, with many more expected to make a move over the coming weeks.

Whether you are an existing mortgage holder or are looking to enter the property market soon, rate reductions can only mean one thing – savings. Continue reading “December 2012 Newsletter” »

November 2012 Newsletter

Welcome to our November newsletter

Just as Green Moon was a surprise winner on Melbourne Cup Day, the Reserve Bank’s decision to leave rates on hold at 3.25 per cent left many industry pundits shocked and surprised.

For the past six years, the RBA has been determined to take some of the limelight from Australia’s race of races by adjusting the cash rate each November.

This year however, they have broken tradition and seem happy to leave rates on hold – employing a ‘wait and see’ approach for the next few months.

Speaking of the decision, Reserve Bank governor, Glenn Stevens, pointed to early recovery signs in both the European debt crisis and Australia’s lacklustre housing market.

“Financial markets have responded positively over the past few months to signs of progress in addressing Europe’s financial problems, but expectations for further progress remain high,” Mr Stevens said. Continue reading “November 2012 Newsletter” »

October 2012 Newsletter


Welcome to our October newsletter 

With the Reserve Bank of Australia (RBA) lowering the cash rate by 25 basis points at its October meeting and fixed rate home loans at a five year low, now could be the perfect time for borrowers and investors to evaluate their position in the property market.

The RBA’s decision to lower the cash rate for the first time in four months was unexpected, with many economists expecting rates to stay on hold in October.

Reserve Bank governor Glenn Stevens said, “The outlook for growth in the world economy has softened over recent months, with estimates for global GDP being edged down, and risks to the outlook still seen to be on the downside.

“Investment in dwellings has remained subdued, though there have been some tentative signs of improvement,” Mr Stevens said.

“Interest rates for borrowers have for some months been a little below their medium-term averages Continue reading “October 2012 Newsletter” »

September 2012 Newsletter

Welcome to our September newsletter

Home buyers and investors alike could snag themselves a bargain this spring, with early forecasts flagging suppressed property prices and lower mortgage rates over coming months.

For the third consecutive month, the Reserve Bank of Australia’s (RBA’s) Board decided to leave the official cash rate unchanged at 3.50 per cent at its September meeting.

Reserve Bank Governor Glenn Stevens said the RBA will continue to take a sit and wait approach as the effects of rate cuts made earlier in the year trickle down through the national economy. Continue reading “September 2012 Newsletter” »

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