Posts

Residential properties that guarantee an ROI

Being selective about what you invest in, whether it’s commercial or residential properties, is a blessing. You invest wisely and earn enough to make your next purchase. When you’re shopping around, you already know the type of tenant you want to target.

 

Student accommodation

University and international students either live on-campus or in suburban properties close to their school. Residential properties like this need to be monitored closely so that nobody skips rent or causes damage. But in spite of the horror stories, the tenants are normally very well behaved.

You can rent out your properties as student accomodation

Student accommodation can take many forms. It can be a block of units, a single family home or even a townhouse. The home is ideal if it’s close to any given university or college campus and public transport.

 

Retirement living

These residential properties are often built by specialists and handled by a company with specialist experience (Aveo is an example). But on Real Estate, there’s some properties marketed as ‘retirement living’, geared towards investors.

Retirement homes are marketed to those who are over sixty but are by no means invalid. Residential properties on the market have high-end amenities and appliances included in the apartment or home. ‘Old’ doesn’t equal ‘dated’.

Mansion on the outside, retirement living inside

Retirees are good tenants because they respect their home and maintain it to the best of their ability. If they can’t, they’ll have a nurse or family member help them. If you’re looking at residential properties for retirees, it’s worth looking into these medical/nursing services and market them as optional amenities.

 

Single family homes

Small families will rent before they can afford their first home. Single family dwellings that are close to schools and shops are absolutely worth the investment and the fight that comes with trying to purchase one. Competition is fierce because other investors know there’s money to be made in this area of the market.

 

Need more advice? We have these for you…

  1. The great debate | Buy old property or build new?
  2. 6 signs of an amazing property manager

The great debate: 5 articles about smashed avo vs property investment

On May 16th 2017, property guru Tim Gurner appeared on 60 Minutes to talk about the property market and he didn’t hold back. What he didn’t expect, though, was to set off a chain reaction of jokes, puns, and a genuine debate about breakfast.

His comments that young people can’t afford to get into the market thanks to meals out and their daily coffee hit received a lot of backlash, but also changed the way we looked at Australian property investment. We collected some of the best articles about the issue from around the web so you can make your own judgement.

 

 

 

‘There was no discussions around, could I go out for breakfast, could I go out for dinner. I just worked.’  – Tim Gurner

A quote from the original interview that sparked an uproar. Tim Gurner, property investment advisor and developer speaks candidly about his struggles when he entered the property market…and why the new generation has no chance of getting their foot in the door.

 

 

 

Travel, smashed avo, or that avocado farm in rural WA? Mark Campbell, writer for the Sydney Morning Herald, looks at the ‘lazy’ millennial generation and their prospects for entering the property market. Are they really in trouble when they’re spending money on trips to South America and $15 smashed avo with a sprinkling of dukkah?

 

 

 

The debate made its way over to the USA, where a savvy Twitter user did some maths and shared the results.

 

 

How many serves of avo smash a day equals the profit your investment property brings you in capital? This tongue-in-cheek piece from Real Estate has some unexpected figures.

 

 

What if it’s not the breakfasts’, or millennial’s, fault? Nick Evershed from The Guardian helpfully points out that markets and general affordability, or lack thereof, are putting young people out of the running.

This article even comes with a fun ‘luxuries’ calculator that equates the amount of ‘fun stuff’ people can do, eat, and more with the equivalent of a property investment deposit.

 

Liked this? Check out these:

  1. 5 ways to find the best property investment
  2. 4 articles that give investors a reality check about the property market, worldwide

4 articles that give investors a reality check about the property market, worldwide

The property market is competitive, no doubt about that. Internationally and locally, investors are getting priced out of one market and moving onto another, before the same cycle repeats itself. Australia’s had a ‘golden age’ of affordability, but in recent months that rosy period has come to a screeching halt.

 

 

Sydney and Melbourne’s property markets are slowly outpricing potential investors thanks to rapid employment growth, among other reasons. While prices in these cities have risen over 10%, Brisbane’s growth remains in the single figures. But is it too good to last?

 

The UK has one of the priciest property markets in the world, and the younger demographic is certainly feeling the pinch. This is all thanks to changing work conditions, the drama of Brexit, and the ‘silver generation’ using their experience to snap up hot real estate.

 

This is an opinion piece, but the context is relevant. This debate was sparked by investment professional Tim Gurner’s scathing observation about millennials and their lack of potential to crack the property market. Why? Because they love $4 coffee and avo smash everyday. Even though the debate has raged back and forth, it’s put the way we work, save, and spend in the spotlight and there’s no sign of it slowing down.

 

There’s a glut of apartments in Brisbane, and developers are so desperate to sell them they’re offering incentives to buyers. This comes as a result of  oversupply and minimal demand. ‘Offers’ include the likes of free rent (for a period), vehicles and free avo toast everyday for a year. That’s probably another house deposit…or a new couch.

 

Liked this? How about these?

  1. 5 ways to find the best property investment
  2. Less than 1% of Investors Succeed in Building a Property Portfolio

Don’t make these 6 mistakes if you want the best property investment possible

There’s no one-size-fits-all when it comes to finding the ‘best’ property investment available. Ideally though, you want it to make you money through rent paid by tenants. It doesn’t matter if the property is residential or commercial, a house or an apartment. To make sure you find the best property investment for YOU and your portfolio, we compiled these five tips.

 

  • You don’t have professional help

You need unbiased professionals to help you handle the financial aspects of property investment. Mortgage brokers help investors daily, giving them advice about home loans and ownership structures. You’ll also need your accountant on your side. Find one that specialises in property accounting so they can lay out a plan and a budget based on your income and credit.

 

  • You don’t have an end game

Nobody invests in property just for the heck of it. There’s always a plan in place for each property in the portfolio. There should be a backup plan, too.

Some get into property investment to boost their retirement savings or retire early. Others want to get out of their day job after earning income through buying, renovating, and selling homes. Don’t walk into the property investment game with short-term goals.

 

  • Your properties are all in one place

Yes, you’re more comfortable buying ‘close to home’ because it’s familiar territory. But this means other investors are buying you out of the locations that really make the big bucks.

Less than 20% of investors have two properties or more in their portfolio. Less than 1% own six. This means 99% of investors are playing it safe and are missing out as a result. There’s no reason why you can’t have a property in Tasmania or another in Perth. Get out of town when it comes to looking for the best property investment.

 

  • You haven’t looked at trends

Get familiar with complicated terms like ‘yield’, ‘median price’, and ‘cash flow’. Trends like these will guide you in making great purchases.

 

  • …or done your homework

Have you done any research into the area you want to buy? Did you check if there’s any upcoming developments like shopping centres? What about schools and access to public transport?

If you don’t do your homework, you’ll end up with a property investment located in an area saturated with others. You’ll leak money instead of save. This is why it’s important to look at trends and branch out from your ‘home base’.

 

  • You can ‘manage on your own’

If you can, good on you. But the task of picking tenants as well as monitoring them, setting rents, and the like takes time you don’t have. Plus, you’ll get emotionally invested. Hiring a property management team is a better option.

How to survive investing in property

Investing in property is a path many choose to grow their wealth. Experienced investors, like those who take mentorship roles in Property Club, have a couple of dozen properties around Australia. Others are content with having just two or three in their portfolio. First-timers wonder, though: how do these experienced investors survive the game?

 

One aspect is knowing what could go wrong, and taking measures to prevent it. Investing in property isn’t a matter of ‘I’ll buy a place and hope for the best’. It’s a strategic game, and there’s every chance of losing. Dodgy tenants, bad property managers, natural disasters, and debt,  are just some of what can go wrong.

 

It’s important for investors to do their homework, and those who’ve played the game a while don’t even have to think about it. Seasoned investors look at property condition, the potential for capital gains tax, the ideal tenant for the place, and how much competition (other investors) there is in the surrounding area.

 

When you’re investing in property, you’ll also need a team of professionals on your side to handle the things you can’t. The same way you’d call a plumber to fix the pipes, you need a depreciation professional to make your depreciation schedule. Deppro’s quantity surveyors do their best work after the deal on the property is settled and they can inspect it in the condition you bought it. If you want to continue investing in property, having a depreciation schedule in hand will get you there faster.

 

To survive investing in property it’s important to know the risks, accept them, and do whatever you can to prevent them. You also need to do your homework on the house, apartment, or whatever else you want to add to your portfolio. To have a chance in the game, call on professionals like Deppro to get the ‘official business’ around your tax depreciation sorted.

What everybody ought to know about tax depreciation

There’s experts out there, like Deppro, who efficiently handle tax depreciation so their clients can get the best possible return. Seasoned property investors know about tax depreciation and how to claim deductions every year. This article is for the first-time investors wanting to get in the market, but not quite able to wrap their head around depreciation.

 

  • It’s a claimable expense

Tax depreciation is deductible from your income, giving you a greater tax return.

 

  • You need a depreciation schedule

This is absolutely necessary so investors and business owners can claim the maximum amount over time. Depreciation schedules begin from the settlement date and estimate the value of taxable items over their useful lifetime.

Getting a depreciation schedule takes the guesswork out of evaluating items in your property as the years pass. Quantity assessors, like those who work for Deppro, will do an inspection. The depreciation company uses these to write a report and a depreciation schedule. These are delivered to the client within the month. This often overlooked information helps investors significantly boost their returns.

 

  • You can buy more properties

The money earned back from tax depreciation lessens the debt investors take on when they buy property. It’s common for them to use the extra funds to expand their portfolio. Once they do, they repeat the process of getting a depreciation assessment.

 

  • The report isn’t an annual thing

The quantity surveyor will only need to visit the property once. They’ll take pictures and make notes before heading back to the office and drawing up the report, outlining the values of the items they see. If you do renovations on the home, though, you will need to update this report for an accurate schedule. You’ll get in trouble with the ATO if you make a claim with false information.

 

  • ATO approval

The depreciation schedule must come from a registered tax agent so that it complies with guidelines from the ATO.  Deppro’s quantity surveyors are educated, accredited, and take pride in providing accurate reports.

Buying an investment property for under $500,000

By Paul Bennion, Managing Director of DEPPRO

 

In most capital cities of Australia, apart from Melbourne and Sydney, there are still a plentiful supply of properties priced for sale under $500,000. This includes Brisbane, Perth, Adelaide and Hobart. Major regional centres such as the Gold Coast in Queensland and Bunbury in Western Australia have this abundance of properties as well. In Perth, for example, it’s now an investors paradise. There’s many properties currently listed for sale under $500,000 located within a 20 kilometre radius of the CBD.

 

$500,000 is around half the median house price of Sydney. Properties in theses competitively priced capital cities offer a low risk entry into the property market. There’s added potential for capital growth moving forward. Yet, it’s important that first time investors take a cautious approach to their first property investment purchase. Realistically, they should focus on buying an investment property for under $500,000.

 

It’s an unfortunate fact that too many first-time investors financially over expose themselves. They buy an expensive investment property that limits their ability to purchase more in the future. This is especially the case if they purchase an expensive property in the wrong location. That could result in a financial nightmare. In contrast, buying a lower priced property that’s got the potential for strong capital growth is an important building block to creating a successful property portfolio.

 

Lower priced properties tend to have higher rental returns. This is important in a climate of rising interest rates, with the major banks increasing rates for investors over recent months.

 

Issues you should consider when buying a lower priced property include:

 

  • Spend time researching all aspects of property market before even looking for an investment property. First time property investors need to consider factors like negative or positive gearing, rental returns and depreciation.

 

  • Past trends in property values will generally indicate future trends. Therefore, it’s wise to examine the long-term capital growth rates of the suburb.

 

  • Take a broad approach to buying an investment property. Most first-time property investors buy a property in their local neighbourhood because they’re familiar with the area. By taking a narrow approach to the location of the investment property, first time investors severely limit their options.

 

  • Target suburbs in lower priced areas that have a higher number of properties for sale. A simple tip is to check the internet and weekend papers. This helps investors discover areas with a larger number of property ads.

 

  • When you have selected a suburb, don’t make an emotional decision when choosing a specific home. Most first-time investors purchase a property they’d like to live in. It’s important to remember that the investment property must appeal to a tenant who’ll be paying the rent.

 

  • Check out any planning changes proposed for the suburb. Many local governments are undertaking reviews of zoning that potentially have a major impact on property values. For example, a property that was purchased for a single residential use and then rezoned by the local council, as a triplex site. The property in turn notably increases in value.  The planning department of a local government can inform first time investors of any proposed zoning changes.

 

  • Check out any planned infrastructure changes in an area you’re interested in buying. For example, an upgrade of a local shopping centre or a new railway station will make a major impact on local property values.

 

  • Make sure that there are tenants prepared to rent your property. Rental income is a key factor in serving the loan. If you can’t find a tenant, then you’ll have problems keeping the investment property over the longer term.

 

  • Check your finances before you consider buying anything. If you have pre-approval finance it will allow you to move more quickly to secure the right investment property.