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Will buying a smaller investment property provide a good ROI?

glennadmin — Wed, 07 Feb 2018 06:33:32 +0000

A small investment property could potentially make a great investment, provided you choose the right one. The key to success with any investment property is thorough research. In this article, we take a look at how to research and choose the right small space property to give you the investment property returns you’re looking for.

Pros - why choose a small space apartment or unit as an Investment Property?

There are lots of benefits to buying a smaller investment property such as an apartment or a unit. Houses often have a higher entry price point due to land value, so you could potentially buy an apartment or unit with a smaller deposit. Ongoing costs for apartments and units can be a lot less too – council rates are usually higher on a house and in many states, you’re also required to pay land tax on an ongoing basis. With a unit or apartment, costs are limited to strata and body corporate fees.

Maintenance is also a cost that must be taken into consideration. If you purchase a house, all maintenance issues are your responsibility, whereas with an apartment or unit, many of these costs are covered by the body corporate.

These factors mean that a unit or apartment may be more favourable from a cash flow perspective – which is great, particularly for first time investors. Additionally, if you do your research carefully, you could potentially locate an apartment or unit in a location set to make both great capital gains and solid rental returns.

Cons - how small is too small?

Some developments offer studio and one-bedroom apartments of less than 50sqm. Many lenders are reluctant to finance these properties, and also some small space properties in high rise, high density developments, so it pays to discuss any property you may be considering with your mortgage broker before you sign a contract or put down your deposit.

Research is the key to success.

So how do you know for sure that a location will be in high demand for small space renters in the long term? Small space apartments and units are often in high demand in locations that are close to the action for singles! These may include the city centre and other busy employment hubs, universities, areas with vibrant nightlife, or excellent public transport facilities that provide fast and easy access to these amenities.

To find out what you need to know about a particular location, start by talking with local real estate agents and property managers. Essentially, you’ll want to find the answers to these questions about your chosen location:

How is the local economy doing? Is there employment growth?
What is happening that will affect supply and demand of small space property in the area in future? Are there many new developments in the pipeline?
What is the historical growth of property prices in the area?
What are the current rental yields on investment properties similar to the one you are considering?
What is the median price of properties in the area?

We can also provide you with a comprehensive report on any location or suburb of interest. We have access to specialised data from Australia’s leading property market data supplier, CoreLogic that specifically targets small space apartments and units.

How to analyse the market data.

You’ll want to analyse the data you collect to find a location with positive capital growth and solid rental yields to maximise the profit potential of your investment. (If you need help, please ask us as we have a great deal of experience!) Some other good indicators of these include:

Days on the market. How quickly do properties sell in the area?
Vacancy rate/demand to supply ratio. Is there much competition amongst renters?
Rental yield. What percentage of the price of the property can you collect in rent?
Auction clearance rates. Do sellers need to reduce the price to get a sale?
Limited available property. This could suggest that demand exceeds supply and this is likely to drive future capital growth.

Ask us to help you crunch the numbers!

There are always reasons for and against investing in any type of investment property. The right investment choice for you will depend on your financial position and investment strategy. If you’re considering in investing in property for the first time, a small unit or apartment could be a good way to start, so talk to us and we’ll help you crunch the numbers to see if they add up!

Remember, a good mortgage broker can be an invaluable resource when investing in property. We’ll help you choose the right loan that will not only serve your needs now, but set you up for further investments in the future. Talk with us today – we’d love to help you get started with a little property investment today!

This article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances. Your full financial situation will need to be reviewed prior to acceptance of any offer or product. This article does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances. Subject to lenders terms and conditions, fees and charges and eligibility criteria apply.

The post Will buying a smaller investment property provide a good ROI? appeared first on Focus Property Wealth - Perth Mortgage Broker.

10 Top Caravan Holiday Tips

glennadmin — Wed, 07 Feb 2018 06:12:41 +0000

Wish you could take longer holidays and spend more of the summer in the great outdoors? Caravanning is a great way to make the most of your holiday budget and is increasing in popularity. Last year, we Australians made more than 11 million trips and spent more than 51 million nights in our caravans and campervans! If you’ve just bought a caravan, or you’re in the market for one, here are some great tips to make the most of your trips!

1. Plan ahead.

One of the biggest mistakes first-timers make is not booking a site in advance in the camping hot spots. The most popular locations can be booked out months ahead, so secure your site in each place you want to visit before you set off. If you’re on a budget, there are a number of free camping sites around Australia – check them out at www.freecampingaustralia.com.au

2. Allow enough time to get there in daylight.

Towing a caravan takes practice. You have to reduce your speed, allow for the wind factor and avoid creating a traffic jam that goes on for miles. It pays to start early to avoid heavy traffic and so you can arrive at your destination and set up whilst it is still light.

3. Practice reversing.

Reversing the caravan is a difficult skill to master so we recommend you practice at home. It helps if you have a partner to give you directions – walkie talkies can be a big help and will save you yelling and attracting an audience.

4. Get caravan insurance.

When you’re towing your own accommodation, it pays to get an insurance policy. Check out insurance that covers you for loss or damage anywhere in Australia due to accidents, storms, impact, vandalism, fire and theft. It’s also a good idea to ensure it covers your caravan contents.

5. Don’t leave the Esky outside.

Don’t make this newbie mistake! The interior space in a caravan is limited, so when bedtime rolls around, you might be tempted to put the Esky outside the door. This attracts the local wildlife and in the morning, there is no food left or your campsite is destroyed. If there is no room for you and all of your foodstuffs inside the van, put them in the car at night.

6. Laundry facilities may be limited.

There will come a time when you have to do some washing. Most good caravan parks provide laundry facilities, but it’s Murphy’s Law that everyone will want to use them at the same time. Consider doing your laundry at night. Remember to bring your own pegs.

7. Don’t rely on the kids for company.

Caravan parks offer great amenities for the kids. You can usually let them do their own thing without worry, but you’ll probably only see them when they’re hungry. Bring a good book.

8. Plan your meals.

If you’re going somewhere off the beaten track, there may be no local shop if you run out of essentials. Always bring plenty of fresh drinking water – the local water may not be drinkable.

9. Don’t depend on a campfire.

Don’t count on using a campfire to cook with. In many locations, campfires are prohibited or there may be fire bans. If it rains, you may not be able to light a fire. If your van doesn’t have cooking facilities, bring a BBQ.

10. Bring a first-aid kit.

It should include band-aids, bandages, antiseptic, sterile wipes, sunburn ointment, insect repellent, insect sting lotion, and burn cream. You should also include tweezers, scissors, safety pins and a knife.

In the market for a new caravan?

This is a great time of year to buy a new caravan. And if you need finance, talk to us! We can help you with a suitable loan for all kinds of large purchases – not just home loans. There’s still plenty of time to take advantage of the great summer weather and you’ll be surprised how quickly we can get a loan organised for you. Give us a call today!

Source: https://www.caravanindustry.com.au/research

This article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances. Your full financial situation will need to be reviewed prior to acceptance of any offer or product. This article does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances. Subject to lenders terms and conditions, fees and charges and eligibility criteria apply.

The post 10 Top Caravan Holiday Tips appeared first on Focus Property Wealth - Perth Mortgage Broker.

It’s 6 O’clock on the Property Clock – Time to buy now!

Focus Property Wealth — Wed, 13 Apr 2016 06:50:29 +0000

Boom. Slump. Recession. Recovery. This tends to be the pattern on the property clock – a pattern that is cyclical and predictable. If you’re a savvy investor you can learn to read the time on the clock and use it to your advantage!

BOOM is at 12 – this is not the time to be buying, but it’s is a great time to sell. Indications of a property boom include interest from the media and rampant growth for three years in a row. Otherwise known as market peak, this is the ceiling on market growth within any normal cycle. Its length is roughly six months. 12 o’clock is the peak of the market, and that’s when you want to sell. This is not the time to buy.

SLUMP comes in at 3 - where the market has slowed. A good sign that a market is slumping is when values slow by 5–10%. This period normally lasts about a year; however, at this point many people tend to be in denial about the market’s viability.

RECESSION of the market is at 6 o’clock – a great time to buy! This time on the property clock is often referred to as an ‘opportunity market’ as it is easy to buy at a discount from panicked sellers. When a market has hit rock bottom, it will be sitting still. There will be a small volume of sales and lots of great opportunities to achieve discounts from desperate vendors. This represents a great time to buy, and for those investors willing to gamble that the bottom really has arrived, it’s possible to achieve amazing results. However, as investors, we try to catch the market as it’s starting to rise, coming off the bottom.

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Recovery is at 8 o’clock – the best time to buy for most investors. Often in a rising market valuers are still looking to the past for data and will value the houses even lower, and because the market is rising, you can realise your profit a lot faster. Once the market has achieved its first 5–10% growth in the first year, we know this is a great time to buy.

What are the worst things you can do in a booming market?

If you’re canny and experienced you can make money no matter what the market is doing, but investors will always make more by running counter to the cycle. The worst thing you can do is buy a property in a booming market - You are too late. You will suffer as soon as that little hand swings past the 1 on the clock. Wait it out. The market will fall again, and then is the time to buy.

What are the worst things you can do in a slumping market?

The worst you can do is panic and sell your property at a loss. Wait it out until the next cycle. It’s wise to prepare for the downtimes by allocating funds to and emergency fund to cover any slumps in the market. That way you can still cover any shortfalls adequately, to get you through the slump to the recovery period. We recommend you always sell in a booming market to maximise your results.

Generally speaking, the Australian market is doing well by world standards. This is evident by:

Chronic undersupply
Tight rental markets and growing returns
Immigration and the emergence of a fast-growing population
High home-ownership aspiration for all Australians, which is still achievable
High-income financial society with a cultural prestige to be in property
Investor magnet for yields and growth locally and internationally, particularly with Asian buyers
Bricks-and-mortar security, and safe for investment (proved during the GFC)
Preferential tax treatment through gearing
Australia has a prudential financial environment and AAA banking
Emergence of SMSF is putting pressure on supply and creating a new demand

Understanding where the market cycle is should be in every investor’s checklist. At Focus Property Wealth we have a deep understanding of the property clock and are here to help you get the most out of your property investments. We know that A-class buyers buy at the bottom of the market. B-class buyers buy in a rising market and C-class buyers buy at the top of the market. The A-class buyers sell to the C-class buyers, and the C-class buyers take the 12 o’clock to 5 o’clock loss in the market.

What type of buyer are you?

According to a Herron Todd White report, Perth is now sitting at approximately 5pm on the property clock, meaning that you should be considering purchasing soon. 5-7 o’clock is that magic time, when everyone is thinking that the market is hopeless and nothing is selling. We get to 6pm and those who don’t know panic and sell but the astute invest and make good money.

No matter what the market is doing, you can make money in real estate. As investors you should pinpoint where you are in the cycle, to help predict what will happen next, for a better and well-planned, outcome. Focus Property Wealth will guide you every step of the way on your property investment journey.

Focus Property Wealth are here to take the stress out of property investment. Our experienced and professional staff will keep you informed of the time on the property market clock. We do the legwork for you – providing the right type of research, financial planning, goal setting and advice to put you in the best position to get optimum returns on your investments.

Book a FREE no obligation consultation or call us today on (08) 6162 6577

The post It’s 6 O’clock on the Property Clock – Time to buy now! appeared first on Focus Property Wealth - Perth Mortgage Broker.