Tag Archives: investing in property

Investing in Property

Investing in property? You’ll find it so much quicker and easier utilising a buyers agent based on your own clear financial strategy. Why? Because buyers agent offers you accurate comparison of your options. You won’t need to spend valuable time on prior research, just sit back and compare properties, loans or broker providers.

Investing in Property
Investing in Property...want to maximize the performance of your investment property?

In terms of investing in property you can choose between negative geared property or cash flow geared property. If you need help check out property investments weekly webinars held between Monday and Wednesday nights at 8.00pm Eastern Standard Time or  feel free to contact us.

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Creating your shortlist of properties becomes so much more efficient and accurate when you use our unique investment strategy and exclusive buyers agent. We can help you to better understand your required property investments criteria and create for you an easy-to-digest shortlist of options.

Are you a new or seasoned property investor? Want to maximize the performance of your investment property? When it comes to your finances, it pays to make the right choice. Choose your investment strategy based on your personal goals.

Which of the following should you do before you start investing in property?

  • Sell your home
  • Check your credit score
  • Shop for furniture

Why check your credit score well ahead of the investing in property process? Because if you discover an error, you’ve got plenty of time to go through the official process of correcting it.

When investing in property should you be shopping for a loan? Which status should you seek to give you an upper hand with a seller?

  • Pre-qualification
  • Pre-approval
  • Pre-reviewed

Its important when investing in property to get pre-approved for a loan. Although pre-qualification is free, it’s unofficial and often unreliable. Pre-approval means a lender has looked into your credit and financial situation more closely and will make you look like a serious buyer to the seller.

What is amortization?

  • Process of taking out a second mortgage
  • Process of drowning in debt from a mortgage
  • Process of paying off the mortgage gradually

Amortization is the process of paying off the principal of a loan in incremental payments that gradually chip away at the principal.

Which of the following mortgage terms gives you the maximum tax advantage?

  • 15-year fixed rate
  • 20-year fixed rate
  • 30-year fixed rate

The 30-year term gives you the maximum tax advantage by having the greatest interest deduction.

What percent down payment should you make in order to avoid having to get private mortgage insurance?

  • 20 percent
  • 35 percent
  • 45 percent

Unless you pay at least a 20-percent down payment, you’ll also have to pay private mortgage insurance (PMI). This can sometimes be pretty expensive, so it makes sense to put as much into your down payment as you can.

How much should you expect to pay for a professional home inspection?

  • $50 to $100
  • $200 to $500
  • $800 to $1100

Professional Inspections cost anywhere from $200-$500 but are well worth it. Even with new construction, there can be hidden problems that only a professional inspector may find.

Which of the following types of real estate agent works for an office that does not take listings of any kind and represents only buyers?

  • Exclusive buyer agent
  • Single agency buyer agent
  • Dual agent

An exclusive buyer agent represents only buyers and does not list properties. A single agency buyer agent (SA) works for an office that represents both buyers and sellers but will not represent both in one transaction. A traditional buyer agent might work as a dual agent, representing both buyer and seller in one transaction.

If you sign an agreement with a buyer’s agent, which kind of clause should you make sure the contract includes?

  • Fee escalation clause
  • Release clause
  • Lemon clause

Make sure you have a “release clause” in your buyer’s agency agreement just in case you find out you just don’t like your agent. This will allow you to sever ties without any future problems.

After a seller has told you he has agreed to accept your offer and then backs out, what’s your legal recourse?

  • You can sue and most likely get the house back.
  • You can sue for fraud and damages, but you probably won’t get the house in the end.
  • You have none because a verbal agreement is non-binding.

Unfortunately, there’s not much you can do short of pleading with the seller. Verbal agreements aren’t binding, and you’ll find that you have little legal recourse.

Which of the following isn’t a typical fee you’ll have to pay in closing costs as a buyer?

  • Seller’s agent fee
  • Notary fee
  • Escrow fee

The seller is responsible for paying the seller’s agent, not the buyer. The escrow fee is a typical fee for a neutral third party to hold the funds during negotiations. A notary should be paid to notarize the documents.

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Investing in Property

Property Investment Loans?

What You Need to Know About Investment Loans?

 

Investing in property? There are a range of residential investment loans to meet the varying needs of property investors. In fact, property investment loans are not too different from any other type of home loan.

Property Investment Loans for when deciding on the right investment loan most people only consider the interest rate.

Property investment loans include many other considerations like (hidden) fees you pay which can include:

  • Application/establishment fees, range from $0 to $1,000 and more depending on lender and the type of loan you need
  • Ongoing fees can range between nil to $550 per annum
  • Early exit fees/penalties from $0 to thousands
  • Fixed rate loan and economic costs
  • Discharge fees in order to get your title back you need to discharge any mortgage held over it, lenders charge differing fees
  • Mortgage insurance fee depending on lender/insurer, which is calculated using a percentage of loan amount (LVR)
  • Additional lending costs, charged to access any additional funds you have paid on your loan (redraw)
  • Fees charged for changing the security over loan and switching loan products also vary between lenders
  • Valuation costs and legal fees should also be considered…

Property Investment Loans, it’s important to tailor the correct product to suit your investment needs.

property investment loans
Property investment loans

 

Property investment loans example…let’s say you want to maximise the most suitable finance structure by using the best tax structure discussing the options with your tax professional.

Property Investment Loan Types: Property investment loans are no different to home loans. Interest rates, fees and lending policy are very similar:

  • Variable rates
  • Fixed rate loans
  • Line of credit
  • Construction loan
  • Low doc loan

All these types of loans are available for investment property loans.

It does not really matter what type of loan you choose just as long it fits your investment strategy using an interest rate which is competitive and fees (as discussed above) are not excessive.

Property investment loans considerations: professional packaged loans that allow you to put multiple loans under the one package which can help to save on establishment costs and ongoing fees.

Line of credit loans can be used to access equity from an existing home, used as a deposit or to purchase an investment property. If you already own a property, a line of credit is a good way for you to tap into any equity you’ve built up in property which can be used as a deposit for buying investment property.

A line of credit loan allows you to draw from a fixed amount at any time to pay for whatever you want. It’s kind of like a credit card with a big limit but the equity in your home acts as security for the loan.

Interest only loans and principal and interest facilities may be better utilized depending on your personal circumstances and investing objectives. Interest only loan the principal remains the same.

You only pay the original amount you borrowed when you finally sell investment property as this type of loan is useful for investors because your monthly repayments are less than they would be if you were paying off principal as well.

Fixed or variable rate loans also depend on borrowers risk profile and property investment strategy.

Long term property investors with a long term views prefer fixed rates so they know exactly what their repayments are.

Interest Only or Principle and Interest: Interest only loans allow you to only repay interest on the loan without reducing the principle loan amount.

This can assist in allowing a borrower to reduce non-deductible debt or bad debt more quickly. Principal and interest repayments allow debt to be reduced and more equity to be established.

Most property investors prefer interest only loans for the following reasons:

  • Investment interest repayments are tax deductible
  • Principle payments are not tax deductible
  • Principle payments are better utilised via personal non tax deductible debt which reduces amount paid each month freeing up cash flow…

Property investment loans like other loans means you can choose fixed, variable or split interest rates with flexible features like redraws, etc…

Property Investment Loans

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Buying Investment Property And The Property Cliches

Many Australians are buying investment property armed with nothing more than poorly understood property cliches, are these aphorisms always true?

Is property investing your business or passion? I personally love seeing property investors make bank. Seeing property investors make ill-informed property decisions and costly mistakes can be avoided with greater knowledge and understanding of property cliches.

Regardless of your property investing experience and the type of property you’re now researching or planning, here are some real estate and hard-won investing lessons I’d to share with you…

So what are property cliches? Are you aware of property cliches and why you’d want to ignore them in your property research, planning and transactions?

Over the years residential property has proven to be one of Australia’s best performing investments. Buying property is considered the biggest investment decision…a cliche?

Surprisingly, many Australians buy property with little or no investigation into the factors which drive individual property performance.

Misinformation is prolific and the cause of many poor investment decisions. Even well trusted beliefs can prove misleading for the most experienced property investors.

What if you questioned the validity of property clichés and commonly held assumptions? Would it mean as buyers you’d make better informed decisions? What are the investing factors which differentiate a good investment property from a poor one?

property cliches
Are you buying investment property armed with nothing more than poorly understood property cliches…

Location, location, location, possibly the most well-known property cliche, often quoted as the quintessential factor when it comes to property selection.

What many buyers fail to realise is location is about far more than just the right suburb or even the right street; it is as specific as the lot number or position in a block of units.

Neighbouring properties may appear to be similar in many ways, factors such as aspect, orientation, floor plan, levels of natural light and security, all have an important impact on property value beyond the underlying land value.

Hot spots, it’s not uncommon for property investors and buyers to chase the next big hot spot with hopes of making a quick buck. Hot spots aren’t all they’re cracked up to be right?

By definition a hot spot is a suburb or area predicted to benefit from rapid short-term gains in value. However, despite an initial spike, a hot spot is usually characterised by slow or limited growth in the long-term that often eventually undermines short-term gain.

Because of the high transactional costs of buying property investments,  real estate should be viewed as a long-term plan, which means hot spots often fail to provide the exceptional growth buyers hope for…

Timing and analysis of historical sales data clearly shows that it isn’t when you’re buying investment property, so what you buy is that an important factor?

Purchasing a property based on price alone is no guarantee of future capital growth or performance. Selecting the right property with the right profile for growth ensures property owners buy an asset which performs irrespective of wider market conditions.

Keeping up with the Jones, some of the best performing properties aren’t glamorous. When buying investment property don’t be fooled into thinking the more you spend the greater the likelihood of good capital growth.

In fact, buying a flashy new property or one considerably above a suburb’s median price can limit buyer demand and subsequently growth.

When investing, don’t buy property which appeals to buyers’ aspirations. Buy property which caters to financial and social requirements of tenants and buyers in the area.

Sitting on the sidelines, during uncertain economic times it’s common for buyers to withdraw from the marketplace in anticipation of property prices reaching the bottom.

Adopting a wait and see attitude to buying and selling real estate can be disadvantageous.

The reduced competition during a downturn can create really good opportunities for savvy property investment buyers. History shows most buyers tend to return to the market after a positive shift in sentiment and later on as the values have already occurred.

Property investors which have bought well needn’t worry about selling in a downturn either as quality real estate assets are always in high demand.

So don’t wait for others to make the first move. Base your decision to buy on your personal financial circumstances, not market sentiment.

Buy the worst house on the best street, can seem like a cost effective way of buying investment property in a sought after location, however, it is not without risk…

property renovation cliche
Property renovation cliche…

The goal is commonly to transform property from worst to one of the best properties on the street. However, any saving on initial purchase is often very quickly absorbed by renovations to improve the property.

Conversely, deciding to leave the property in its original purchase conditions can have negative implications for the property, which will be reflected in future capital growth.

It may actually be more cost-effective to buy a better property and forgo the expense, stress and risk of renovating.

Think outside the box, when it comes to investing in property there is no need to reinvent the wheel.

Investment properties which offer ROI aren’t always architecturally unique or modern. In fact, they are more commonly well-located inner city period and pre-1970s properties.

Property selection isn’t a guessing game, so stick with tried and tested property selection methodologies that rely on empirical sales evidence, not speculated or high-risk returns.

A renovators dream, as renovation property programs continue to hit Australian television screens the punter or DIY handyman considers the prospect of buying and renovating to make a quick buck.

The novice renovators often underestimates the commitment required to transform a property, which can cost them significantly.

value investing
Novice renovators surprised by value investing…

When deciding to renovate it is important to consider where the property is located, the type of property e.g house or apartment, whether it will be a rented investment property or owner-occupied…

Who is the target market, potential buyer or tenant of the property? Sellers should renovate to their target market…

It is also important to be wary of overcapitalising in a property, as the amount spent on renovations may not offer an equivalent return in the increased value of the property.

A good rule of thumb is to not spend more than 20 per cent of the property’s value on renovations.

Up and coming, closely related to hot spots concept, which is often used for suburbs expected to perform well on the basis of proposed future improvements to infrastructure and/or local amenities such as roads, school, shopping complexes, sporting facilities etc.

When it comes to property, one of the golden rules is never speculate. Purchasing on the basis of planned or proposed future improvements is risky.

Hundreds, if not more, development proposals are put on hold or denied every year and when approved can take many years to build. There’s no guarantee the added amenity will add positive weight to local property prices.

The most diligent measurement for an asset’s future growth is to look at its performance history. Remember to consider this when looking at hot spot or up and coming suburb.

If you feel that you are ready to step up to the next level, stop trying to figure it all out on your own and make sure you don’t go around the calender another year without seeing success...click here now!

We might be able to help by mentoring you and giving you a step-by-step system to follow and help you get to the next level.

Property Cliches