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Updates
Reno Fever Hits Brisbane! -
With Australian's busy
spending literally billions of dollars each year renovating, the lure
of the renovated property is even stronger than ever. Last financial
year according to the Housing Industry Association (HIA) Australian's
spent 19.6 billion dollars on renovating and it is expected that this
figure will increase by at least 4% to 20.4 billion this financial
year.
Good Debt and Bad Debt - Many
of us were brought up in an era when any debt was a bad debt. If you
had to get a loan then pay it off as quickly as possible and the
ultimate financial Nirvana to aim for was to be debt free and not owe
a cent to anybody. But now today, isn't it easy to borrow money!
Your Obligations as a Property Owner
- There's more to owning an investment property than finding a
tenant. Many inexperienced property owners fail to understand their
tenants rights and their obligations as landlords.
Your Own Renovation Project -
The benefits of purchasing a property, and renovating it to reveal
it's full potential certainly isn't a new concept. Although we all can
see the financial benefits if applied to the right property, few
people have the time, patience or skill to manage a full-blown house
renovation.
A Long Distance Relationship that Paid Off
- As an investor based in New South Wales, many people would
question my sanity about embarking on a project to build a replica
Queenslander in the Brisbane suburb of Camp Hill. However after doing
my research I realised that the decision was a sound one due to the
demand for property and prices in Queensland.
The Importance of Research -
Although we all logically recognise the importance of research, it's
alarming to see how many investors purchase property without going
through the proper due diligence.
Reno Fever Hits Brisbane
With
Australian's busy spending literally billions of dollars each year
renovating, the lure of the renovated property is even stronger than
ever.
Last financial
year according to the Housing Industry Association (HIA) Australian's
spent 19.6 billion dollars on renovating and it is expected that this
figure will increase by at least 4% to 20.4 billion this financial
year. One of the key draw cards of renovating is the location of the
existing property. To secure premium inner city properties, buyers are
purchasing older, often run down properties and breathing a new lease
of life into them by renovating them and reaping the rewards.
Is it any wonder
investors are securing 'renovator's delights' when the profits are
there for the taking. Just look though the local papers and you will
quickly see the value a renovation adds to a property. With the high
demand for quality renovations in the inner suburbs set to continue
for the foreseeable future now really is the time to consider the
power of renovating. A popular strategy that adds value and appeal is
to lift an existing timber house. By raising an existing home and
building in underneath this allows the owner to double the floor space
of the original property.
An added bonus
in inner city suburbs is that this can sometimes also improve the
properties aspect by opening it up to better views of the city and
surrounding suburbs. Apart from raising an existing home, the top ten
renovation trends that have emerged in South-East Queensland over the
last twelve months includes...
- Adding an
ensuite
- Refurbishing
kitchens and bathrooms
- Creating
indoor/outdoor living areas
- Opening up
the house to its best aspect
- Adding sun
protection ie. veranda's, pergola's and plants
- Creating more
natural light
- Including a
home office into the final plan
- Adding
insulation
- Creating a
leisure area for children
- Including a
parent's retreat
As well as the
benefit of adding value to the current property, renovating allows you
to create exactly the property you want, for far less than building a
new home. So don't dismiss the idea of buying a renovators delight as
your next investment property. With demand high for premium properties
in the inner sectors of the city, this really is one strategy well
worth considering.
Good
Debt and Bad Debt
By Ben Healy, Managing Director of Wealth Coach Australia
Many of us were
brought up in an era when any debt was a bad debt. If you had to get a
loan then pay it off as quickly as possible and the ultimate financial
Nirvana to aim for was to be debt free and not owe a cent to anybody.
But now today,
isn't it easy to borrow money! We can get credit cards, home equity
loans and even interest free and no repayment for two year loans.
Offers come in the mail to lend us money - just fill out the form and
it's yours!
The fundamentals
haven't changed much - we just need to differentiate between good debt
and bad debt. We're all pretty good at justifying why the debt for the
holiday, the boat and the home entertainment system isn't THAT bad -
we just need a few more reasons to convince ourselves! So what is GOOD
DEBT?
It is generally
considered that GOOD DEBT is used for an appreciating asset -
something that you expect to go up in value such as your home,
investment property, shares or managed funds. Some commentators like
Kiyosaki say that your home loan is not good debt based on the fact
that it doesn't earn an income. Anybody who has just had a $100,000
increase in their home would probably disagree with him.
However, it is
fair to say that we should try and pay our home off as quickly as
possible because there is even better debt than that. And that is for
an investment that increases in value AND pays an income AND the
interest on your debt is tax deductible. When you borrow to buy an
investment it is called a GEARED investment and typically the
investment will be PROPERTY, SHARES or MANAGED FUNDS.
Understanding your obligations as a Landlord
By
Kathy Lawrence - Property Management
There's more to
owning an investment property than finding a tenant. Many
inexperienced property owners fail to understand their tenants rights
and their obligations as landlords. When you venture into the realm of
property management there are many pitfalls that the inexperienced can
find themselves in. In this months article we'll address your
obligations as a landlord and those of your new tenant.
As the owner of
a rental property, your obligations include…
- To ensure the
premises are clean & fit to live in at the start of the tenancy.
- To provide
the tenant with reasonable peace, comfort and privacy.
- To ensure
reasonable security and provide a copy of the keys to the tenant
- To pay all
charges, levies, premiums, rates and taxes payable for the premises.
- To cover the
costs of preparing the tenancy agreement.
- To ensure
compliance with laws regarding the health and safety of persons
using or entering the premises.
- To maintain
the premises and inclusions in good repair (this includes
maintaining or replacing a fridge if it has been left in the
property for the tenant's use.)
- To keep any
common areas clean (where the premises include such an area).
Many of these
points seem like common sense, however it is often easy to overlook
them when you are managing the property yourself. Another trap that
many new landlords can fall into is finding it hard to know where to
draw the line so you simply don't waste money on unnecessary requests
from tenants. This is where an experienced property manager can assist
you and give you peace of mind.
Your tenants
also have several obligations as part of their rental agreement with
you. These include…
- The tenant's
must keep the premises and inclusions clean, having regard to their
condition at the start of the tenancy
- The tenant
must not maliciously damage, or allow someone else to maliciously
damage the premises or inclusions.
At the end of
the tenancy, the tenant must leave the premises and inclusions, as far
as possible, in the same condition they were in at the start of the
tenancy. With the help of a skilled property manager you can eliminate
the headache of managing your rental, while enjoying the fruits of its
labour. To find out more about your obligations as a landlord visit
the Residential Tenancy Authorities website at
www.rta.qld.gov.au
or you are welcome to call me on (07)3369 0111 discuss any issues.
Taking Advantage of the Benefits of Renovating without having to lift
a finger!
The benefits of
purchasing a property, and renovating it to reveal it's full potential
certainly isn't a new concept. Although we all can see the financial
benefits if applied to the right property, few people have the time,
patience or skill to manage a full-blown house renovation.
With the help of
Investment House, you can join other Queenslander's who have profited
from the renovation boom without leaving the comfort of your lounge
room. You can now purchase a prime piece of real estate in the raw,
with all council approvals in place for a profit generating
renovation.
But it doesn't
stop there, as part of your package, Investment House will renovate
the property for you in a style which is in keeping with the rental
demand in your area. This means increased yield and decreased stress
and worry for you!! And, because Investment House offers a
one-stop-shop, we'll be actively looking for a tenant for you, even
before the property is completed!! Saving you the headache of finding
a quality tenant.
Of course, the
best part of this strategy is your ability to purchase your property
wholesale which sets you on the best footing right from the start.
Typically the combined effect of a buying strategy and the subsequent
added value of a renovation can add from 10 - 12% to the value of the
property. Had you purchased the property fully renovated, you would
expect to pay an additional $40,000 - $55,000 on the finished product
cost.
An example of
this strategy at work is a project we are currently undertaking at 38
Dorothea Street Cannon Hill which is approximately six kilometers from
the Brisbane CBD.
This house was
purchased for $290,000. As part of our renovation strategy we lifted
the original three bedroom house and arranged for council approvals to
allow for further development. With renovation costs totaling $150,000
plus holding and development costs of $27,000 the owners of this
property have ended up with a five bedroom house with double lock up
garage which is worth $525,000 in today's market.
|
Purchase Price |
$290,000
|
|
Renovation Cost |
$150,000
|
|
Holding & Development Costs |
$27,000
|
|
Total Cost to Owner |
$467,000
|
|
Current Market Value of Finished
Property |
$525,000
|
|
Profit on this Project |
$58,000
|
The total cost
to the owners has been $467,000 giving them a profit of $58,000. At
the time of valuation it was estimated that its rental income would be
$420 per week. For most investors this would make this property
neutrally geared, which is something that can be hard to achieve in
the current market.
To find out more
about how you can use this strategy to add another high performance
property to your portfolio, call the team today on 3369 0111. You'll
be so glad you did!!
A
Long Distance Relationship that Paid Off
By Yvonne McIntosh
As an investor
based in New South Wales, many people would question my sanity about
embarking on a project to build a replica Queenslander in the Brisbane
suburb of Camp Hill. However after doing my research I realised that
the decision was a sound one due to the demand for property and prices
in Queensland.
With the help of
Investment House I purchased a block of land in Brisbane Avenue, Camp
Hill for $216,500. One of the aspects of the Investment House
philosophy that I loved was the fact that they did it all for me!
Living so far away there was no way I could check on the property on a
regular basis and this is were the Investment House team really shone.
They understood the fact that this was a large purchase for me and
respected my need for regular information on how it was progressing.
Throughout the
process the various departments of Investment House all pulled
together to come up with the finished product. At times I felt I was
bombarding them with questions, yet every time they were willing to
answer any questions I had and their response was always quick and
re-assuring. I can honestly say through the entire process I truly
felt that the team worked with my best interests at heart. Which can
be rare in this day and age!
If there was one
challenge building long distance it would have to be choosing colours!
But even then, due to the rapport I had built with the team I felt
confident to go with their recommendations and I must say I'm very
pleased with the finished result.
Yvonne with her house three weeks before completion.
I am now the
proud owner of a five bedroom Queensland Replica which has cost me in
total $470,000 including holding costs and the Investment House fee.
With a conservative estimate of rents totaling $430 a week and a
recent valuation of $580,000 giving me a profit of over $100,000, I'm
more than happy with my decision to build with Investment House.
The
Importance of Research
By Paul Bakker - Research & Development
Although we all
logically recognise the importance of research, it's alarming to see
how many investors purchase property without going through the proper
due diligence.
Investment House
has a strong focus on doing thorough research on projects that are to
be recommended to clients. This is achieved though our network of
local agents, town planning consultants and builders we are able to
source for you the right property in the right area to suit your
needs. And because we are recognised as serious players in the market,
Investment House gets the first bite of the cherry when it comes to
new properties coming on the market. Thanks to our professional
relationships with local agents many will contact us first if they
receive a property for listing that might suit our criteria. You would
be surprised at how many good properties simply don't make it onto the
open market. But this is only one part of our formula.
As part of our
service the Research and Project department spend three weeks in due
diligence alone when embarking on a new project. This research process
is broken into three phases.
-
Preliminary Feasability Assessment to
determine whether the property is worth further investigation.
(Guestimation)
-
Detailed Viability Analysis
where we look at the properties strengths and weaknesses and bring
in consultants to evaluate the property.
(Estimation)
-
Due Diligence
involving actual quotes from trades people.
(Quotation)
As part of our
research, our team will typically look at up to 30 developments in a
month. Of these we may only shortlist 10 and ultimately proceed with
just 4. By taking the time to thoroughly investigate each property we
are confident that only quality properties are made available to our
clients. You might wonder about the people who buy the properties we
reject and how well they will perform in the coming years. I know we
do!
Over the coming
months we will take you through our three phase process in more detail
to give you a better idea of exactly what we look for, and why it is
so important when choosing the right investment property for you.
Disclaimer
Investment House is an organisation that works as buyers agents,
development advisory consultants, and project managers for investors
looking to acquire residential property. The information contained
herein is of a general nature and does not take into account
individual situations, needs or goals. Its purpose is to give you a
general understanding of the specific topics covered. For further
information relating to your specific situation please contact the
team at Investment House direct. No reader should rely solely on the
information contained in this publication as it does not purport to be
comprehensive or to render specific advice. Please be aware that the
authors of this newsletter are NOT licensed investment advisors or
planners, licensed financial planners or advisors, qualified or
practicing accountants.
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