Buy Low, Sell High – Living The Dream

Ever since it was discovered there was money to be made in property the adage Buy Low Sell High has been coined. It’s true this is the investor’s dream.

There’s just one teeny tiny issue with this tactic – the market in Australia has not been in a low for some time. Certainly, at the end of 2014 many of the top analysts in Australia predicted a drop in property values for 2015.

The truth is that this has just not happened. The reports in, so far, are supporting evidence of a slowdown in the number of sales but NOT in the values. It is looking like sunny skies ahead for most of Australia with some slowing in Darwin and Perth.

It would appear the drop in the Australian Dollar has attracted foreign investment and the prediction is for at least 2% growth in major capital cities to June 2018! So, if ‘buy low sell high’ is out then what strategy should you follow?

Unearthing the Gems in the Rough

At Fountain Property Group we believe there will always be gems, both in the rough and in their shining glory, just waiting to be discovered. Gentrification has created a whole new era in some of the older suburbs of both inner city and outlying areas.

The top real estate minds of Australia can only PREDICT what they believe will happen, based on past data. This is the same as choosing the winner for the Melbourne Cup!

With the information of horse, jockey, trainer, et cetera, you can select the top half dozen challengers and your number one may even be the number one but the odds…….?

Getting Down and Dirty in the Trenches

The crew at Fountain Property Group are working hard in the trenches, searching to discover those hidden gems. We do not operate from lofty penthouse office suites with data overflowing our files, just waiting for us to assess.

We are out there talking with vendors and scouting the suburbs ourselves in our quest to unearth the right properties for our clients. Yes, we pay attention to property data, but the field work is so important to ensure success.

Buying an investment property should not be a stressful experience and we are here to make it as simple as possible for all concerned.We believe that this motto is the key to our success and it is what brings our clients back year after year.

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Which One Do You Go For: Rental Growth Or Capital Growth?

house-with-for-rent-sign-posted-in-yardThere are basically two types of property investors on the market today, those who purchase property to sell it, and those who purchase to lease. So, how hard can it be?

Rental properties in the right growth areas provide you with a steady cash flow, and the ability to pay off mortgage at the same time. There are several key factors that have to be considered before a property is called a “good investment”. Among these, you should be able to identify what suits your goals the most, and whether you should go after rental yield, or capital growth.

Often, it is difficult to find both in the same area, as high rental yield properties are often in the outer ring of the CBD. These properties are cheaper than their capital city counterparts, thereby providing you with the most out of the rent. On the other hand, capital growth properties are usually in the inner ring of the CBD and they cost more, but the property value provides the best growth in time. So which one do you go for?

Capital growth properties take advantage of the property value at a lower rental yield. These properties take advantage of the area as it grows in value. Capital growth can take a long time to catch up and the level of competition is higher, as people are willing to invest in the inner ring of the CBD as it is accessible to nearby amenities.

However, rental yield properties provide you with less competition and high rental yields in the mid – to outer ring of the CBD. These properties are ideal for those who want to shy away from more expensive properties near the CBD, but want to take advantage of the growth area. The property values increase in the area as more developments and amenities are constructed.

Once you’ve determined the best property for you, it is best to talk to a licensed financial planner about your goals. This will allow you to choose not only the best property, but the best areas of growth that will match your current financial standing.

First Home Buyers: How to Save Up For Your First home

Planning for your first home is perhaps the biggest financial commitment you will make in your life. Getting it right the first time is crucial, so it is best to have a financial plan laid out to help guide you as you get on your way to achieving the home of your dreams.

Budgeting

Have a clear and practical amount in mind. Although saving up for your first home will not happen overnight, make sure you understand how much you need, and how much you will have to set aside to get there. Start small and see what expenses you can live without and cut down on debt that you don’t really need. You’ll be surprised at how much you can save.

Planning

Always have a financial plan in mind, outlining your short and long term goals. You may want to also include a debt management plan to free yourself from debt before you start saving up for your first home.

Saving For Your Deposit

If you’re planning to save up for your first home, you must be prepared to follow your savings plan religiously. If you can save up 10% of each paycheck without having to miss any of your financial responsibilities, do so. Start cutting down on your splurges and pay only for what you really need.

Be Realistic

Owning your first property will not happen overnight, but with a carefully laid out plan and a good team of advisers behind you, reaching your goals of having the home of your dreams is not impossible. Lenders nowadays would like to see a clear picture of your financial health, so make sure you have everything covered to show them genuine savings.

What Is The Right Home Loan Type For You?

Young couple getting help from a real estate agent

When looking for the perfect home loan, you need to have a clear understanding of 2 basic principles: The loan principal – which is the amount you borrow, and the loan interest – the amount you pay to borrow the money.  Most lenders will align their loan types around these 2 principles. Here are some of the most common types of loans you will encounter when dealing with home loans.

Fixed Loans

This loan type has the interest and repayments fixed for a certain period, usually between 3 – 5 years. This allows you to draw up a consistent budget without any changes to your repayments. Although fixed loans provide you that certainty, interest repayments will never change even if the market rates drop. You cannot redraw and make extra repayments on a Fixed Loan.

Variable Loans

Currently the most popular loan type in Australia, this loan type allows for varying interest rate payments depending on the lender. Changes to the interest rate will affect your loan – If the Interest rates drop, so will your repayments. If the Interest rates go up, so will your repayments. The good thing about Variable Loans is that you can create a budget plan where you can make extra repayments, shortening the term of the loan.

Split Loans

Split Loans are blended loan types that provide you the flexibility by combining Fixed and Variable options in one loan. This allows you to shorten the loan term by making extra repayments, but you still run into the risk of increasing repayments when the interest rates go up, affecting the Variable portion of your loan.

Lo – Doc Loans

Lo – Doc allows home buyers to secure a home loan even if they don’t have the necessary financial documents. Lo – Docs can either be Fixed or Variable. This helps people secure a loan, but also charges higher than other loan types. Repayments usually decrease after a few years if paid on time.

Line of Credit

Line of Credit allows you to draw from a fixed amount for home, shares, or any other asset types. This loan type provides you the extra funds, but with your home as security for the loan. You only pay interest on the funds you use, and can be accessed like a normal savings account.

Equity Release

Also called Reverse Mortgage, this allows people over 60 to gain access to equity on the property. Although no repayments are made, monthly interest accrued has to be paid when the property is sold.

To find out what loan type is the best for you, consult a certified financial planner. Home loans should help ease the burden and should not cause you financial stress when securing the home of your dreams.

Mortgages – Fixed Or Variable?

As property investment consultants and builders of wealth, one of the most common questions we get asked is what sort of mortgage should I go for? Fixed or variable? In fact it is the number one question mortgage brokers around the world get asked by every single one of their clients.

Whilst the crew at Fountain Property Group don’t have a crystal ball and cannot predict the future we can offer a fountain of information when it comes to historical data and information on these two forms of mortgage. All loans, including personal loans, credit cards and mortgages, have their interest rate set according to the prime interest rate that is set by our country’s governing body.

In Australia, this governing body is the Reserve Bank of Australia (RBA). The RBA will assess a complicated variety of indicators and trends to establish this rate. These factors may include, but are not limited to:

  • the employment rate
  • consumer spending
  • commodity pricing
  • labour costs and availability
  • inflation
  • and the Australian Dollar value
  • Variable Loans

The variable loan will be based on the rate that is set down by the RBA. Lending institutions will then add their operating costs and of course profit to the deal. This market is fairly competitive with many options to choose from. Whatever the market is doing, the variable interest rate will follow. If rates increase – so will you repayments. If the rates decrease, so will your payments.

Fixed Loans

A fixed rate loan means that you will know exactly what you are paying from the moment the loan is taken. Whatever the market is doing, the fixed interest rate will remain static for the term of that agreement. This means that whether rates increase or decrease your payments will remain the same. This is a great way for people who need to maintain a budget.

Which is Better?

Back to that magic question. Which is better? Both styles of loan have their advantages and disadvantages. We offer the classic answer, being that it depends on your own personal situation.
Things that you can assess to help you make this decision will include:

  • How much can you afford to pay?
  • If the interest rates were to rise could you afford it?
  • How long do you intend to hold this mortgage for?
  • Does the fixed rate have any controlling factors such as no extra payments allowed or penalties for paying out early?
  • Which way is the market trending?

For more information, have a chat with one of our consultants.

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Do you need a Property Manager?

Property investors are often faced with the dilemma of choosing a property manager to maximise profit. Most people choose their property managers based on fees, but there are some considerations, because there is more to a property manager than just collecting rent.

You have to assess your personality and determine whether you have the ability to manage your tenants at a professional level. If a tenant falls behind in paying the rent, or damage is found during inspection, can you handle these issues professionally?

You, as the Property Manager should also be attuned to the legalities surrounding your property. Lease agreements, evictions and bond claims should follow legal procedures so that you can justify your claim. When seeking tenants for your property, do you have what it takes to advertise and gauge the right people for your property?

When you answer “no” to any of the questions above, it might be a good time to consider a Property Manager. These people are equipped with a marketing plan and will help you with your investment from start to finish. Property Managers have industry specific skills that will assist you in getting the most out of your property. When choosing a Property Manager, make sure your interest is their priority, after all – Investments should give you peace of mind and security.

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The Secret To Property Investing

It would be easier if we all knew what it takes to succeed in any endeavor – oftentimes we would like to take the faster route – looking for secrets, tips and tricks to succeed. Even in property investment, it’s easy to just look up the secret to a successful investment – unfortunately, there is none. Every investment is unique and there is no definite formula for success.

If there is one secret to succeed in this field, it would be to have an effective strategy. Understanding the property landscape gives you a gauge as to whether now is the right time to invest. Here are some of the fool – proof strategies that will help you succeed when investing in property:

Invest at the right Time

In the property cycle, now is the right time to invest. Find ways to understand the market trends and have a good feel as to how the economy is performing.

Invest in the right State

Certain states perform better than others. Depending on the property you’re after, some States provide you with better options and gives you a good return of investment. Larger capital cities are often favoured by investors as these places are constantly growing, however other states are slowly providing investors favorable conditions.

Invest in the right Suburb

Suburbs that have high capital growth are often in the middle and inner ring of big capital cities. Suburbs that have a wide range of amenities and services, such as schools, accessible roads, hospitals and recreation centers are often hotspots for economic growth.

Invest in the right Location

Each suburb will have its pros and cons, however, exploring the surrounding streets will allow you to gauge which will most likely attract more investors. Some areas are close to main roads, shops and commercial areas.

Invest in the right Property

Buy the right property at the right price. Newer properties tend to be more expensive, but are often covered by insurance. Older properties are cheaper, however, you may need to pay more for repair and maintenance costs.

Finding The Right Mentor

If you are into property investment then you are in it to earn some form of remuneration. Now we are not saying that you cannot be in this industry for fun. We love this industry with a passion.

When you find your passion the work you do to achieve it becomes fun. We enjoy the triumph of guiding our clients through the sometimes murky waters of real estate investment. It is so satisfying to be able to help people grow their finances and see them blossom

If you have ever been to see the likes of Robert Kiyosaki, Pat Mesiti, Tony Robbins, or John De Martini, there is one thing they tell you to do if you want to be successful in any venture That is to find a mentor—someone who you can connect with.

Leaders in Our Field

Fountain Property Group are investment property specialists. We possess over 15 years’ experience guiding and mentoring in this field. Our affiliated mortgage specialists have a huge 24-year span in the industry and are a huge fountain of knowledge.

Our Beliefs

We have an innate grasp on what we believe are the five areas of successful investing.

These areas consist of:

Structure and finance

Asset Protection

Cash flow and tax

Supply and demand

Property management.

As you can see, you must put some thought into your investment strategy before you even think about looking at property or talking to your bank.

Getting your structure and finance right is the single most important step in your journey. Once you have laid a good strong foundation it will be much easier to build your empire.

Where We Differ

As a non-affiliated company we are not restricted by territories such as other agencies may be. But even deeper than that, we have been able to niche our specialty down to what an investor requires from their property agent.

Yes, we are more than able to find you a great property to live in. It will be at a great price, in a great location that is sure to pay huge dividends in your future. All that aside, we are investment specialists and we can serve you all through your journey.

Here is what we offer

We can source your product. We can guide you through its purchase.

We can then expertly manage your property in such a way as to ensure it is best served to set you up for your next investment purchase. How does it get any better than that?

Australia’s Love – Hate Relationship with Property

Australia is fortunate enough to have abundant data on the finance and real estate markets, and as pointed out by Philip Soos, a researcher for the School of Humanities and Social Sciences at Deakin University, Australian property values have been surging for the past couple of years.  We take a look at how the nation has developed a love – hate relationship with property for the past 150 years, and where we stand in the property cycle.

Property and Inflation. If both are moving at an almost even pace, that would mean that people are not favouring property over goods and services, and vice versa. Except for 1961 – 64, every rise in real prices have led to a downturn, keeping properties in line with the rise and fall of inflation.

Property and Rent. The cost of renting and buying property have closely matched, as drastic upswings in the ratio of property and rent have suggested the presence of a property bubble – from the 70’s, early and late 80’s and recently.

Property and GPD. The Great Depression was caused by a deflating property bubble, specifically in the commercial property market.  As mentioned earlier, every rise has always caused an economic downturn, causing recessions almost every decade.  The availability of credit has been one of the major drivers of the boom and bust cycle. When debt peaked 1893, it created a commercial land bubble and became one of the worst depressions in the history of the nation.

While property booms have been a part of Australia’s economy, it has always been evened out by property values and private debt.

Property and Debt. Data on Private debt goes as far back as 1861, while Land Value data started in 1910. Each of the peaks in debt – in 1893 and 1920’s have caused property bubbles to burst, and it was only during the 1970’s that the debt cycle was able to recover and recorded the highest peak on record in 2008, becoming the largest land boom on record.

Conclusion

The Australian property market has been driven by major economic factors, particularly inflation and debt that allows it to go through its cycle and recover. As of this writing, property values and interest rates have reached record levels that the nation has never seen before.  One thing’s for sure – If a boom or bubble happens, it will be the biggest in history. So goes on Australia’s love – hate relationship with property.

Property Investment Tips

When you set out to invest in property there are some important things to sort and prepare first, such as finance and budget. But these are not the only decisions to make and you will soon learn that there is so much more to consider.

Our specialist team at Fountain Property Group will expertly guide you through the process of stepping onto the investment platform. From here we can help you nurture your dream for wealth through further property investments if that is the path you wish to take.

To assist you in understanding some of the decisions and steps you will be taking on this journey, we offer some tips for investing in property.

Right property, right price

Buying the right property for the right price is vitally important when investing. Understanding the market and having some knowledge and patience will put you in good stead to securing a great investment at the right price.

Ideally, you want to invest in a property that will grow in value. Our expertise and knowledge in the industry will help you in achieving this by applying research and experience. With our help you can be sure of the value of the property you have in mind and whether or not it has enough capital growth potential.

Budget and finances

We have no doubt mentioned it many times before, but it’s always worth saying again; get your budget in check. An investment can’t be a successful one without first ensuring it is financially viable. Talk to your chosen lender; be sure of the outlay, your expenses and ongoing repayments.

Remember that property investment is usually long term so look ahead and decide if you can cover payments and all costs involved for an extended amount of time. Make sure that you have investigated all home loan options available and have made the right decision regarding what suits you.

If you already have other properties consider if you will use the equity in these to assist in your next investment and if you will be negative gearing, amongst others. Create a long-term, inclusive plan in respect of what is current and where you are heading.

Property management

After we have assisted you through the buying process it is imperative you choose a good property manager. Your investment relies heavily on excellent management and decent tenants being in place.

Without an efficient and experienced property manager you will run into all kinds of issues that could end up being costly or simply result in a loss of income on the property.

Contact our team at Fountain Property Group today for more information on successful property investment and tips on making the right choices.