Invest in property with a suitable plan

in

Choosing to invest in property is a decision that should not be taken lightly and requires a lot of prior thought and planning. The process in itself is life changing for most new investors and can completely change how you live your life.

Owning an investment property has many benefits and can improve your wealth over time but throughout the lifetime of your investment there will be added pressures and challenges that might make or break you.

I believe a suitable Property Investment Plan is the key to reducing such challenges and pressures while also ensuring the success of your investment.

So your next question might be; what could be a suitable plan for me to consider before I invest in property?

The truth be told there is no easy answer to this question. Your plan will need to reflect your current/future needs and aspirations and is completely personal.

Here is a list of some of the things that I think should be considered and carefully planned prior to investing:

You finances

  • How much can I pay?
  • Do I need a loan or should I use my own savings?
  • Do I need to have tenants and how long can I service my property in the case of no rental return?
  • Should I get wage insurance?
  • What hidden costs may come about and how can I manage them?

Type of property/location

  • What do I want?
  • Where do I want to invest?
  • Will I move in and make it my principal place of residence after a certain amount of time or sell it off sooner or later?
  • Do I want high rental yield or do I want higher property growth?
  • Am I happier with higher growth on property value?
  • Do I want my investment positive or negatively geared?

Current lifestyle and future lifestyle

  • Do I want to travel more and will I still be able it afford it?
  • Do I need to employ professionals (accountants/property managers, etc.) or will I look after everything myself?
  • Do I have time to manage my investment?

On the whole there is a lot to think about when investing. I’ve found planning ahead in general reduces my stress and gives me a clear view of what I need to do. It helps me stay motivated and places me in a position of power, where I decide, what I want and how I want to do it. You don’t need to plan every contingency but I think it’s critical that some form of plan is put in place before investing or making any major change to your life.

 

The 5 Major Drivers of Property Prices

in

If you joined the real estate bandwagon to grow your wealth, it is crucial that you understand the drivers of property value. Instead of just concentrating on your chosen home’s functionality and accommodation, take a look at it as an investment and get know the factors that will influence its performance. So for starters, here are the six key factors driving housing prices up that you should carefully consider when choosing a property.

1. Supply and Demand

This pair is the number one dictator of prices in any market or industry. In the case of the real estate sector, the supply and demand ratio is influenced by population change. When a suburb becomes popular, for instance, more people will want to live there. However, given that the housing industry is not prepared for the sudden rise in interested investors (with only a few dwelling available), prices increase such as the case of some Australian properties in Sydney, Melbourne and Brisbane. Generally, according to the Australian Bureau of Statistics report, the country’s population growth trends don’t change rapidly. However, factors such as increased immigration quotas, infrastructural development and better employment opportunities can rapidly drive population up, providing investors better opportunity for making profit. So, better watch out for those signs.

2. Affordability

Affordability is defined as the relationship between house prices, interest rate and income. If wages cannot sufficiently pay for the monthly mortgage plus the interest rate, homeowners would seek another place where they can enjoy a better lifestyle given their current income. They would find a new city or suburb where their mortgage will not eat a big chunk of their monthly wages. A good example of this is Brisbane, which has seen migration of homeowners from Sydney. The result is a significant price increase, causing median house prices in Brisbane to reach almost the same level as Melbourne.

3. Infrastructure Development

Improvements in infrastructure can make areas more attractive or accessible to live, thus, driving property prices up in those locations. A few examples of such are the opening of M2 and M7 freeways in Northwest Sydney that made the area more accessible, resulting in increased in housing prices and rental returns; the re-development of Mt Hotham Village in Victoria that comes with limited land release, which surely affects prices; and the construction of a new aluminium smelter in Gladstone, Queensland that provides new jobs and attract people looking for working opportunities, resulting to housing price increase.

4. Baby Boomers

In 2010, there were over 3 million people ageing 65 years or more in Australia. Population projections expect them to reach 20% by 2030. Five to ten years from now, most of these Baby Boomers are expected to leave the workforce and buy Australian properties seaside locations to enjoy better lifestyle. These relocation could increase the demand for beach houses, pushing property prices up in seaside towns.

5. Resource and Employment Boom

People go where better paying jobs can be found. Take for example the mining areas of Perth and Darwin where mine workers are in demand and receive higher salaries. The result is a positive lifestyle change for those workers, who then seek to buy bigger and better homes or maybe invest in properties. The result is increased in demand and housing prices.

Having identified what factors drive home prices up, doing your homework may lead you to the property that will give you better ROI in the long run.

Do You Really Need to Hire Property Investment Consultants?

in

A lot of people often mistake investment consultants Australia or in other places as having the same function as an agent or broker. Although they are just as knowledgeable about the estate market, with plenty of advice to provide, they are more objective. If there is one professional who definitely have your best interests at heart, these would be property investment consultants.

 

What else can they do for you?

 

Provide objective advice

Whatever a consultant tells you is not influenced by how much commission they will make or for other personal interest. After all, you are paying them for their services and their expertise. If you’re unhappy about what they’ve done so far, you can choose not to pay for a poor job. It also helps if you work with reputable investment consultants Australia, so you don’t end up wasting time and money. Put simply, a consultant will provide you with unbiased advice and service.

 

Work solely for you

Property investment consultants may be part of an organisation, but you will be their boss once you hire them. Your satisfaction is something they will guarantee, since they don’t have a personal agenda of their own. So what you get is an honest and reliable estate advice. What more can you ask for?

 

Have insider knowledge

Different locations mean different estate markets. If you want to close the best deal, it is important that the professional you work with knows the neighbourhood and the local market like the back of his hand. Well, you will never go wrong with partnering with investment consultants Australia. If you happen to be a foreigner, the same professionals can help you achieve your investment goals.

 

Access to various specialities

Most consultants specialise in certain fields, including legal, market research and analysis, and property valuation. Some property investment consultants even focus primarily on locating lucrative and appropriate investment ventures. Depending on what you really need at the moment, you can choose a specialist or a general consultant. Either way, you will reach your property investing goals.

 

Get detailed reports

Real estate can be a good source of income, but not all properties will have good yields. If you are looking for a specific investment venture, you should hire investment consultants Australia as they can provide you information or a detailed report about bulk buying, selling opportunities, equity partnerships, joint ventures or developer closeout, all of which can make or break your investment plans. From the data presented, you will have a good idea as to the basis of your consultant’s advice. This will tell you that he is not just making things up.

 

Handle negotiations on your behalf

Sure, a broker and estate agent can also negotiate for you. Unlike property investment consultants, however, they have personal agendas and commissions to consider, which could affect the negotiation process. But with a consult, you are assured that the exchange will almost always be in your favour because he only has your best interest, and he will do anything to protect you from scams and losses.

 

As you can see hiring investment consultants Australia will work to your advantage. So don’t hesitate to hire one today.

 

5 Things to Ask Yourself Before You Invest in Australian Property

in

Tempted to go back in to real estate? Here are 5 questions you need to ask yourself before jumping on the investment bandwagon.

Can I afford to put down a 20% deposit?

Gone are the days where it is cheap and easy to borrow 100% of a home’s value. The financial crisis has forced banks to tighten their credit policies and be selective who they give their money to. That is why if you are testing if you can afford a loan and if you are financially ready to pay a monthly mortgage, see if you can afford to pay 20% of the principal amount.

Who can I turn to for money?

Buying any investment property in Australia is easy if you have your finances ready. For one thing, it gives you great negotiating power, giving you enormous opportunity to squeeze a better price. For another, it gives you freedom to buy that dream home once you’ve found it or stumbled upon it, giving you great advantage against competing buyers.

Do I know what I want?

Knowing what type of house you want, what location and what price you can afford to pay will not only save you time but also money. So do your homework, check out the property for sale in Australia, get any data available about the investment property you want, the recent sales in a particular area, and the changes in the local demographic.

Can I trust my income?

Buying a house with a mortgage can be a big financial responsibility. You will have to take away a portion of your monthly income for payment to lenders. This can throw your budget out of balance if you don’t have a reliable source of income that can cover this additional expense. And of course, you must have an adequate safety net for emergencies such injury, pregnancy, theft and the like.

Am I ready to settle down for at least 5 years?

Renting gives you flexibility to move out at a short notice. Ownership doesn’t. It may take 5 years to 7 years before you can recover from the purchase cost. So be prepared to settle down for at least five years.

Property investment needs planning and preparation. So before you start to invest in Australian Property, be sure you are ready to buy.

How to Invest in Property and Fail – Common Investment Mistakes

in

Property investing has been to be a ticket to wealth for the many. It has also led many to bankruptcy. Let us take a look at how many of us invest in property to fail, and how we can avoid these common mistakes in the future.

Monkey see, monkey do

Many investors bought a house for sale but didn’t really know what to do with it. But, why buy in the first place? Well, it’s what everybody did to get wealthy, so might as well follow suit. The problem with this is that not knowing what you want to achieve sets you up for failure from the very start. So before buying, make sure you have a strategy! Here’s a few:

  • Buy an undervalued home and resell it on an open market for a profit.
  • Be a house flipper; buy one that needs improvement, add value to it and re-sell at a higher price.
  • Develop new flats or houses and let or sell.
  • Buy a duplex home; live on the first unit and rent out the second.
  • Invest in multiple properties and let them out.

Pick a strategy that matches your investing profile and get really good at it. Then maybe, when you’re ready, combine one or two strategies later.

Follow the buzz

Another common mistake many investors make is not doing proper research on the property they want to buy. They listen to the buzz; they choose what’s popular. For example, relying too much on the “hot spot” lists printed on glossy magazines without taking into consideration that by the time those magazines hit the news stand, savvy investors are already moving out of those so called hot spots.

If you are an aspiring real estate investor, make sure that the news you are reading or listening to is not only informative but also timely and relevant to the current market condition. Do your own research. Talk to a property consultant and get information about the local market conditions.

Too many bad debts

When investing in property, especially if you are buying to let, it helps to have a safety net against occupancy dips, repairs and maintenance, and the like.

This can be achieved by limiting your bad debts. The latter can eat up your cash flow, which supposedly can help you create a safety net against your operating costs.

Where’s the raft

If your investment did not proceed as you would like it to be, how do you plan to get your money out of a potential loss?

Failing to plan is planning to fail, so plan your exit strategies. As your circumstances, investment goals and market conditions change, you’ll want to have various options in case things don’t go in your favour.

To get a head start in real estate investing, sign up for our free e-book where we answer some the most important questions you must ask any property consultant before jumping on the property investment bandwagon.

How to Invest in Australian Property Even with a Low Income

in

Real estate investing is a pipe dream for many aspiring investors. After all, buying a property is unlike any other shopping escapade, right? The price to pay is high, not to mention it is a long-term commitment that requires years of budget discipline and saving.

However, while investing in a flashy, beachside house might be out of your reach right now, you can definitely find an affordable option for you if you have enough money for the deposit and can prove that you can afford to get a loan. Yes, a low income does not mean you cannot pay for that dream home. Give it a shot and you might be surprised at what you can borrow and what you can afford to do.

Of course, you have to think creatively about it.

Focus on Profit Not on Property

 Often, when told that they can only borrow limited amount of money, low-income property investors in Australia set a limit on the type of homes they can buy—mostly the really cheap ones.

If the reason you invest in Australian property is to build wealth, your concern should be whether a profitable deal is possible for you and, if not, what you could possibly do to achieve it. Also, don’t judge a property’s profit potential based on face value. In other words, avoid making an assumption that just because a certain house is bigger than the other then it will earn higher and, therefore, it’s what you should be buying.

“That is one of the biggest mistakes: too many people go searching for a property rather than for a profit. It is important that they distinguish one from the other. Because you could be investing in a shack and making more profit than someone investing in a four-bedroom house”, said Yza Canja from Property Rocket.

Prove You’re a Saver

 There are many ways to get a bank approve your loan, and among which is to prove that you have genuinely saved at least 10% of the property’s cost.

A steady saving pattern of over six months or a year helps you prove to lenders that you are good with handling your finances and that you are disciplined when it comes to saving.  Majority of Australian banks have their books comprise mostly of home loans, and they will be more than glad to fund a financially responsible homebuyer.

Determine Your Borrowing Capacity

The first thing any aspiring property investor in Australia should do is to compute their borrowing capacity. A home loan could mean 15 to 25 years of financial obligation—a certain deduction to your monthly income. Are you financially ready for this responsibility? Try to do the math.

You can use ASIC’s mortgage calculator to determine how much your repayments will be as well as get an idea how you can repay your loan sooner.

Choose a Creative Investment Strategy

Let’s face it, the monthly repayment can be quite costly. But you can easily deal with this financial responsibility using some creative property investment strategy.

One option that might work for you is the buy, live in, improve and sell strategy. This entails moving into a place, doing some minor renovations or improvements (mostly cosmetics) and then selling the house at your convenience. You don’t have to sell quickly, because your goal is to sell at a profit. This is by far the easiest way to create an investment portfolio and build wealth in property.

Foreign Investment in Australia’s Property Market on the Rise

in

Foreign investors have been flocking on the Australian shores since 2010, and this trend is showing no signs of slowing down in 2015 despite the already sky-rocketing prices of properties in Australia, particularly in major cities such as Sydney, Melbourne and Brisbane.

As of the September 2014 quarter, foreign demand for new homes surged to a new high, accounting for almost 17% demand for new properties across the country. They were also more active in the established property sector in the same quarter, accounting 8% of the demand, according to National Australia Bank’s residential property survey.

“Foreign buyers accounted for 16.8% of total demand for new property in Q3, or about 1 in 6 of all buyers, with this share tipped to rise to 17.3% over the next year. Foreign buyers were more active in all states, but especially in Victoria where they accounted for an estimated 24.8% of total demand, or 1 in 4 all new property sales”, said NAB Group Chief Economist Alan Oster.

Are foreign investors making home ownership difficult for first-time Aussie homebuyers?

While the number of foreigners who invest in Australian properties is increasing, first homebuyers are becoming less active. Victoria felt the decline sharply, with its first timers making up only 15% of the market in the third quarter—a sharp fall from 22.5% in the second quarter.

In a recent Australian Property Institute’s survey, 96% of property analysts working at Australia’s biggest banks and property development companies believe that foreign investment is the main driver of soaring property prices in the capital cities, criticising the Foreign Investment Review Board for failing to enforce their rules, particularly in restricting the type of properties foreigners can buy.

The Australian Bureau of Statistics issued a warning though, noting that the number of first Australian homebuyers maybe under-reported compared to foreign investors because the figures were based on the first home buyer grants alone. Some economists and real estate analysts also cautioned about blaming foreign investments, emphasising the need for more research into the issue.

Oster explained that first home buyers and foreign buyers are not in competition for properties in Australia, because the latter have their eyes on high-end homes and apartments. “They’re not buying cheap stuff,” he remarked.

The result of the parliamentary inquiry into foreign real estate investment is due to be released this month, so keep a tab for update. In the meantime, visit invest Australia properties for more investment tip and sign up to receive our free e-book.

 

Understanding the Property Cycle – 3 Steps to Knowing When to Invest in Australian Property

in

Planning to invest in an Australian property? One factor that plays a key role to your success is market timing, which when combined with a well thought-out, long-term strategy, sets you right into achieving your investment dreams.

The following are three techniques that will help you understand the property cycle and help you determine when is the right to buy or sell a property in Australia.

Research About the Past

 A cycle can last for about seven years with a slowdown and flattening of property prices averaging from 3 to 3.5 years. This is followed by another 3.5 years of rising prices—the peak of which can last only for a very short time until the price slump starts.

Familiarise the Triggers

If you are planning to invest in Australian property, understand that many factors can affect the prices. The most obvious of which is interest rates. When these go down, it is your cue to buy. Banks and lenders are giving friendly rates, making homeownership affordable for everyone. When interest rates start to rise, on the other hand, expect prices to shoot up sharply. It is an indicator that there is higher demand than supply.

Another key signs are migration and economic data. If these two trend positively, then it is an indicator that the real estate market is entering the boom phrase or the growth phase and that the country is well positioned for investment.

Look at the Future

Australia’s property market is currently enjoying strong growth, with Australian housing now the most expensive among developed countries. Some experts predict this growth is still far from over and will likely to continue in a few more years.

The whole point is, if you are looking to buy a property in Australia, consider the whole market’s future growth, including it infrastructure development planned, employment rate, income level and so on.

So, these are the three steps to understanding the property cycle and knowing when is the best time to take a leap. For more tips and advice, contact us  and sign up to receive our free e-book.

3 Tips for New Property Investors

in

If there is one asset you should be putting your money in, it should be property.

“But I don’t have any experience and have little knowledge about the real estate market!”

Well, every investor started exactly where you are now—with no experience, afraid about buying the wrong property and making a wrong move.

With that said, don’t be afraid to jump on the real estate bandwagon. As long as you are clear about your goals, understand some of the key investing concepts and know who turn to for help, property investing can be far less daunting. The following are a few tips you might find handy as you take the plunge in the real estate market.

Build an invaluable team and expand your network.

Some things you can do alone, but investing is not of them. Seasoned investors know that a smarter way to succeed in this business is to surround yourself with people who can help and support you, such as family and friends, and most especially professionals from whom you can seek advice, such as property investment consultant, accountant, solicitor, conveyance and financial broker.

Networking with like-minded people, such as fellow investors, other property investment consultant, and more is also recommended. So attend real estate investment talks, seminars and shows to meet people who share your interest and from which you can swap tips, information and investing stories with.

Choose an investment strategy and stick with it.

As a beginner, you are better off sticking to one strategy and mastering if first before employing multiple strategies. Choose one that allows you flexibility and suits your risk profile. Some of those strategies you can consider include:

  • Flipping. This entails buying cheap property, renovating it and then quickly selling it at a higher amount for a profit.
  • Buy-and-rent. This is where you purchase a property and then rent it. This can expand your income stream and helps you pay up the mortgage.But be prepared to take the work to manage your asset, especially if you don’t plan to use a property manager.
  • Buy-and-hold. This means buying a house or more when prices are low and then holding on to them for at least two property cycles (15 years or more) and then selling them gradually as you get nearer to your retirement age.

So these are just three strategies you can follow, and you can definitely create your own.

Determine your target market beforehand.

Investing in real estate is like any other business, as such, you must treat your property as a “product” you are going to sell. This also means that you must carefully consider who will be buying or renting.

Doing so will help you get better profit when you decide to sell it later on, or earn higher revenue from rental. For instance, a single-bedroom apartment located in outer suburb will not have much demand in a family-focused market. So know who your target market and play to it.

For more tips and advice, you may also give us a ring here at BAP and set an appointment with our property investment consultant.

Reasons to Invest in Perth’s Real Estate Market

in

 

Perth, Brisbane, Melbourne and Sydney are on investors’ hotlist, but if you are looking to get more value for your money, property investment in Perth may give you better return for a number of reasons, including:

 

Market resilience. With the slowing down of Western Australia’s mining industry, investors fear a slowdown in housing demand. But the city continues to defy these negative expectations and continually posts slow to moderate increases in house prices. For example, in the second quarter of 2014, residential price index rose by 3.6% despite a -0.2% dipped a few months earlier.

 

Property slowdown. A slowdown is not always a bad thing; it’s the perfect opportunity to get a bargain. You could find a decent two-bedroom for less than $400,000. So, when the real estate market in Perth reaches its bottom, make sure you are ready to buy. Get a pre-approved home loan if possible. Sellers would be willing to lower down their prices for homebuyers who are ready to make a quick purchase.

 

High rental yield. While the city can’t currently match Sydney in terms of market growth, it can boast higher gross rental yield. An investment property in Perth has comparatively higher gross rental rate than those in Sydney and Melbourne at 5.82%, 5.14% and 4.83%, respectively—thanks to the city’s competitive property prices, rising rental rate, and shortage of rental properties.

 

Rising Property Demand. Perth is Australia’s fastest growing city in terms of population. In 2013 for instance, the population reached around 1.9 million; this is expected to double by 2040. From this data alone, you can conclude or expect Perth’s properties to increase in value (perhaps not this year or the year after) several years from now—making it the perfect investment for the long haul.

 

Takeaway

 

Investing in Perth properties today maybe a bit challenging, but that can be made easier with expert help. Call us today at Buy Australian Properties for a safe and worry-free property investment.