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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CASE STUDY 2– DON’T DELAY, ORDER NOW

high rise apartmentDelaying your decision to obtain a depreciation report can cost you tens of thousands of dollars worth of depreciation entitlements. We have set out below a case study of depreciation entitlements claimable by a first time investor examining what a delay of 4 years could do to an investor’s cash flow. In December 2016, Paul and Samantha are told of the cost benefits of engaging Deppro to produce a depreciation report. As is evident from the table below, Paul and Samantha’s delay means they missed out on almost $60,000 worth of depreciation deductions from previous financial years.

 

Financial YearDepreciation on PlantCapital AllowancesYearly Total
  Low Value Pooling  
23/3/2012 – 20122,6748012,4465,921
2012 – 20134,10113028,95214,355
2013 – 20143,4548148,95213,220
2014 – 20152,9235088,95212,384
2015 – 20162,4878478,95212,286
2016 – 20172,12708,95211,079
2017 – 20181,82808,95210,780
2018 – 20191,58108,95210,533
2019 – 20201,37408,95210,326
2020 – 20211,20108,95210,153

Obtaining a depreciation report at or around the time of settlement of a property can put thousands of dollars back into an investors pocket. This money can be used to either pay down existing debts on investments or drive the investor to re-invest and grow their portfolio.

What Are Clearance Rates In Real Estate Talk?

When you hear or think clearance rates you might be forgiven for thinking that there is a big sale going down somewhere and you better get in quick. Well, probably the only word in the last sentence that relates to real estate clearance rates is the word ‘sale’.

More importantly, clearance rates in this industry relate only to properties that are sold (or not) via the auction process.

Who Gathers the Data
Apart from each individual Australian state Real Estate Institute gathering some form of this data, there are two major companies that formally gather this form of information Australia wide. They are RP Data, and Australian Property Monitors (APM).

Interestingly, these two major companies go about the gathering of this data in very different ways. It is not as simple as saying 10 properties went to auction this week and 8 of them were sold under the hammer for an average of “x” dollars.

They each have their own criteria that they use to garner the information required. The criteria that can be used by both are how many properties:

  • Were advertised for auction,
  • Were sold at auction,
  • Were withdrawn,
  • Sold before auction,
  • Sold after auction,
  • Were passed in at auction.

Each of these can be diluted even further. For example: they may only include sales made within 24 hours of auction completion. For some, the negotiations may take a day or even week or longer.

One of the companies may not include withdrawn property data. You can see how this may change the relevance of any published results.

The one contributing factor to this house of cards is the reporting. It is up to the individual agency to report the results of any and all auctions. In a good market, they are more inclined to report their successes. But in a bad market…….. You fill in the blank.

The One True Guide Post
Deakin University conducted their own research into the anomalies of this subject.

They advised that at times the clearance rate was obtained from a very small segment of the market. They also pointed out that such things as the number of bidders present for an individual property as compared with competing auctions, as well as the number of bids received were not recorded. Nor does this form of reporting show how many, if any, properties exceeded the vendor’s reserve.

The other interesting fact they discovered over this 5-year study was that the data received actually showed a correlation between auction prices achieved and actual property prices as very similar.

What Fountain Property Group can confirm is that sale by private treaty is still by far the most common form of property transaction used in Australia and our choice of negotiation.

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.

AU Homes Reaches $1 Million Mark

Australian home prices have reached the $1 million mark, according to the Finder website.

Mortgages below $500,000 will have to spend $1 million for a 30 year loan at a variable interest rate of 5.5%. Purchasing property with a small deposit may cause people to spend more than the value increase in a 30 year span, which is why it is advised to look into how much you spend in the long term, apart from being able to afford the loan.

Sydney still leads all capital cities in median house price at $825,000 according to a recent RP Data CoreLogic report.

Read more about this on the Australian Property Investor website.

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Are You Ready To Invest In a Property?

Many people want to get into the property investment market and with good reason. When you do it right, investing in property has the potential to be a very fruitful expedition. The best way to take the step into property investment is with an expert at your side.

At Fountain Property Group we have the experience and knowledge that can help you achieve your goal to reach financial freedom and more. Here are some tips and advice about investing in property that you may find useful to begin the process.

How is your budget?

The most important thing to have in order for property investment is your budget and income. Property investment does not only involve making mortgage repayments. You will also have rates bills and body corporate fees if it’s a unit or townhouse.

You also need to factor in paying a property manager and funds to cover any repairs and maintenance needed. With this in mind you need to plan your budget well. Ideally, you will have some extra cash flow left over rather than just have enough.

Plan with an expert

There is plenty of information available now about teaching yourself to get into property investment but this leaves too much room for error. The best way to plan for success in buying an investment property is with an expert. Our Principal Dorian Traill specialises in home loans and in advising clients on purchasing the right property for their needs.

You can read as much as you like on how to invest but the only sure way is to take advice from professionals who know the business and who have been there before.

Don’t miss your opportunity

So many people try to wait for the right moment. They wait for interest rates to be right, for the market to be in the right place, for rents to be high. There will never be a moment when each facet of investing is perfectly right; there will always be something missing from the equation. The perfect moment to buy is when you are ready financially not when the time is right in the market.

Be prepared

There are no real guarantees for the future, only predictions. Body corporate fees and rates can rise, tenants can cancel leases early and plumbing can burst. There are so many things you can’t be 100% sure won’t happen, so it’s always best to plan for the worst.

If you’re ready to contact a team of professionals for guidance in property investment call us at Fountain Property Group on 1300 137 689 today.

Why Property Investment is Always Number One

There are many ways to skin a cat as we all know. If you want to create a nest egg for your future, you may choose to buy shares, deposit cash into some form of term deposit or invest in property.

Fountain Property Group are in the latter arena and we know this industry so well, we eat, drink and sleep it.

We don’t want to point out the pitfalls of investing in the share market or the low returns a term deposit offers. The truth is the share market can offer wonderful returns over time to a savvy investor and a term deposit may suit some people best.

What we would prefer to do is highlight the advantages of investing in hard solid earth, bricks and mortar or hardi plank, or corrugated iron or even just plane timber.

If it is for living in or for conducting a business, it’s for building wealth.

Capital Growth

Time and again it has been proven that if you hold any form of property for between 7 and 10 years or more you will see a growth in the value of your asset far beyond that of simply saving or other forms of investment.

The trick is in finding the right asset in the right location to ensure the maximum increase of growth you may receive.

Regular Income

Whilst it is advantageous to possess a positively geared asset, this is not always an option.

What is and always will be a constant is that some form of income is coming in.

The careful choice of position will always attract a stream of people just waiting to rent your home, offices or factory and help you pay off the debt.

Insurable Asset

Unlike a share portfolio or term deposit, any property is able to be insured against any number of negative outcomes.

Through fire, storms, flood and car crash you can insure your asset against damage and have it repaired without forking out more cash.

Tax Benefits and Incentives

For some reason the taxman smiles upon the investment of property like no other investment.

All sorts of tax breaks and incentives are offered to assist the investor of this style.

Anyone Can Do It! It does not matter whether you are a savvy developer, builder, banker, or a mum and dad investor.

With the money, the right advice, guidance and decisions, anyone can make a success of this form of investment.

Queensland’s Time To Shine Is Now

New dwelling approvals in the Sunshine State have outperformed all other states in the country as it posted a 24.5% annual increase  – the highest it has been for the past 6 years.

Brisbane inner suburbs posted a 101.8%approval growth, with middle and outer suburbs up by 90.7%, clear signs that investors are shifting towards investing in Queensland, due to strong property d

The Urban Development Institute of Australia’s Queensland branch president Andrew Stevens is optimistic that the rise in the emand and existing undersupply issues – estimated at 45,000 dwellings.number of dwellings aligned with the growing population will provide more jobs and benefits to Queensland in the coming years.

Read more about this on the Perth Now website.

Should You Invest In Property Over Shares?

Diversity has often been said as the safest way to invest, but if you were to choose, would you rather invest in Property or Shares?

In terms of starting with either investment type, a small cash deposit can go a long way with Property, because banks and lenders value the reliability of the property market. In property, lenders can lend as much as 95% the value of property, as opposed to the 50% leverage for stocks. Stocks are not for the weak of heart, as values fluctuate by the second. Property, on the other hand takes months to affect, as values rely heavily on certain economic factors.

Despite these sharp differences, investing in both property and shares is encouraged. A good investment strategy coupled with sound financial advice can help you reconcile these differences to build wealth.

Read more about this on the Your Investment Property website.

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