RBA Optimistic Toward The Housing Sector

The Reserved Bank of Australia is showing optimism as house prices have increased annually by 5.5%. For the month of September alone, home values have increased by 2.5%. The value of dwelling relative to income is also below normal levels – an indication that the Nation is earning enough to purchase property.

People are starting to take notice of the Property Sector, as shown by above average auction clearance rates for the past months. Construction has also been higher than last year, a strong sign that demand for new homes are increasing. Credit growth has been mediocre, but because of low interest rates, people are most likely to take advantage of this in availing home loans.

Read more about this on the Australian Property Investor website.

Boosting the Size of Your Portfolio with Unused Equity

The goal of most property investors is to have a portfolio of sufficient size and diversity that they are able to weather any economic downturn and still have enough assets to generate a reasonable income. This goal is achievable as long as investors understand the fundamentals of the real estate market, and they have some equity in an existing property to get them started.

Start a Real Estate Portfolio with Unused Equity

If you already have a home mortgage that has been running for a few years and the value of your home has increased during that time, you already have some equity. This is simply the difference between what you owe on your mortgage and the value of your home. Depending on individual circumstances, this could be a substantial amount of money, enough to use as a deposit on investment real estate.

Get the Right Finance and Structure for the Best Outcome

If you have one or two real estate investments with unused equity, then you are to be congratulated. You already have a substantial platform on which to further increase your portfolio. However, before you go ahead and make any decisions, you need to make sure that you have the right structure to hold your assets and the right finance arrangements in place.

Interest rates currently are at historically low levels with no sign of an increase in the foreseeable future. This is the perfect time to be thinking about continuing to add to your portfolio, and we are here to assist with advice on how to set everything up to get the most out of your situation. We are Position One Property, an investment property specialist with suitable real estate stock available ready to be recommended to astute buyers.

Buy Where Demand is Just Beginning to Build

We do not limit ourselves to just one area of the housing market, and this is a key point for our clients to understand. While the market at the moment is talking up inner-city apartments that have become expensive as a result, we have equally suitable properties in many others areas where demand is just beginning to outstrip supply.

Don’t Let Unused Equity Just Sit There

Market research shows the growth areas throughout the state, and it is these areas that will provide the demand for rental housing that can turn your stagnating equity into a wealth creating strategy. You need to have enough income to make intermittent mortgage payments in the event that one or more of the properties become vacant for a short time. If you can do this, your equity can be used to finance additional purchases in growth areas.

If all this sounds interesting, contact us to make an appointment to speak to one of our specialists.

How To Reduce The Risks That Cause Financial Failure

There are some life events and circumstances that can derail efforts to achieve financial independence. Some of them are out of our control like natural disasters and accidents, but our society has developed products such as life and health insurance to mitigate the consequences. “Lifestyle” diseases can also be controlled by making better food and exercise choices.

Apply Some Risk Management Strategies for Financial Security

Aside from these unfortunate events, there are other threats lurking that can throw into chaos our attempts to create financial buffers against unforeseen circumstances. What we can do, however, is to recognise these threats and apply some risk management techniques to create a soft landing if it becomes necessary.

Income Protection Insurance is Only the First Step

For most of us, secure and reasonably paid employment is the starting base. Income protection insurance and actively managing your career through upskilling, as well as promoting or starting your own business are some ways to reduce risks in producing a regular income. Understanding how the economy works and watching for changes like Australia’s recent decline in mining income are other ways.

Assuming that your income is secure for the foreseeable future, you could now be working on creating those financial buffers. We recommend always having some cash savings on hand for emergencies, but accept that with interest rates as low as they currently are, the returns are meagre. The only advantage is instant accessibility, which is why you should only do this for emergencies.

Share Market Volatility Deters Amateurs

Investing in the share market is an option, but only if you have the time and desire to learn and understand how it works and how to maximise investments. For most people, shares are a commodity that is best left to experts in this field to manage.

Property Investment has Many Advantages

The property market is the one area that has continued to perform over a long period of time in Australia. It is also one that most people who own or rent their homes are familiar with. No market is completely safe from economic downturns but we have found property to be one of the best vehicles for achieving financial security.

At Fountain Property Group we have experts available to help you select the right type of property for your circumstances. We will also arrange professional property managers who will select the best tenants and look after the ongoing maintenance.

Good Property Management and Insurance Cover Mitigates Risk

Landlords’ protection and home and contents insurance policies will protect your asset from unforeseen events. With industry-best property managers handling the day-to-day details, you will hardly need to lift a finger on your journey to financial security. Whether you are looking for capital growth, high rental returns or a long-term strategy, we can assist you.

Retain Your Quality Tenants With A Well-Maintained Property

To attract quality tenants, owners must be prepared to keep their properties in good condition. Gone are the days when tenants were desperate for a roof over their heads and would accept sub-standard accommodation. Tenants now are often looking for long-term rentals and expect that, in exchange for their rent and care of the various properties, the owners will keep them well-maintained.

How Investors Keep their Holdings in Good Condition

For owners with a number of rental properties this can pose a problem, as these days, very few of them would be expecting to do any of the cleaning or maintenance personally. They usually have no emotional attachment to their holdings, as they are a means of building wealth over time and are treated strictly as an investment.

This is an area where we have considerable expertise. With many years of experience in real estate and financial planningFountain Property Group has experts in accounting, legal and finance to help you select the right property to suit your investment portfolio.

A Good Property Manager is a Priceless Asset

All our pre-selected properties are in great locations and in excellent condition. Keeping them that way not only attracts quality tenants but also builds equity ready for the time the owners decide to convert their investment to cash. This is where having a hard-working, professional property manager begins to bear fruit.

Property managers deal with all the issues that occur during a tenancy on behalf of the owner. They screen new tenants, prepare tenancy agreements, conduct regular property inspections and generally perform all the administration tasks on behalf of the owners.

Cleaning and Maintenance Maximises the Value of the Property

As far as maintenance is concerned, it is the property manager who alerts the owner to any issues needing attention. Perhaps the interior needs cleaning or even painting. Window or floor coverings may have reached the stage through normal wear and tear, where they should be replaced. These maintenance tasks will need to be done to maximise the value of the property.

Everyone Should Feel Safe in Their Homes

In these times of opportunist crimes, good tenants expect their safety to be of concern to the owners. Most private dwellings these days have security measures in place, and tenants expect nothing less for their homes. An investment in security screens, doors, locks and external lighting will be appreciated by those tenants that investors want to retain.

All of these issues can be handled by a property manager under authority from the owners to manage a pre-agreed budget. Holding investment properties through our company is a truly hassle-free way to create the wealth needed in retirement to live a comfortable lifestyle.

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You Are Never Too Young To Invest In Property

Most young people starting out make sacrifices to become independent. They may work low-paying casual jobs to pay for university or complete an apprenticeship to get qualifications. If they leave home to access these opportunities, they usually forego new clothes and entertainment, and even eat poorly to pay rent and transport costs.

Enjoy Success but Temper it with Discipline

When they earn their first substantial salary, the temptation to make up for what they missed is great. They often spend wildly on parties, holidays, latest fashions, a new car or other symbols of their hard-earned status. While they have earned the right to enjoy these rewards, a little discipline could improve their long-term situation.

They would enjoy more financial security in the long term by having a chat with one of our investment experts at Fountain Property Group. The best results in wealth creation through property investment are achieved by starting as early as possible, and there are a couple of reasons for this.

Long-term Projections for Property are Still Solid

One is the long-term performance of the Australian property market. Over the past fifty years, property has doubled in value every ten years, apart from a couple of minor hiccups. Despite predictions that our property bubble is about to burst, this has not happened and some expert opinions suggest it is still unlikely.

If current trends continue, the most likely scenario is that over the next twenty years, property will increase in value. These increases may not be as high as the average long-term figure of seven percent a year, but should at least reach four percent. This is still a very healthy return for the person who has invested in the right type of property, and we can help with that.

Investors Need Good Advice When the Market Turns

There will always be market corrections as investors respond to whatever is going on in the world economy. It is during these corrections that investors “going it alone” without good advice lose out. The right kind of property in the right location is the key to riding out these market corrections.

Take Advantage of Negative Gearing While It’s Still Available

This brings us to the second reason for getting into property investment early in life. The right kind of property will consistently earn rental income. However, it may not cover all expenses, especially early in the term of a mortgage. Current negative gearing laws allow these losses to be used to reduce tax payable. These laws may not be around forever, so we believe the time to take advantage of them is now.

Why work hard in your early years to get a good job or enter a lucrative profession, then fritter it away with years of ill-disciplined spending? We can help you get the lifestyle you want in retirement by investing in property now.

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Cash Rate Decisions By Reserve Bank Influence Lending Rates

Investing in “bricks and mortar” has for many years been the pathway to financial independence for thousands of Australians. Our real estate market has performed well overall, and our taxation system provides additional incentives that make owning investment properties attractive.

Low Interest Rates Not the Whole Story

One of the drivers of the growth in this sector of the market has been our historically low interest rates. These provided the impetus for a sustained building surge, especially for new apartments close to the CBD. However, low interest rates are not the whole story when it comes to selecting properties that will provide the best return.

The selection process is not something that prospective investors should undertake without some professional assistance. This is where we come in. At Fountain Property Group we have high quality residential real estate suitable for people who want to build wealth through property.

A Quick Lesson on Monetary Policy

We have seen that low interest rates encourage investors into the property market. We also believe that people should go into these ventures with some understanding of the other factors that may affect market returns. Government monetary policy has a big influence on investor confidence, and understanding the cash rate is the key to understanding the movement of interest rates.

Our Reserve Bank, which operates independent of government, has three key responsibilities. They are to contribute to the stability of the currency, full employment and the economic prosperity and welfare of the Australian people. Having a stable financial system is fundamental to promote economic growth, and setting the cash rate is one of the tools the Reserve Bank uses to achieve this aim.

Cash Rate – a Definition

The cash rate is defined as the overnight money market interest rate. Decisions to change this rate are made by the Reserve Bank Board members who meet monthly and make these decisions based on a range of other economic data.

From a high of 17.5% in January 1990 to a low of 5% in August 1995, the cash rate remained relatively stable until it dropped to 3% in May 2009 in response to the GFC (Global Financial Crisis). Apart from a few minor corrections, the cash rate again hit 3% in December 2012 and has remained below that since. It currently sits at 1.75% with any adjustment made being in the order of -0.25% percentage points.

No Dramatic Changes Expected

The absence of unexpected fluctuations in the cash rate has given investors some certainty when making decisions about entering the property market. This does not mean that interest rates will not rise given the right circumstances, but as the cash rate has been stable for some time, the market is not expecting any dramatic changes any time soon.

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Mortgage Repayments – A Different Approach

Everyone with a mortgage looks forward to the day when the last payment is made and this financial commitment is no longer necessary. Whether the mortgage is over the family home or an investment property, the euphoric feeling is the same. With it come new possibilities as the money that has been set aside regularly for this purpose is now free to be used for something else.

Use New Strategies to Control your Mortgage

For many people this comes at the end of a long process, taking years to get to this point. How great would it be then, to take a different approach to mortgage payments, and look for ways to not only cope better, but even to shorten the duration by getting in front when it is financially possible?

By taking greater control over spending, and looking for ways to be smarter with your mortgage payments, you could even be in the situation where buying an investment property is possible. With some equity in your home, reasonable employment prospects and a good credit history, our people at Fountain Property Group could be starting you on the road to serious wealth creation.

First Things First

Let’s put first things first by offering some suggestions to better manage your current mortgage payments. Interest rates are at their lowest since the 1960s, and current indications are that they will remain low for some time. This is a great opportunity for a mortgagor to calculate repayments at a couple of points higher than their current commitment, and pay this amount off the existing mortgage. If rates do go up, you won’t notice it and you will be getting in front with every additional dollar you pay.

Don’t Waste Financial Windfalls

Often, situations occur that give us unexpected access to lump sums of money. The most common example is a tax refund, but it could also be a small lottery win or an inheritance. Most people with a mortgage spend these windfalls on consumable items, but with a little self-discipline, these could be applied to the mortgage.

Make More Frequent Payments

If your mortgage lender allows, making more frequent payments will reduce the term of your loan considerably. For example, paying a mortgage fortnightly instead of monthly will save thousands in interest payments by using simple maths. There are only 12 months in a year, but there are 26 fortnights. By paying this way, you are effectively making 13 monthly payments annually.

Save More and Spend Less

The suggestions that most of us don’t want to hear involve spending less and saving more. We are not suggesting that you withdraw from society, but some short-term pain ploughed back into your mortgage will put you in an excellent position in a few years. That investment property could well be within your reach.

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Could Your Staff Handle a Fire Emergency?

Over the past couple of years there have been several major house fires around the Brisbane area involving complete property destruction and tragic loss of life. Smoke detectors that did not work, fires that started during the night when the family was sleeping and leaving candles burning were some of the causes. There have also been fires on business premises, and although these cause income loss and great expense, they rarely result in employee deaths.

What are your Responsibilities under our Fire Safety Legislation?

There is a very good reason for this. Building owners or occupiers of certain types of buildings are required by law to install specified fire safety equipment at strategic locations. They must also appoint fire safety advisors in some cases, and all must have fire emergency procedures in place, including regular fire evacuation drills.

With this in mind, now is a good time for anyone with responsibilities under the fire safety laws to make sure they are complying. A good place to start is with the Queensland Fire and Emergency Services web page. All the various definitions and criteria are there, along with information sheets so you can see where your level of responsibility lies.

Can You Use a Fire Extinguisher? Can Your Staff?

As business owners ourselves, the Fountain Property Group has a legal obligation to ensure the safety of our staff while they are on our premises. One of the ways we do this is to provide training to our staff in the fire emergency procedures applicable to our building. This is not as hard as it sounds, and we start with basic instruction in how to use a fire extinguisher.

Which One is the Right One?

You can either do this yourself, or engage professionals to do it for you at your workplace. The training involves a short information session on the various types of fires and the correct methods of fighting them, followed by an actual demonstration This is important and will vary from building to building, depending on the type of fire most likely to break out. For example, a restaurant kitchen where there is hot fat would use a different method from an office building where electronics and paper are the main fire hazards.

Emergency Evacuation Training Saves Lives

The other major employee training exercise is the emergency evacuation. Once you have developed the procedure, staff training is essential so that they all know their roles in an evacuation. Larger businesses have a safety committee and nominate wardens and various other roles to staff members. Regular fire drills and evacuations are essential so that everyone knows how to respond in a real situation.

If you do not have these procedures in place, find out your responsibilities and get your emergency procedures happening. There is truth in the saying that the life you save may be your own.

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Getting Into Property – An Alternative Approach

There has been much media comment lately about the Australian property market, much of it focused on the high prices being paid, especially in Sydney and Melbourne. This media conversation is bemoaning the likelihood that young Australians will never own their own homes like their parents did, and that they are being priced out of the market by investors.

Property Opportunities Available Outside Sydney and Melbourne

Like all such conversations it has some merit, but it is also ignoring the huge diversity of property available in Australia. It also concentrates its argument in two relatively small geographical locations, albeit those containing a significant proportion of our total population. In our other capital cities and large regional centres, properties are being snapped up by first home buyers and investors at reasonable prices.

How do we know this? We are the Fountain Property Group, a one stop solution for people interested in building an investment portfolio. Over the years we have been in business, we have heard many reasons why people think they can’t buy a home. With the right advice, these reasons can all be overcome.

Stable Income and Savings History a Good Start

The first issue is, naturally enough, having a sufficient and stable income that would give a lending institution the confidence to approve a home loan. The next factor is having a reasonable deposit firstly to avoid paying mortgage insurance, and also to demonstrate your ability to maintain a regular savings pattern over time.

Could Tenants in Common be the Answer?

Both these considerations apply equally to an owner-occupier, or to someone interested in purchasing an investment property. Another way to mitigate the risk, should something unexpected happen, is to purchase property with two or more other stakeholders under a legal structure called tenants in common.

If each party contributes an equal amount they become tenants in common in equal shares. If one or more parties contribute a larger or smaller share, they become tenants in common with shares in proportion to their contribution. There are some other issues that need to be discussed, but this is a viable way for people to purchase a home, particularly an investment property.

Good Properties at Affordable Prices in Regional Centres

The other factor that many people do not consider is the location where they want to buy. If it is for a home to live in, obviously that must be near employment. If, however, they are starting a property portfolio, there are many locations throughout the country, other than the capital cities, where they can get started. Wherever there is a demand by tenants for housing, there is opportunity for investors.

This, and other advice such as ownership structures, cash flow and management, is available to our clients at the Fountain Property Group. Anyone with a reasonable debt history and regular income can own property.

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Bringing It All Into Perspective

There is a lot of conjecture out there in the market about the ability of young people today being able to afford a mortgage. After reading this you may just believe that the truth Is – it’s all in how you manage your money in the first place. Surprise! Surprise! Nothing has changed about that in hundreds of years.

Easy Money

Over the years, as the public began to be aware that investing in property was a good thing, a new industry blossomed. Mortgages!

With large tax incentives all round, a bricks and mortar asset to insure against to satisfy your lending institution and you could easily be on the way to having your first – or fifth – or tenth mortgage, often at 100% of the purchase price, sometimes more.

The institutions, whilst still canny with their money, are more than willing to loan money for all sorts of things and this is where the trap lies. Twenty-somethings are investing in loans or higher credit card debt more than ever before.

Most people will be unaware that the repayments on a $20,000 credit card will be around the $600 mark per month. If you have a personal loan for $20,000, for a motor vehicle as an example, you are looking straight down the barrel of a $500 monthly repayment.

Amazing Mortgage Fact

Now check out this last little bit of data.

Did you know that the repayments on a $100,000 mortgage, 4.5% interest over 25 years is just $555 per month? Amazing.

The two debts mentioned above are relatively small on their own. Together, however, they can have a big impact on just how much money you can borrow for a mortgage. A bank will automatically cut your borrowing power by up to $200,000 as soon as it sees debt like this.

This is where Fountain Property Group like to help flesh out the details for you. We see a lot of disappointed faces in this business. It is amazing how this form of debt can reduce your service ability.

When we are educating our clients. We ask the hard questions like …In the short term, can you see the value in catching the train for a little while? To get that extra money for your mortgage is it worth forgoing the stereo or is it worth giving up your trip to Greece? You may answer yes or no to these questions. There is no right or wrong answer. The choice, however, will determine your living arrangements for a long, long time to come.