Property Investment

Buying Property with Other People: Mine, Yours or Ours?

When people buy property together, particularly if it’s with a partner or spouse, they often register the title in both people’s names – especially if they’re going to live in the property.

But other arrangements are possible, several friends might opt to own individual shares in a property, for example, or a couple might choose to have only one of their names on an investment property title. The following information provides you with a good starting point to help you on your way. Also tax legislation and other Australian laws governing property ownership and investment are complex, so seek proper legal and financial advice before entering into any arrangement.

Joint-ownership titles
The two main types of joint-ownership titles in Australia are joint tenancy and tenancy in common.

Joint tenants own the whole property together. If one of them dies, ownership passes to the surviving tenant or tenants, you can’t sell or transfer your ‘share’ in a joint tenancy. This is the most common arrangement when a couple owns a family home.

Tenants in common own individual shares in a property, and those shares do not have to be equal. Shares in a common tenancy can be transferred to someone else. When one tenant dies, their shares pass to their heirs if they have a will.

Legal liabilities
Tenancy in common is a useful arrangement when a group of people want to buy property together. Each tenant can own a share proportionate to how much money they’ve contributed, and can sell or otherwise dispose of their share as they wish (unless the tenants have entered into a prior agreement that prohibits this).

Tenants in common can take out individual loans to finance the purchase of their share of a property, with each tenant repaying their own loan. However, tenants in common are “jointly and severally” responsible for all the loans – if one tenant falls behind in their payments, the other tenants are responsible for those payments. You should also be aware that a lender could force the sale of the property to recover money owed by one tenant.

One person’s name on the title
When you’re buying an investment property with a spouse or partner, there could be tax and other advantages to putting the title in only one person’s name.

Capital gains tax is payable when you sell a property that is not your family home, such as an investment property. Tax on capital gains is calculated as part of your annual income in the year the gain is realised. If the property is in the name of the partner who has low or no income, less tax could be payable than if the income from the capital gain was shared with the partner with a higher income.

Future borrowing
If you already have an investment property, a lender will take into account both the income from the property and the loan you’ve taken out to buy it when assessing how much they can lend you.

If you own a share in a property as tenant in common, a lender will count the whole debt on the property as your liability – not just your share of it. This could in turn decrease the amount of money they’re willing to lend you.

Source:  Simply Living Winter 2018, Allan Faint of Home Finance Centre of Australia

 

Hobart Is The Fastest Selling Capital City Housing Market

The days on market metric provides an indication as to how quickly properties sold by private treaty are likely to sell. The current data at a national and capital city level shows fairly steady days on market however, we are seeing diverging trends across the individual cities.

At the end of 2017, properties sold by private treaty across the nation typically took 45 days to sell and across the combined capital cities they took 40 days to sell. Both the capital city and national measure has been reasonably steady over recent months however, the days on the market figure for each region was slightly lower a year earlier. In December 2016 it typically took 44 days to sell a property across the nation and 37 days across the combined capital cities.

The trends are changing quite significantly across the individual capital cities.

The typical home took 42 days to sell in December 2017, up from 34 days a year earlier.  The 42 days it currently takes to sell is the longest time on market since May 2016 and up from its recent low of 29 days in February 2017.

Homes in the city typically take 33 days to sell which is up from 29 days at the end of 2016. The 29 days at the end of 2016 was also a recent low in days on market for the city.

In December 2016 the typical home took 47 days to sell while a year later they were taking 53 days to sell. The days on market figure has been trending higher since reaching a recent low of 43 days in March 2017.

In December 2016 the typical home took 47 days to sell while a year later they were taking 53 days to sell. The days on market figure has been trending higher since reaching a recent low of 43 days in March 2017.

There has been a consistent decline in the days on market figure over the past year falling from 58 days to 53 days. After recently peaking at 75 days in August 2017 there has been a sharp fall over recent months.

Properties are currently taking 33 days to sell which is marginally lower than the 34 days a year ago. Homes have been selling quite quickly in Hobart over the past two years as value growth has accelerated.

The days on market figure for the city at 75 days is substantially lower than the 88 days recorded a year earlier and well down on the recent peak of 119 days in March 2017.

At 42 days, properties are taking longer to sell currently than they were a year ago when they took 39 days.

With dwelling values now falling in Sydney and slowing across many cities it is reasonable to expect that over the coming 12 months the number of days it takes to sell a property will trend higher. In particular this is likely to occur in Sydney (where values are already falling) and Melbourne given that both cities have experience rapid rates of sale and strong growth in dwelling values over recent years. Vendors in those cities were market conditions are softening will need to be realistic about their pricing expecations; as properties take longer to sell, buyers will be more inclined to negotiate on asking prices and vendors may face higher competition from other properties listed for sale as inventory levels rise.

On the other hand, markets such as Perth, where housing values have been falling, are now showing a reduction in total advertised stock levels and homes are starting to sell in fewer days which should help to dampen further value falls.

Latest Property Market Trends

Coming out of the Spring selling season, demand is still surging with low rates and house prices continuing to rise in most areas.

According to NAB’s August Housing Market Report1, 2016 property prices have proved more resilient than expected, supported by higher than predicted population growth and two Reserve Bank cuts to interest rates. The latest monthly figures from Corelogic2, released 31 October, show that the average value of houses and units rose across all capital cities except Adelaide and Hobart. Sydney continues to soar, where the median dwelling price is now a jaw-dropping $800,000; this is $200,000 more than Melbourne and more than double Hobart’s median price of $343,500.

In regional areas, mining regions continue to experience weak housing market conditions, but areas associated with tourism and lifestyle have strengthened in recent years. However, in coming months, NAB economists expect to see mixed conditions in the housing market due to a range of factors, including turnover, time on market and vendor discounts. They predict prices will weaken in 2017, with forecast housing growth fairly subdued at 0.5%, and unit prices dropping by 1.9%.

Demand at fever pitch
Overall demand for houses and units is strong, according to the October REA Group Property Demand Index report – it’s at an all-time high in NSW, Queensland, South Australia, Victoria, Tasmania and the ACT3.

The number of people looking to buy on realestate.com.au increased nationally by 8.2% in October, although overall listings on the site were lower than the same time last year, according to the report. With property demand so strong, supply may well increase as more owners look to take advantage and sell.

But affordability will continue to be a challenge for hopeful buyers, particularly in NSW and Victoria.

The suburbs most in demand
According to the REA Group Property Demand Index, lifestyle factors and good infrastructure, rather than prestige, are now driving demand. Victoria’s leafy outer suburb of Warrandyte took top spot on the demand index for houses in September, replacing the pricier and trendy inner-city suburb of Prahran.

Overall it’s been another strong year for the Australian property market, but experts are expecting to see mixed conditions as we move into a new year.

Sources:
1 www.partner.nabbroker.eom.au/propertyinsights/assets/pdls/Winter_National_Report.pdf
2 www.corelogic.com.au/research/monthly-indices.html
3 www.rea-group.com/irm/PDF/1961/REAGroupPropertyDemandlndexOctober2016

 

Author:  Alan Faint, http://www.hfcahobart.com.au/

How Your Broker Can Boost Your Business

Are you a property owner with a business? Your mortgage broker can help you with commercial and asset finance too.

One of the basic tenets of work/life balance is: ‘Don’t bring your work home with you.’ But what if you could bring your home to work? It’s a scenario that home owners with a business should consider when seeking commercial or asset finance.

Three common types of business finance are:
Business loan: the lender loans money to the business for its operations and the business repays the lender with interest.

Commercial investment: the lender loans money to the business to invest in an asset, including real estate. The asset is often used as security and the repayments attract interest.

Chattel mortgage or equipment loan: the lender loans money to the business to purchase equipment or vehicles, which are used as security. Repayments attract interest.

When it comes to purchasing an asset, lenders will often use the asset as security against the business’ debt. In some cases, however, such as with the purchase of equipment or vehicles w here the assets may depreciate over time, the asset itself may not be sufficient security. In other cases, for instance when a business seeks a loan for operational needs, there may be no security.

Sometimes the more security you can offer a lender, the lower the interest rate it will charge and vice versa. Unsecured loans often attract the highest interest rates. If you’re a home owner with equity in your property, you may be able to use this equity as security to leverage a better rate on your business loan.

As with mortgage rates, commercial and asset finance rates w ill vary from business to business. Lenders w ill look at things such as industry volatility, how long you’ve been in business and your financial records to determine the risk factors that will contribute to their loan terms. Your mortgage broker can offer an unbiased view on whether your property is suitable to be used as security, how much equity you can use and how this might affect different loans from different lenders.

Brokers aren’t just for home mortgages. Don’t leave business growth until the future – explore how commercial and asset finance can work for you today.

Author:  Alan Faint, http://www.hfcahobart.com.au/

How to Purchase an Investment Property

If you’re interested in becoming a property investor, it can be hard to know where to start. Here are seven tips to help get the ball rolling:

1. Make a plan and stick to it
The property itself isn’t the end goal – you’re likely looking to make a profit. Once you know your end goal, create a plan for a realistic time-frame. Remember to review this plan regularly as your situation and the property market changes.

2. Research the market
Do your research to see what types of propert ies are easily attracting tenants and what properties are staying on the market for longer periods of t ime. This will help you choose the right property to purchase.

3. Pick your location carefully
Location is critical to performance. Consider the proximity of the property to the CBD, schools and local shops. It’s also a good idea to find out what the public transport options are.

4. Know your budget
Always check your financials before deciding to purchase a property. Get pre-approval and make sure you have all extra costs available, including conveyancing, inspections and any taxes.

5. Think about how you purchase the property
When setting up the sale contract for your purchase, consider whose name to put the house under. Whether it’s in your own name, through your super or a family trust, it’s important to understand how this investment affects any existing assets.

6. Think about what tenants are looking for
Look for properties that offer that little something extra, like a second bathroom or a lock-up garage – anything that might appeal to potential tenants looking for a home of their own.

7. Ask for expert advice
Your broker can put you in touch with accountants, real estate agents, lawyers and valuers – experts that can help guide you in your decision making.

 

Author:  Alan Faint, http://www.hfcahobart.com.au/

The Property Market: Looking Back on 2016

Thinking about buying a house this year? Before you start exploring property listings, brush up on your knowledge of the property market in your area. To help you get started, here’s a snapshot of the property markets around Australia.

Looking back on Australia’s property market in 2016
The year ended on a high note, as property prices regained momentum in 2016 following additional interest rate cuts by the Reserve Bank of Australia (RBA)1.

While most capital cities saw an increase in property values, Corelogic reports that Perth and Darwin were the only capital cities where property values decreased2, which may be reflective of an ongoing shift in the mining industry.

Corelogic reports that gross rental yields (i.e. total income from rental properties before deductions) reached a historic low of 3.2% late last year1. This is due to the increase in property value.

So if you’re looking to start or grow your investment property portfolio, you might want to talk to your broker about the best investment solutions for you.

What we can expect in 2017
Depending on what you’re after, 2017 might be your year. NAB Economics forecasts a further cut to the official interest rate in November 2017, and where this is the case the trend of property prices may continue to increase.

An oversupply of units and apartments in capital cities has impacted the growth rate for Sydney, Melbourne and Brisbane, according to Corelogic3. This oversupply is expected to slow the growth of property demand in these cities .

As at 31 January 2017, Core Logic reports that the value of houses and units continues to rise for most capital cities4 . Perth and Darwin are again the only capital cities to see an overall decline in value year on year. Darwin saw a decrease of 2.94% in the value of its houses, while its apartments increased in value by 8.49%. Both Brisbane and Perth saw apartment values decrease by 2.72% and 3.82% respectively.

As expected, Sydney and Melbourne have seen the most growth since January 2016. However. Hobart saw the highest month-on-month price increase, despite seeing a drop in apartment values. Your mortgage broker will be able to help you navigate the changing property market, so if you’re thinking about moving house or are looking to invest, talk to your broker about opportunities that might be right for you.

Sources:
1 www.rba.gov.au/statistics/cash-rate/
2 www.corelogic.eom.au/news/corelogic-quarterlyreview
3 blog.corelogic.com.au/2016/10/differences-unit-supply-sydney-compared-melbourne-brisbane/
4 www.corelogic.eom.au/research/monthlyindices.html as at 31 January 2017

 

Author:  Alan Faint, http://www.hfcahobart.com.au/

How to Pay Off Your Home Loan Sooner

Are you looking for ways to save on your mortgage? Try some of these tips.

Increase your repayment amounts
The simplest way to pay off your home loan sooner is to increase the amount you repay. By repaying more than the minimum you can cut the overall term of the loan and save thousands of dollars in interest. The more you pay off earlier on in your mortgage, the more you’ll save over time. Some products may charge you an early payment fee for paying your loan in advance. These costs can be large, so it’s best to always check beforehand.

Consider how mortgage features can help
Think about how using an offset account or a credit card linked to your home loan might help you keep your loan balance low. If you’re looking for ways to keep your interest down, it’s worth investigating what other features your home loan comes with.

Take advantage if there are variable rate cuts
A lower interest rate will reduce your repayments, but if your lender reduces the interest rate, consider repaying more than the minimum loan repayment amount. This can help you save on future interest payments.

Don’t pay the interest-only
An interest-only loan might mean you’re able to make lower repayments for the first few years, but this means your repayments will be larger when it comes time to pay off the principal.

Consider re-financing
If you’ve had your mortgage for 12 months or more, re-financing might be able to get you a better deal on your home loan. There may be costs associated with re-financing and it’s important to take this into account.

Consider split loans
A split loan allows borrowers to divide their mortgage into both variable and fixed components. You can lock in a low fixed rate on part of your loan. if you only want to limit exposure to the variable rate.

Explore your options
Before you sign on the dotted line, make sure you’ve explored all of your options. It’s worth looking into whether you can get a discounted loan rate with a financial package that includes special rates on other products and services. With just a few easy steps, borrowers can significantly reduce the length of their mortgage and save thousands of dollars in the process. If you’re interested in paying off your home loan sooner, contact your mortgage broker.

How brokers can help: commercial and asset finance
If you’re looking to finance your business, a broker can help you find and secure commercial and asset finance options. Your broker w ill also be able to leverage their network of lending institutions to find you the right funding from the start. Many brokers have a deep understanding of the commercial sector and the w ide range of products available. Using a mortgage broker means you have a variety of lending options at your fingertips.

Managing cash flow
Managing your cash flow is an important part of running a business. You might be invoice discounting. This is where you access a proportion of your debtors’ unpaid invoices through the lender. Or maybe you’re invoice factoring, where the lender takes responsibility for chasing your business’s debts. Either way, your mortgage broker can help you find a solution that works for you.

Finding the right deal
If your business is involved in manufacturing, you’ll need the right equipment and the best financial arrangement in order to remain competitive. This is something your broker can help facilitate.

Taking advantage of flexible options
If you have a variety of financial needs, it can be hard to choose the right lender for each part of your business. But the solution may be to use different lenders for different assets. For example, a business may need a special type of mortgage for its plant and equipment (known as a chattel mortgage), but a finance lease for other assets. Your broker has the ability to compare different commercial and asset finance products with multiple lending facilities to help find what’s right for you.

Investing in your business’s opportunities
A broker’s understanding of the commercial sector and the wide range of products available means they can help you identify and secure commercial and asset funding in order to grow your business. Your broker can be a one-stop-shop for your financing needs.

 

Author:  Alan Faint, http://www.hfcahobart.com.au/

The Ultimate Guide to Monetizing Renovations

Renovations are not a new concept in the world of construction, but what most people don’t realize is how renovations have now emerged as one of the best places to invest your money in. Basically, you search for poorly presented properties, one’s that are below median price, and pledge to change that through the renovation process. Easy as it may seem, there are a lot of investors who find themselves shortchanged in the end upon selling the property. So before diving into the realm of investing in renovations, try to ask yourself the following questions first.

  1. What makes the property worth renovating?

Is it the overlooking view of the suburb? Is it the accessibility to other major areas? Or is it the fact that there is a nearby pizza parlor for the midnight pepperoni pizza cravings one may get? Before actually buying a property and deciding to renovate, do make sure that there is already worth that can be brought out from it. Most people think that just because a property is existing, people will want to buy it immediately. Nowadays, people choose a house based on its location and access to immediate needs. Try to research about the history of the location the property belongs to. Try to discover hidden value that the initial owners did not know. This will definitely add to the factors that may get a prospect buyer to purchase the said property.

  1. Is it cheaper than building an entirely new property?

Most people think that renovating costs less than building a new property. Most people underestimate the possible costs it may take to meet your goal for the establishment you aim to renovate. Take note that this will always depend on what is existing and what can be reused. For example, is the foundation of the building stable enough to be continued? This of course must be the 1st thing you need to check or else you beat the purpose of reusing. Next, check if there is anything that can be kept to preserve the “vibe” of the place. When a property carries such, then there is a possibility for the project to cost less. But when you find that most materials are already outdated, then that’s when the costs go up.

  1. How much should you have as a start-up capital?

Well, since you are going to deal with buying property, whether it be a house, an entire building, units or a shed, search for the possible price ranges of these properties, or that one kind of property you wish to focus on. Next, be sure to educate yourself in regards to the costs of the best possible materials you will be using in the future projects you are to embark on, alongside researching about what is trending nowadays. What are people interested in the most that will definitely fit the budget you are eyeing to spend as capital for this business endeavor? It may be somewhere between a couple of thousand dollars to somewhere in the hundreds of thousands. Take note that this will depend widely on the kind of property you wish to refurbish.

Also, research about the current market ceiling price of both brand new and renovated property. This will give you an idea of how much you can spend and get in return as profit and addition to your start up capital.

You have to understand the ins and outs of construction costs and materials, not to mention the manpower you will need. Remember that you are not going to be working alone, and that you will need all the efficient help you can get and that should be a consideration in mapping out your ideal capital for this endeavor.

  1. What is your target return?

Same with any other project, you have to make sure that you have a specific amount of money that you are willing to shell out for everything that can possibly go wrong. Always monitor your expenses to see if you are still well below it or if you are close to hitting budget but not to 100% construction.

Setting a budget will also help you visualize a return. Do not, under any circumstance, expect too much from a project and that is why you must envision a project that will not drain your bank account to the last penny. Costs will depend on your target market, and this will remind you not to go overboard and remind you of what the project aims to earn. Do not over capitalize, this is what usually causes a project to fail. When your property is not bought, then it will double your costs and beat the purpose of the project. Make both ends meet, yours and that of your target market. You don’t want to see a buyer feel bad about him/herself for not being able to afford your property because you decided to place a higher value that what is meant for it.

People do research as well and will always go for the “good buy”, so always make sure that your property belongs to that category.

  1. Who do you plan to sell to?

Always have a target market in mind. Everything that you will do to the property must answer the needs, wants and general preference of your possible buyers: from aesthetics to materials, to foundation and presentation. Never compromise materials for aesthetics but do not neglect the beauty factor as well. Some people, if not all people, want a pretty but sturdy building. If you can make everything meet in the middle, the better. A family of 4 will search for something sturdy, homey and child friendly. You have to know the specifics of how they see that house fit into what they are looking for.

  1. Is this experience similar to popular notion?

No. Contrary to what our favourite extreme makeovers for properties, your personal experience is nowhere going to be the same with those stories. You are going to make your own version and story.

Do not disappoint yourself just because it did not happen in that one show that you like watching. Look at those shows as fairy tales, and admit that fairy tales are different from reality. Truth be told, most of those episodes are scripted and appear to be more challenging than what you can possibly encounter. Do not peg yourself on the pattern that they go through for you are about to go into a different variation of your project.

  1. Should you have a vision for this?

Just like any other project, you have to make sure that you have a vision. Do you envision building homes for families to make memories in? Do you envision building establishments that will cater to the everyday needs of the community? Or do you long to provide an avenue for entertainment? Setting a vision will keep you on track especially when you find yourself on the verge of giving up on that project you started.

  1. Is it going to be easy?

Of course it won’t, and you have to understand that. It will always be a hit and miss process but once you learn from your misses, the hits will come easier than ever. You will get frustrated over building costs and permits to apply for, but always remember your vision. This will keep you going.

  1. What particular properties should you consider renovating for profit?

From a house to an old warehouse or an old airplane hangar, there are a lot of properties that have lost its value either because of time, or lack of funding from its original owners. In this manner, always remember the saying: “One man’s trash is another man’s treasure.” Your vision will guide you in the entire process, and will surely give you the fulfilment once you see the finished project.

  1. Is renovation simply a bigger scale DIY?

Yes. It is your chance to pull a DIY with the chance of actually getting returns from it. If you are the kind of person who has an eye for details, then go ahead and immerse yourself. You get to plan the most outrageous visions and execute them hoping that someone somewhere enjoy the same taste as you.

 

All in all, it may seem like you are asked to cross a railroad blindfolded despite hearing the train’s horn blowing not so far from where you are. But life and business is all about taking the right amount of risks and understanding how far you can go. You can never go wrong with investing in what people long to have. People who are looking to buy themselves a home they dream to have will always go for the house that will hit them right in the heart. If you choose to invest not just your money, but your heart as well in the project, then it will always come through in each property your work on. The most successful entrepreneurs and investors are the ones who learned the process one step at a time, sometimes taking 2 steps backward. But in the end, they find themselves in the finish line. Anything we work hard for will always have a way of paying us back tenfold. In this endeavor, you get experiences, relationships and of course the return of investment. What more can you ask for? Besides, where is the fun in being too safe?

 

If you are interested in investing in renovations, and you want to know more about home renovations, feel free to visit our site at www.platinumhomebuilders.com.au. We are so excited to assist you.

 

Author: Clarissa Leary

Bruce and Clarissa from Platinum Homes Hobart have been working in the building industry since 2003 and are active Property Investors. Their experience and skills extend too: New Homes, Renovations, Developments & Investing, Commercial and Maintenance in Hobart, Tasmania.

Join up for Free Ebooks and Information – www.platinumhomebuilders.com.au
Email: info@platinumhomebuilders.com.au
Contact Numbers: 0400 904 873 (Bruce) or 0466 068 777 (David)

 

x

Loan Calculator