Future Proofing Investment Properties in Uncertain Times: 3 Basic Principles

Whispers of national recessions, market crashes and popping property bubbles have been doing the rounds for decades. Yet, many property investors continue to thrive, despite both real and speculated economic ups and downs.

What is the secret to choosing a property that has growing value, as opposed to a dead end investment that never pays off?

1. Research the Area’s Future

If you don’t take the time to get an understanding of both the zoning and future planning of your potential investment area, you could miss out on some incredible opportunities.

Take, for example, the recent case of a property for sale in Brisbane. Two years ago, buyers were put off from purchasing this property because of its consistently noisy neighbour - a very active live music venue.

However, few potential investors bothered to investigate the future of the music venue. If they had done their homework, they would have known that the venue was under a 2-year lease that was not, under any circumstances, going to be renewed.

The lease is now up, and the music venue is set to be demolished and replaced with an apartment development. Meanwhile, the savvy buyer of the previously unwanted property nearby is now enjoying the financial benefits of owning land that is now in a highly desirable location.

The bottom line: Areas are constantly evolving, and when you invest in a property you’re investing not in the present vicinity, but in its future surroundings.

2. Renovate with an End Game

Television shows like The Block, Renovation Rumble and House Rules all emphasise the importance of wowing buyers with the latest in home technology, style and design.

In reality, however, there’s no prize for having an investment property with all the latest bells and whistles if those extra trimmings aren’t what the renters or buyers you target want.

When it comes to renovating, prioritise improvements that are suited to the type of people likely to move to your area. Don't buy a pool when retirees dominate your neighbourhood or install a fireplace when you're trying to sell to a young family.

The bottom line: Stay on top of the market by renovating smart. Seek the advice of a property manager before you start on your renovations as they’ll be able to tell you what changes will directly improve your rental or resale value.

3. Fully Understand the Area

If size, features, location and price are your only considerations when purchasing an investment property, you could be setting yourself up for failure. Why? Because a property’s long-term value is largely determined by the rest of the neighbourhood and its inhabitants. Before you purchase, ask yourself the following questions:

·        What is the demographic of the local area – are your neighbours interested in and capable of increasing their own property values?

·        Are there signs of economic growth in the area, including increased local business activity, employment opportunities and investment in infrastructure?

·        Does the property you’re interested in have unique selling points, or is there many similar properties on the market that could lead to oversupply later down the track?

The bottom line: Look for properties located in neighbourhoods that are geared towards strong growth.

7 Advantages of Buying Off-The-Plan

Are you tossing up between purchasing an existing property and buying off the plan?

When most people start looking for a property they are already ready to buy. The quick-buy approach, however, is a recipe for investment disaster.  

Every purchase you make is an important addition to your portfolio, that needs to be carefully considered over time. 

Waiting for your next property to be built off-the-plan has many advantages you may not know about,  including:

1. Less Maintenance & More Rent

Newer properties are a lot more appealing to renters, so you’ll be able to lock in a firmer rental return. And, aside from luring prospective renters with a fresh looking property, you’ll also be able to save on maintenance costs and keep your tenants happy with a building that doesn’t need repair.

2. Fixed Price Customisation

Additions and renovations to existing homes very rarely go exactly to plan. It’s natural for refurbishing budgets to stretch and deadlines to get missed. When you buy off-the-plan, however, you can build the house you’ve always dreamed of with the assurance of a fixed price. You can choose what you want and have it ready when you want, from colours to fixtures, finishes, and even the location within the community or apartment building, it's up to you.

3. Energy Efficiency

These days, there are strict energy usage requirements in place for all new homes. Buying new allows you take advantage of all of the incredible advancements in modern construction technology from the get go. With an off-the-plan home, you won’t have to worry about paying for additional efficiency measures like insulation, energy saving lights, or a new hot water system, because your home will already be performing at peak condition as soon as you walk in.

4. Warranties

Brand new homes are sold with a seven-year builder’s guarantee. This covers structural and interior building faults throughout both the inside and the outside of the house.

5. Easy Market Entry for First Time Buyers

Many companies selling off-the-plan properties require lower upfront deposits – typically around 10% - and the balance at settlement. While construction is underway, first time home buyers have around 18 months to 2 years to save more money to put towards their mortgage deposit, moving costs or furnishing the house. And, if the property increases in value during this period, you’ll get some nice passive equity growth.

6. Planned Parking

While parking is a non-issue for many people living outside of major cities, in some areas, the availability of parking (and the likelihood of people parking you in on a regular basis) can make or break a buying or renting decision. New residential communities and apartment blocks are planned to accommodate all the traffic needs of their residents, so you won’t be stuck circling the block for a park every day.

7. Save on Stamp Duty

If you buy off-the-plan instead of purchasing a new home, you’ll reap some massive stamp duty savings (depending of course on which Australian state you live in). This is because state governments are attempting to stimulate economic growth through construction. Purchasing off-the-plan can save you thousands of dollars on your purchase, and coupled with a first home buyer’s grant, could make a serious dent in your mortgage.

“West is Best”: Study Finds Perth has Best Home Loan Saving Potential

A new study has found Perth resident’s high average income coupled with the city’s low rental costs makes the West Australia’s capital the best capital city in the country to live in while trying to save up for a deposit on a new home.

The study conducted by banking and insurance comparison website mozo.com.au found on average Perth residents had the potential to save $91,784 a year.

“West is definitely best when it comes to saving for a home deposit, with Perth benefiting from a combination of the highest household incomes and rent payments well below the national average,” says Mozo Director Kirsty Lamont.

In fact, Perth locals could save an average of $40,000 a year more than Hobart residents, who came out at the bottom of the pack in the study.

Mozo found that Hobart’s cheap rent did not offset the lower than average incomes its households received, with the saving potential of the average resident pegged at just $44,154.

The costs of household expenses in capital cities, including groceries, utilities and insurance were also factored into the study, although it was found that average income and rent were the two big determinants of people’s ability to save.

Verdict by City

Below are Australia’s capital cities, ranked according to ability to save:

Perth: Has the greatest ability to save, with the highest levels of income, average rental costs and below average living expenses.

Canberra: The second highest ability to save, despite having the highest living expenses in the country.

Darwin: The third highest household incomes, but the second most expensive rent.Brisbane: Average incomes, average rents, and average other expenses make Brisbane a “reasonable” city to attempt to save money in.

Sydney: Surprisingly, the city with the country’s highest average rent still outranked Hobart, Melbourne and Adelaide in terms of savings potential.

Melbourne: Falling into the less ‘saveable’ end of the spectrum, Melbourne has cheaper rent than Sydney, Darwin and Canberra, but only better household income than Adelaide and Hobart

Adelaide: The second worst city to save in, with lower household income than every other capital except Hobart, the South Australian capital’s lower rent still fails to make up the difference.

Hobart: With the lowest household incomes ($30,000 below the Australian average), rent & other expenses in Hobart aren’t nearly low enough to make it a place where saving is easy. 

What Triggers Capital Growth? 8 Signs to Look Out for Before Investing in a Suburb

Picking a winning investment is all about knowing which markets are about to rise in value, and getting in early enough to ride the wave. By taking advantage of capital growth wherever you can, you can make property portfolio flourish and turn short term investments into long term returns.

So what are the telling factors that a suburb’s value is about to soar? 

1. The average time on market is falling

If demand in a particular market is surpassing supply, any available property will be snapped up quickly and the time property spends on the market will noticeably drop. So keep a look out for suburbs with properties spending low average days on market because this is a sure sign of high demand.

2. A drop in discounting

Growth suburbs have a high level of competition, and vendors will stop offering discounts to attract more buyers because demand is high enough not to need it.

3. A rise in auctions

Properties will often be sold by auction when demand for them is strong because auctions have the unique potential to push a selling price even higher. A rise in auctions and high auction clearance rates in a particular suburb could be a sign of a surging market.

4. Falling vacancy rates

In general, a 3% vacancy rate indicates a balanced market – anything below that means a shortage in rental properties, and a rate above that means a surplus. If a suburb’s vacancy rate is low, there are more tenants in the market than available rental properties and this often results in rent and price increases as investors seize the opportunity for higher returns.

5. Growing rental yields

A rising yield is generally an indicator of capital growth because as a suburb grows in popularity more tenants will move there and the rental rates will rise. Investors then follow, attracted by the higher yields, and this leads to a rise in buying activity.

6. Fewer available properties

If there is less stock on the market, it means that owners aren’t selling and any property available is being quickly snapped up.

7. A lot of online interest

Strong demand in the way of many people searching for properties in a particular suburb where there aren't enough available for sale is usually a good indication that values in that suburb are rising.

8. A long period of underperformance

If a suburb has been underperforming for a while – and markets close by are on the rise – it’s a hint that the suburb is about to see a surge in growth as well. And the good news is that in most cases, the longer a suburb has been underperforming, the faster the reco

The Secret Aussie Property Investment Internationals Love: Do You Know What It Is?

Australia has a rapidly growing yet surprising new property market luring in international developers: student housing.

The country's high standard of education, coupled with the weakened Australian dollar has given it the fastest growing foreign student population in the world, and global companies are cashing in on students need for accommodation.

The current shortfall of purpose-built student accommodation in the relatively immature Australian market is leading to some of the highest returns on student housing investment in the world. 

According to Savills WorldResearch, student housing investments in Australia offer an average 7% yield as opposed to the 5% offered by the UK and 5.75% offered by the US.

These above average returns are attracting developers from China, Dubai and South Africa, who are purchasing land, apartments and housing that can be re-purposed into student accommodation.

Educational services are now Australia’s third-biggest export after mined commodities like iron ore and coal, and with the mining boom winding up, the economy is continuing to refocus on to service industries, like education, which attract the coveted Chinese dollar.

Over a quarter of the country's 645,000 overseas enrolments last year were Chinese students, and the nation's demand for both education and housing in Australia is on track for continued growth in the years to come.

6 Signs the Gold Coast is the “Pick” of Investment Areas in 2016

When asked which Australian cities are likely to boast this year’s best property market potential, property developers and market analysts are pointing to Queensland’s Gold Coast. 

1. Infrastructure investment galore

Both the government and private investors have been quietly delivering more and more infrastructure to the Gold Coast for the last few years.

The light rail and its extension to the heavy rail network that has just been approved, the sporting facilities being built for the 2018 Commonwealth Games, potential Broadwater developments and the widespread retail centre upgrades across the city are all clear indicators of economic growth.

2. Rental demand is soaring

Now is a good time to be a Gold Coast landlord. The market is tight right now, with unrelenting rental demand, some of the lowest vacancyrates in the state, and comparatively low property prices all fuelling investor confidence.

3. Culture, not just lifestyle, is becoming a selling point

A noticeable shift in the culture of the Gold Coast is taking place. While there will always be fish and chips shops, night clubs, theme parks and an on-the-water lifestyle on the Coast, there is a growing demand for a more cultivated experience.

In the last five years, the city’s restaurateurs, high-end hotels and retail outlets have been quietly stepping up their game, moving the city towards becoming a world-class cultural hub, not just a beach-side holiday destination.

4. Genuine value for Southern buyers

Sydney and Melbourne buyers – particularly first time property buyers who are looking for a lower-cost entry point in to the market – are flocking to the Gold Coast.

Southern buyers are genuinely impressed with the value that the city offers – why buy a two bedroom apartment for $1 million in Sydney when you could purchase two family homes on the Gold Coast for the same price? Or even an affordable beach front property?

5. The demographic is changing

The Gold Coast has long been renowned for housing the rich and famous of Australia. And, while the nation’s financially elite and their international counterparts certainly aren't going anywhere, the Southern influx is heralding the emergence of a new demographic.

The region’s growth means that young families buying their first homes, professionals drawn to new job opportunities, and interstate retirees will continue represent an increasing portion of the Gold Coast’s housing market in the decades to come.

6. Properties aren’t lasting long

Properties of all varieties are being snapped up quickly after being listed. Earlier this year a half-finished five-bedroom, seven-bathroom mansion in Tallai sold for $2.8 million – double what it was bought for in 2007!