Viewing by month: June 2012

Mould prevention – make it a priority

As a homeowner, there is not much worse than discovering that you have a household mould problem. Because its presence can be extremely problematic, it is important to both recognise a mould problem before it escalates, and take preventative measures to reduce the likelihood of mould growth on your property.

 

Despite being easily fixable in many cases, the problem of mould commonly goes undetected or ignored by homeowners. Ignorance, however, is certainly not bliss in such instances; because although it may seem like a minor issue at first, mould can quickly spore and lead to a variety of health problems including sneezing, coughing, respiratory infections, nausea, asthma, allergic conditions as well as structural damage to the premises itself.

 

Mould prevention strategies

 

Here are ten strategies to help you reduce the chances of mould growing on your property:

 

1.       Keep a close eye on areas like kitchens, laundries, bathrooms, cupboards and poorly insulated walls or roofs. Mould grows best in places that are frequently damp, humid or insufficiently ventilated;

2.       Use or encourage your tenants to use extractor fans;

3.       Hang wet clothes outside, and if you have renters, ensure that clothes lines are made available to them.

4.       Ensure that roofing, guttering and plumbing is regularly maintained and repaired promptly;

5.       Make sure that all windows and internal doors are capable of being left open to allow every room in the property to be sufficiently aerated;

6.       If building, renovating or maintaining a property, try to employ mould resistant materials. For example, when building walls and/or ceilings use high gloss paint and install installation if possible;

7.       Provided you are comfortable doing so, keep blinds and curtains open during the daytime; sunlight restrains mould growth;

8.       If you spot condensation, wipe it off as soon as possible;

9.       Try to maintain even room temperatures;

10.   Vacuum regularly: Proper vacuuming reduces the chances of mould becoming airborne and reproducing.


0 comments | Posted by Charles Tarbey on 25/06/2012 at 1:54 PM | Categories:

Property versus shares – the age old question

It is one of the most debated and uncertain questions of investing – shares or property. Both classes have their advantages and drawbacks, with different levels of risk and return, and as such the answer will almost invariably come down to personal preference.

 

In any case, for investors looking for an intelligent, long-term solution and who don’t have the time or the resources to continually monitor the performance of their investment, residential property should certainly be considered as a viable option.

 

Charles Tarbey, Chairman of CENTURY 21 Australasia, recently contextualised this issue and put forward some compelling arguments as to why property investment might be the way to go in today’s turbulent global marketplace

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“Over the first five-and-a-half months of 2012, the Australian equities market has experienced some extreme fluctuations driven in part by instability in Europe, softening growth in China’s economy and lingering negative consumer sentiment,” said Charles Tarby. 

 

“While the Australian property market as a whole has seen stagnant or depressed growth this year, values have not fluctuated to the extremes or lows that many shareholders of listed companies have endured, and as such, many investors may now be looking closely at buying opportunities in the property market.

 

“With good stock levels, stagnant or depressed value growth of late, and many buyers sitting on the sidelines – market conditions continue to favour purchasers,” continued Charles Tarbey.

 

The benchmark S&P/ASX 200 took a sharp drop over May, falling 7.3 per cent - the biggest monthly slide the Index has experienced in two years. 

 

Similarly, the housing market further retreated in May, with RP Data-Rismark reporting that national residential property values dropped 1.4 per cent over the month, and 5.3 per cent over the year. 

 

Despite such, RP Data-Rismark emphasised that luxury homes had accounted for the bulk of the drop in overall values, with premium dwelling values having fallen 6.1 per cent over the past year, as opposed to 1.5 per cent for dwelling values at the affordable end of the spectrum.

 

Charles Tarbey did, nevertheless, emphasise that any property investment should be a heavily considered process. He explained that “while many investors may be seeking out property opportunities in this market, property investments should be viewed as long term investments.”

 

He concluded: “CENTURY 21 expects a few more twists and turns in the Australian market over the short and medium terms.”

For more information about the residential property market in your areas of interest, please feel free to stop by your local CENTURY 21 Real Estate office for expert, clear advice. Additionally, if you would like to speak to a mortgage professional about potential finance options, please contact CENTURY 21 Home Loans.


0 comments | Posted by Charles Tarbey on 25/06/2012 at 1:54 PM | Categories:

Hot tips for property investors

Whether you area first time home buyer or a seasoned property investor, it is always good to be reminded of smart property investment principles, particularly in today’s residential property market where affordable investment opportunities appear to be on the increase.

 

Given such, I have decided to share with you the following piece provided by our very own CENTURY 21 Chairman, Charles Tarbey, which appeared in the June edition of CENTURY 21 Wentworth’s Property Investor

 

Five Tips for finding (and structuring) the perfect investment property

 

By Charles Tarbey, Chairman of Century 21 Australasia

 

With Westpac predicting the cash rate could reach 2.75 per cent by the end of this year, turbulent market conditions and numerous property opportunities to choose from, many real estate investors are assessing what and where their next property purchase will be.

 

Given that the market is awash with opportunities, promotions and complexity, I like to constantly remind myself of some of the property investing fundamentals before delving into any new opportunity:

 

1.       It all starts with finance;

Before scouring the market for opportunities, it is worthwhile to firstly define how much debt you have access to, at what price and whether servicing that debt is within your means.

 

This process usually starts by speaking to a mortgage broker. Not only are they typically best placed to suggest how much debt you have access to, they can often also secure you the best terms for your finance and structure the debt in the optimal manner for your portfolio.

 

In many cases investors will have greater access to finance than what they originally thought. By defining this range with a broker from the outset, investors may have an advantage when searching and competing in the market, as properties they never thought would sit in their price range, now do. However, it is always worthwhile to ensure that any new finance arrangement can be adequately serviced with a strong margin of safety in any new opportunity;

 

2.       Develop a relationship with your local real estate agent;

Real estate agents 'live and breathe' property; building and maintaining a relationship with an expert agent can often be very rewarding.

 

Once the agent knows what an investor is looking for, they can act on that information and inform the individual of attractive properties as they arise. This process often sees investors snap-up prized investments efficiently and at competitive prices.

 

3.       Buy during favourable market conditions;

Like investors across most asset classes, property investors try to purchase property while markets are depressed in order to receive strong returns as markets recover.

 

Picking the floor is always a difficult activity but identifying favourable market conditions is relatively straight forward. At present, investors can secure relatively cheap finance (with more interest rate cuts likely); there are strong stock levels on the market and with dwelling values either stagnant or depressed of late, purchases are hardly being made in a 'bull market'.

 

These factors combined with Australia's strong economic fundamentals, well capitalised banks and ongoing mining activity, suggest that conditions are favourable for strategic property investments at present.

 

While each investment locale should be assessed on its own merit, identifying favourable market conditions gives investors an improved chance to secure the property they want, at the price they want – and with the best chance of strong future capital growth.

 

4.       Location, Location, Location;

While a landlord can renovate a house to make it more attractive to tenants, the house itself can never be moved to a separate suburb - making the 'location, location, location' adage as true today as it was when it was first said.

 

With this in mind, it's always useful to not only assess the location's merit today but also its likely merit in the future. Proximity to schools, transport hubs and shopping centers are all key factors to throw into this matrix.

 

There is always much commentary around how major infrastructure projects will add future value to a location, but in some instances these projects can actually detract from a location.

 

With major infrastructure projects on the cards for nearly all states in Australia, it's worthwhile assessing whether a planned infrastructure project will benefit or detract from a potential investment. Rail lines or freeways may increase the value of a suburb but if your property is close enough to them or the project work, the noise may be unattractive for both tenants and buyers alike.

 

Assessing the attractiveness of a location both now and in the future, will help increase the chance that any investment will deliver strong yields and capital returns in both the short and long term.

 

5.       Look beyond your horizon for opportunities;

While there are obvious advantages of investing into a known local area, it's often worthwhile to assess the prospects of investments further a field in the quest to secure higher yields and capital returns.

 

Whether it's apartments with depressed values on the Gold Coast or booming mining regions, there are a vast number of opportunities that exist for property investors in the current market.

 

When assessing these locales it's worthwhile speaking to a number of local agents and inspecting many properties in order to get familiar with the area and its property market. Market research from companies like RP Data can also prove invaluable.

 

Assuming the area's fundamentals are strong, it may be a lucrative exercise to compare the opportunity further afield, to the one closer to home.

 

For leasing and investment opportunities that may suit your portfolio and current market conditions, please contact CENTURY 21 Wentworth or call me directly on 0421055955 if I can be of any assistance.


0 comments | Posted by Charles Tarbey on 22/06/2012 at 3:27 PM | Categories:

Get a head start on property investment opportunities by preparing in advance

If you do think that you might look to purchase a property in the not-so-distant future, there are a few measures that you should consider implementing to ensure that you are able to act promptly if the right opportunity arises.

 

After all, it would be horrible to discover your dream home or apartment only to have it snagged from underneath you by a more swiftly prepared buyer.

 

Here are a few important steps that you can take to make it easier to act quickly on property investment opportunities:

 

1.       Determine how much you can borrow

Determining your borrowing power is the first major step towards securing a property investment, because it enables you to get a general idea of your target price range, so that you can narrow your property search within your purchase budget.

 

The amount you can borrow will depend on a variety of factors including, but not limited to, your debt and equity levels, credit history and existing assets, as well as the property type and any rental income/s that you expect to receive from it.

 

Many lenders have forms that can be submitted online to help you get a general idea of your borrowing capacity, or alternatively you can approach banks directly for advice.

 

2.       Consider your costs

Once you have arrived at a general figure for your potential purchase price, you will need to take into account other charges that will apply.

 

One of the biggest initial outlays will be your deposit, which is usually 10% of the purchase price. You should also allow additional funds for the loan application fee, valuation fees, taxes, stamp duty, legal costs and insurances associated with buying a property.

 

It is suggested that you itemise your existing and projected expenses, put together a budget, and then assess what types of properties are financially feasible for you.

 

3.       Research Loan Options.

It is always good to get an idea of the type of financing packages that are available within the market: you should compare rates, features, fees and charges and consider which particular mortgage packages are most suitable to your needs.

 

This is often a complicated process, however, and it can therefore sometimes be beneficial to consult a mortgage broker, who can explain your options to you and facilitate the process with the banks to help you get the most competitive and appropriate finance solution.

 

4.       Get loan pre-approval

You should attempt to get your loan pre-approved by the bank as it will enable you to shop within your budget and make a calculated offer on your property of choice. It will also give you a head start on other buyers that don’t have their loans pre-approved.

 

In addition, having your loan pre-approved might make you a more attractive purchaser to vendors, as there may be less perceived risk that the transaction won’t go through. You might even be able to secure a buying selling price through proposing a private offer, particularly if the vendor is looking to sell in a hurry.

 

5.       Plan your ‘activation’ team

When the time comes to execute a property transaction you are likely going to need a team of professionals by your side to help get the job done, including a real estate agent, a lawyer/conveyancer and an accountant.

 

Given such, you should begin seeking out professionals that you can be confident will be honest, direct and reliable. By having these relationships in place before the transaction process begins, you can save yourself a great deal of time, energy and stress - allowing you to perform the remaining parts of the process without added distractions or worries. 

 

In any case, you should only ever borrow finance within your means, and purchase if you are well-positioned to buy.

 

For information about available property purchase opportunities in your area, please contact your local CENTURY 21 agent, and for additional advice on prospective loan options please contact a CENTURY 21 HOME LOANS agent.


1 comments | Posted by Charles Tarbey on 22/06/2012 at 3:26 PM | Categories:

Save money by understanding common property entitlements

As property investors it is always good to know what tax deduction options are available. After all, every little bit counts, and the savings you make here and there - no matter how small or large, could very well help you to secure your next house or apartment. Given such, I have decided to share with you the following piece provided by BMT Tax Depreciation, which appears in the June edition of CENTURY 21 Wentworth’s Property Investor

 

Take full advantage of common property deductions in your investment property

 

Common property has been identified by the Australian Taxation Office (ATO) as areas within an apartment complex or development that areshared between owners. Common areas are nominated sections of a complex which all owners are entitled to utilise.

 

How can common property entitlements increase an investor's depreciation benefit?

 

Unit owners can save thousands of dollars each year by claiming depreciation on common property within the apartment complex or development in which their investment is located.

 

Common property depreciates in the same way as any other part of the property. Plant & Equipment items (Division 40) in common property will depreciate according to effective lives which are determined by the ATO. Capital Works allowance (Division 43) relates to the structural portion of common property and depreciates over 25 or 40 years, depending on the construction date.

 

A taxpayer's percentage of ownership for common property is calculated using unit entitlements commonly found on the strata plan. The portion of a common item owned is considered an asset in its own right and is depreciated as such. Claiming a percentage of the depreciation on common property adds to the investor's total depreciation claim.

 

How is a unit owner's entitlement to common property usually determined?

 

A unit owner's entitlement to common property correlates directly with their liability. Common property is usually apportioned depending on a number of criteria such as the size of the unit, its position in the development (e.g. penthouse or ground floor unit) and even its view. When a Land Surveyor initially draws up the plan for a development, they calculate each unit's entitlements.

 

BMT Tax Depreciation performs a thorough site inspection of common property areas and items. Based on relevant building plans, BMT Tax Depreciation determines the owner's entitlements. All common plant and equipment items within the development are valued and then apportioned based on the calculated entitlement. This is a complex procedure which should be handled by a specialist Quantity Surveyor.

 

We are happy to discuss any queries investors may have about common property depreciation.

 

Article Provided by BMT Tax Depreciation.

 

Please contact 1300 728 726 or visit www.bmtqs.com.au for an Australia wide service.


1 comments | Posted by Charles Tarbey on 12/06/2012 at 12:58 PM | Categories:

Interest rate cut to stimulate the property market

At its monthly meeting in Sydney last week, the Reserve Bank of Australia (RBA) elected to reduce the official cash rate by 25 basis points to 3.5 per cent. This decision was welcomed by CENTURY 21 and we expect that it will inject some much needed stimulus into the residential property market.

Speaking on the RBA’s second consecutive monthly cut, Chairman of CENTURY 21 Australasia, Charles Tarbey, said: “This latest rate cut will put further pressure on banks to increase the competitiveness of their interest rate terms, which should increase housing affordability and therefore incentivise prospective buyers to invest.”

The RBA’s decision followed several months of heightened concerns surrounding European economic conditions, turbulent global financial markets, weakened consumer confidence and falling national home values.

Released a week prior to the decision were RP Data-Rismark figures that showed median house prices across Australian capital cities had fallen 1.4 per cent in May. 

That same week the Australian Bureau of Statistics released figures, revealing that residential building approvals had fallen 8.74 per cent in April, reaching their lowest levels since January 2009.

In his statement following the meeting, RBA Governor Glenn Stevens cited international economic uncertainty, weakening financial market sentiment, modest domestic growth and favourable inflation forecasts as key factors behind the decision. 

For more information about the residential property market in your areas of interest, please feel free to stop by your local CENTURY 21 Real Estate office for expert, clear advice. Additionally, if you would like to speak to a mortgage professional about the impact of this rate cut on your mortgage, or to find out more about suitable loan packages for your circumstances, please contact CENTURY 21 Home Loans.


0 comments | Posted by Charles Tarbey on 12/06/2012 at 9:59 AM | Categories:

Residential property market update

Home values across Australia’s capital cities continued to soften over the month of May, defying the Reserve Bank’s efforts to restimulate the nation's residential housing market with interest rate cuts, and further strengthening calls for additional interest rate reductions in the coming months.

 

According to the latest RP Data-Rismark home value index, residential property values slid 1.4 per cent across Australia’s capital cities in May, bringing the year-to-date cumulative national decline to 2.2 per cent, and taking the annual decline to 5.3 per cent.

 

The index showed that seven out of the nation’s eight capital cities experienced declines in housing values over the month, with the exception of Adelaide, which saw an increase of 1.2 per cent.

 

Melbourne was the worst performer, posting a dip of 2.7 per cent, while Perth, Sydney and Queensland sustained falls of 1.7 per cent, 1.2 per cent and 0.3 per cent, respectively.

 

According to RP Data’s Research Director, Tim Lawless, much of the weakness in real estate values was contained in detached housing rather than apartments, with unit prices having actually increased over the year thus far.

 

"It is clear that the market is becoming increasingly price point driven. Unit values across the combined capitals increased in May and they are up by 1.3 per cent over the first five months of the year. Based on median prices, unit prices are generally around 15 to 20 per cent lower than house prices. Investment yields also tend to be higher and units are often located more strategically compared with their detached counterparts," Mr Lawless explained.

 

And while sliding housing values are obviously not particularly positive for vendors, soft market conditions are increasing the affordability of residential properties for prospective purchasers, noted Rismark Managing Director, Ben Skilbeck.

 

"The combination of interest rate reductions, declining home values and disposable income growth has significantly improved affordability. Since dwelling values peaked in November 2010, they are down by -7.6 per cent, the RBA cash rate has fallen from 4.75% to 3.75% and disposable income per household has increased by over 5 per cent," Mr Skilbeck said

 

Mr Lawless also pointed out various factors that indicate housing market conditions may have improved over the past few months.

 

"Each of the key vendor metrics we analyse have improved over the month,” he said.

 

“Vendor discounting has reduced from a peak of -7.9 per cent to -7.1 per cent which suggests that vendors are becoming more realistic about price expectations on their home. The average number of days it takes to sell a property has also fallen from the seasonal highs recorded earlier this year.

 

The typical capital city house is now taking 63 days to sell compared with 70 days last month. Auction clearance rates have also levelled around the 50 per cent market compared with an average of about 45 per cent throughout the second half of 2011," concluded Mr Lawless.

 

For those Australians looking to buy a residential property in the near future, this decrease to the Index should signal the chance for affordable investment options. With lower interest rates and reduced competition in the marketplace, now might just be the perfect time to buy.

 

For information about available property purchase opportunities in your area, please contact your local CENTURY 21 agent.


1 comments | Posted by Charles Tarbey on 04/06/2012 at 11:41 AM | Categories:

A flexible tax depreciation option for property investors

 

As property investors it is always good to know what options are available for maximising cash flow flexibility, particularly in today’s market where the cost of living appears to be continually on the increase.

 

In light of tax time’s quick approach, it seems fitting to highlight a tax depreciation option that may be considered useful for next financial year. To this end, I have decided to share with you the following piece provided by BMT Tax Depreciation, which appeared in the May edition of CENTURY 21 Wentworth’s Property Investor

 

Could you benefit from higher cash flow now?

 

Save on interest costs by paying a current mortgage off faster? Save more quickly for the next investment property deposit? Go on a holiday? There are so many possibilities...

 

Why not consider a Pay As You Go (PAYG) variation?

 

Often overlooked by investors, the PAYG system is a great way to increase fortnightly cash flow throughout the year. The PAYG method of tax collection was introduced in July 2000 to replace previous versions of the same system, such as Pay As You Earn (PAYE). The system gives the option of claiming back tax regularly, rather than in one lump sum at the end of the financial year.

 

A PAYG variation means that the property owner's employer will reduce the amount of tax withheld to reflect set deductions like depreciation on a rental property. In essence it is a way of decreasing the amount of tax paid by the investor each pay period.

 

It is important to note that submitting the PAYG variation does not replace a normal tax return. A tax return still needs to be filed at the end of the year to calculate the actual amount of tax liability. Your PAYG instalments for the year are credited against your assessment.

 

A Quantity Surveyor can provide all current and future depreciation values for investment properties in a detailed tax depreciation report. Obtaining the report immediately after the purchase of a property will allow the maximum return from a PAYG variation, as the precise figures will make the instalments accurate.

 

The flexibility provided to the Investor through a PAYG variation, combined with depreciation deductions identified by a Quantity Surveyor, can be of great help in managing the fortnightly cash flow of an investment property.

 

Let's consider a hypothetical situation:

 

A typical $400,000 investment property would show an average annual loss (or deduction) of $35,000 and an average income of $20,000 for the first five years. The deductions include costs such as interest on a $350,000 mortgage, management fees, maintenance and property depreciation. The total loss (income minus expenses) will result in a deduction for the owner of $15,000. In the 37 per cent tax bracket the $15,000 deduction could generate a tax return (or credit) of $5,550.

 

Under a PAYG variation, the investment property owner can adjust their fortnightly pay to anticipate this return, adding $213 to their pay packet each fortnight.

 

BMT Tax Depreciation are specialists at maximising tax deductions for investment properties. Talk to an accountant about a PAYG variation to increase fortnightly cash flow.

Article Provided by BMT Tax Depreciation.

Bradley Beer (B. Con. Mgt, AAIQS, MRICS) is a Director of BMT Tax Depreciation.  Please contact 1300 728 726 or visit www.bmtqs.com.au for an Australia wide service


1 comments | Posted by Charles Tarbey on 04/06/2012 at 11:40 AM | Categories: