Category Archives: Investing

That perfect house and land package

That perfect house and land package

Your house and land package include a construction package of your choice and land, this is usually described as one transaction but is effectively two separate transactions executed by separate contracts.

A house and land package are attractive as you know the land costs and build costs from the start, you can use market metrics to compare plausible rental yields. Existing market data is rather reliable, so choosing a house and land package in a good area is crucial.

Just as important is choosing a reputable builder if the choice is not given to you it is likely the agent is representing a developer rather than you. Choosing a build through a developer isn’t an issue most of the time (in terms of quality).

Houses in the same area end up looking eerily similar as developers pay architects for a hand full of plans and do not budget of unique houses as that would defeat the purpose of a suburb bulk build project.

You will need to consider your incidental costs of owning a property such as stamp duty and registration fees, costs on interest, conveyancing fees and other legal fees. Getting a good lawyer when undergoing this process is crucial as they can protect your rights and help you avoid any unnecessary delays.

You’ve got to be careful as you can run into council fees right from the start of when you move in if you do not keep your front yard clean. Make sure that you remove all debris and rubbish from the front of your place as soon as possible to prevent unnecessary council fees or fines.

You can find house and land packages within the planning stage on offer. You’ll need to do further research into what amenities are nearby, when and where public transport is going to be built and the target population of the area. The last thing you want to do is spent upwards of $700,000 on a house and land package that won’t see any rental yield for 18 months.

Your first investment property

Your first investment property

If you are making the choice to purchase your first investment property, there two things which you need to consider before making the purchase.

The first is the location equation, the kind of investment property you should be buying will depend on the immediate amenities of the immediate area surrounding properties.

The second is parking or access to parking, this is just as valuable as having the property itself. Everyone needs access to reliable parking as it’s a necessary convenience that helps us get by. We need it, it’s that simple.

The location equation has several variables, the prime variable being the immediate facilities available.

An apartment would be a stronger performing investment where:

  • A Hospital within 2 km distance;
  • Train station within 2 km distance;
  • Shopping centers within 3km distance.

Workers in the health profession are ideal renters because they are not likely to move for a few years and in the event of them sub-letting, will only do so to other health employees. Consider adding a sub-letting clause to the lease limiting to those working in the health profession.

Would you rather get $550 Per week in rent for 12 months and then spend 2 months trying to get the lease signed or let it go for $525 for 24 months for health employees?

A house or duplex would be a stronger performing investment where:

  • You are located within 5Km of a University or School;
  • You are located within 3Km of park or other recreational facilities;
  • Has an existing granny flat or has space for a granny flat;
  • Public transport within 2Km;
  • Have many rooms;

There a two options for the house or duplex: You can manage everything yourself which may be preferable if you are renting to students, in which case you will have high maintenance and electricity costs or you can have a real estate agent manage it, in which case you will have lower maintenance and electricity costs and a lower income.

Having a three- or four-bedroom house with an attached granny flat will bring you up to 5 or 6 rooms. You should budget to have each room rented out for $160 – 180 per week. Conservative estimate should be $800 per week in rental income before maintenance and electricity expenses in an ideal situation.

The goal of your first investment property depends on your financial goals therefore you should seek this kind of advice from your accountant. That being said, you should focus on generating equity in these investment properties, whether you stash the rental payments in a savings account or shares; you should focus on buying as many investment properties as you can.

When you rental income compounds over time, you’ll hopefully have generated sufficient equity to begin diverting receipts from your investment properties into the loans, eventually paying all of them off.

Depending on how focused you are and in your income potential, you should accumulate 4 properties within 10 years. Achieving financial freedom in fifteen and retiring within 20 years.

the value of investing in an apartment

The value of investing in an Apartment

Investing in an apartment offers value for real estate investors in several ways, this article delves into the obvious and not so obvious benefits of purchasing an apartment over a house. Apartments are great for building a wealth focused portfolio which you can rely on, to grow in value and create cash-flow.  But what are the advantages compared to a house?

Apartments are cheaper to acquire but have comparable rental yields, this means you can build a portfolio faster, compared if you’d be purchasing a house. If you’d rather have more money in your pocket overall, this may be the choice for you.

You will earn less rental income but have less expenses associated with upkeep and damage. Your insurance will also be cheaper and many of the costs can be shared with the tenant.

Apartments have lower maintenance costs this cuts less into your income budget, because they are smaller any improvements you make will typically be cheaper than a house. These lower maintenance costs will more or less be isolated and could be shared with the tenant depending on who the maintenance issues arise. These costs will not eat into your budget as you would have allocated a safety net in the form of equity in the first place.

Apartments are typically rented by people who are less than 35 years old, the same age group who are exposed convenience craze. If your apartment or prospect is located near public transport and or a supermarket, you are going to have an easier time finding tenants.

Young tenants tend to move around less, if your apartment is located near a hospital or a large shopping precinct it is likely that they are going to be working close by, you may be able to negotiate a longer lease with the tenant by offering them a competitive rate.

Whilst apartments are subject to strata fees and the rest, they are an option for people to enter the property market at a lower rate and build their portfolio. Building wealth through the purchase of an apartment is the first step for people on a budget that want to secure long term rental yields.

The value of a duplex

The value of a duplex

If you’re an investor you are probably searching for ways to maximize the value of your investment, especially when it comes to money. Building a duplex is one of those options and see’s a better return on investment compared to other options like a traditional home, townhouse or apartment.

Whether you are building on new land as a package or rebuilding your home you are making a good investment decision. Instead of having rental income from a single property, you can cash in on income from two separate residencies, anyone can see the appeal.

Of course, you will need to get development approval, using preexisting building plans which are common amongst land packages can help make the process easier, but the costs associated with the approval process can add up quickly, so be sure you budget for that.

Once the development approval has been successful, you will now need to get building approval, this can be challenging especially with neighbors. You can expect neighbors will add their $0.2 cents, but this is one of the tradeoffs you as an investor should be prepared for.

The building approval process is just as long and is conducted in stages. Each stage of approval has its own expectations and timeline. This process is may be managed by the building company, so make sure you choose a company who is reputable. At the beginning of the build, you will likely need to take fences on all sides of the property down.

Neighbors won’t be happy to see their gardens getting damaged, so make sure you monitor the building activity on your land as much as possible, document and take photos and communicate with the builders and contractors so that you can minimize the impact of your investment on your neighbors.

Remember, the relationship with your neighbors is important, especially if you are planning to rent these properties out. They can offer insightful information about your tenants which may be helpful in considering the renewal of their leases.

Once the build is progressing, materials are going to be approved and the structure of the house is going to start being setup. It is not uncommon for materials on your site to go missing or stolen, so having a relationship with your neighbors may go along to way avoid unnecessary delay in your build.

Upon completion of the build, your duplex will need to be assessed for fire safety and receive its occupational certificate before anyone can move in. Once you receive the occupational certificate you will need to get landlords insurance on your duplexes.

Now you are ready to contact a real estate agent to manage the marketing process of your property. In metropolitan areas this process should not take any longer than two months. Make sure you research your real estate agents to find someone who you can trust and rely on.

When choosing a real estate agent, choose someone who has a lengthy history with their current employer and has positive feedback on their property management skills. This will ensure you get a good marketable price with respectable tenants.

Taking Advantage of Australia’s Low Interest rate environment

Taking Advantage of Australia’s Low Interest rate environment

The Reserve bank of Australia has kept the base interest rates at 0.75% but what does that mean everyday Australians? Many savvy investors are considering different means of conserving their wealth as they investigate options as far away as they can from the traditional savings account.

The banks are not going to pass on the cash rate onto mortgages because they are focused on profit for their shareholders, but this does not mean you are going to have a hard time securing a good rate. The lower the cash rate the more room there is for negotiation on introductory rates.

If you are a property investor on a variable loan or negative geared, now is a good time to consolidate or buy another property. People are moving away from their savings accounts and into other methods of investment to protect their wealth, so why shouldn’t you?

By purchasing a property, you are buying into one the most stable and lucrative savings account’s there is. Focus on placing your rental income and additional savings from your paycheck into your offset account in order to pay less interest and lose less of your money to inflation.

That should be your goal, to beat inflation of a bare minimum. Most rental properties will achieve a stable 3-4% income yield, so by making additional payments and accruing equity, you can take advantage of these low interest rates and rapidly build your property portfolio.

Make the most of your portfolio before property prices skyrocket due to their demand or even run the risk of the Reserve Bank adjusting interest rates higher, meaning that you will lose out on a good deal.

Many savvy investors are going to be interested in investigating their options when it comes to sourcing a strong investment, so make sure you are doing the same. This website is full of guides and idea’s that get you in the right direction.

Whilst this is a good time to get in the property market and buy up as much as you can, make sure you do as much research as you can to make sure that it’s a good investment for you and won’t run up costs.

Avoid lemon properties as much as you can and if you are planning on going on a spending spree try to avoid properties which require renovations. You want to avoid as many unnecessary costs as possible as the interest’s rates are volatile and you’d want to manage your investment risk by mitigating costs.