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

House and Land Packages

Hello Fans, Followers, and Family of LMM!

By now you may be familiar with my Monthly Newsletter which focuses on the latest news, trends, and happenings in the financial world. To round out the information we at LMM provide you, I’m pleased to announce “The Builder’s Blog”, LMM’s latest edition to our series of blogs!

At the helm, will be Dan Coperich, a Professional Building and Development Consultant whom I’ve known and had the pleasure of working with for the past three years; providing a full suite of building and financial services to our clients. Over to you Dan!

Thanks for the warm introduction Nick, and I’ll begin by saying I’m very excited to have the opportunity to share whatever information and tips I can through this blog. I’m always one to keep a positive attitude toward the market, reminding myself there are always opportunities in any climate.

With interest rates stabilizing, this is a great time to step back and examine your own personal finances by meeting with your accountant, your financial planner, your partner (who may very well be your accountant and planner too!), and a certain broker who I may have mentioned at the start of all this =) Continue reading “House and Land Packages” »

So what is this NRAS thing anyway?

If you’ve been toying with the idea of purchasing an investment property or adding to your portfolio as part of your New Year wish-list, the National Rental Affordability Scheme (NRAS) is Continue reading “So what is this NRAS thing anyway?” »

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