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I worked in property management for 2 years. Its not a matter of which agency. Its a matter of which person, are they thourough, do they know theyre market, do they accurately check rental references, if so how. Id be interviewing your few shortlisted agents with some very open ended questions to test thier knowlege. Then after they give you all the info ask them for some evidence that these policies or procedures are being done. Its not the spanish inquisitio but its worth checking.
The most dangerous thing to you is getting a dudd tennant or having an uninsured property. So protect your self against those 2 issues the most.
I hope its not correct but so many experts are prediciting the same thing that it is concern. I hope for everyones sake that they are wrong.
Unfortunately there are a LOT of hurdles to overcome prior to any sort of recovery. US debt stands at $56,000 per man woman and child, we have a 20 year bubble of easy credit and leverage to unwind and revalue risk. The aging population. There is a qwerky theory proven time and time again eg: Japan that the economy of any modern country follows the birth rate with a 47 year lag. If thats the case wee are in trouble. There is also the Elliot Wave theory which would still indicate the stock market has not fully bottomed.
Robert Kyosaki's book "Prophecy accurately predicted this mess" but whats worse is it also predict the mother of all currency collapses in the US and currencies linked to US. So if you believe that you should sell everything you have and turn it into Gold and silver. But keep it offshore or hidden as if this happened the govt would ban private ownership of large quantities of gold. Im not a financial planner or advisor so please dont act on this advice. Its a figure of speech.
Sorry to be so negative as i really cant stand pesimists, but their really is some continually mounting indicators of sustained problems rather then a quick recovery. There is no point pretending it isnt true..
Our issue in this forum is whether the property market can weather the storm and all indications so far are for continued downward pressure as the economy unwinds with pockets of hope where pent up demand exists. The US and UK are different to Aust but the correction their now places an even greater "regression to the mean" force upon our property market to fall in line with competing asset classes. ie to fall and become relatively priced with the stock market and OS property markets.
The secondary isssue is running scared to cash will not attain any meaningful investment return, but it may well preserve capital. Lets just hope that Krudds bank guarantee isnt needed or the treasurey and banks will both be broke. There are currently some fantastic share yeilds on offer, but if the economic downturn is prolonged those returns will surely evaporate with time.
My amatuer opinion is to diversify significantly, including your income sources. Its probably the next few year where having three jobs is far better then one. At present IMF is only prediciting 0.2% recession which is insignificant, but it was only a month ago they where saying Aust would have 1.5% growth. Ive gone so far as creating multiple online incomes in my spare time and been very pleasantly surprised with my success.
A massive interest rate cut and stimulus through fast tracking of productivitiy boosting infrastructure like transport and communication is what is necesary to get through this mess.
I suggest keeping your feelers to the ground on your emloyers performance. If they are running late paying bills or collecting payments from customers, if they have rising inventories and limited stock these warning bells might indicate you should jump ship and look for safer employment prior to your work place closing and your local employment market being flooded with similarly qualified people.
A transfer to more recession proof jobs is possible a good idea if things start to get far worse.
Student accom – limited capital growth as rental returns are limited to student income.
Holiday accom – very dependent on a strong economy – hmmm ???? not a good idea at present.
A weak economy will increase vacancies, lower room rates per night and squeeze profit margins of hotel / holiday acomm providers. A broke hotel or operator is a nightmare situation for owners.
Go onto realestate.com.au
Search for inner city brisbane properies and click on one to each agent in the area.
Send them an enqury.
You will soon see how the gurus do thier business.You will have ebooks, maket updates, newsletters, mail email and much more coming out your ears within a week.
Personally you need a website. Create you own or pay someone to do it. Realestate.com.au and im sure domain offer agents free web sites. There is also home hound and others.
Or go to MMII My man in india, just google them and outsource the whole job for a whole lot cheaper. But make sure you set a budget and time frame for the job if outsourcing. And make sure they know the budget.
Once you have your website you can drive traffic to it by lisiting in free directories, blogs, forums or using adsense.
My sites in my signature I drive hundreds of visitors per day for 2 c per click using google. There are other providrs doing it even cheaper but i dont recommend them for business sites as they can result in google banning your site.
As for promoting your agency by word of mouth. Yes obviously important, but i can tell you i will be selling my brisbane unit through one of the expert marketeers that use the internet to drive masses of buyers straight to my property. The best material i recieve is from TriCity, Joe Macaleno and Ray White. Mtro FN do an alright job too.
Hope this helps
I dont like it when people try and second guess the market.
But having been in NZ 4 times in the past 3 years its market is so over priced it is not funny and its economy is presently tanking.
NZ wages are significantly lower then Oz and the domestic RE purchasers are almost priced out of the market from the overseas investors over the last few years. NZ wages are significantly lower then OZ so high yeilds are unsustainable.Interest rates in NZ are much higher and if you use the Aus equity you are playing a Forex gamble on that $40K
Im not saying dont do it and I have no doubt their is still some small pockets where value exists. But tread carefully and consider the overall market.
I cant believe this is even being debated its an absolute no brainer. Dont do it. Even if it was legal its completely unethical. Go and make money legitimately without looking for grey lines to dance over.
Try Ainslie Bullion
Search some of the inner city brisbane agents and send them an email. Try Ray White CBD and Tricity at Spring Hill. Within a few weeks of sending them an email as a potential buyer you will have thier marketing products rolling into your inbox. They all utilise Realestate.com which makes a painful task easy. But more importantly they capture all emails into a database of non, semi and qualified buyers. They send regular market updates supplied by RP Data and Realestate.com. They provide market reports and the send new proerty listings.
At those rates lock in big time. But yeh its still very much wishful thinking. Some are offering 5.99 for 3 yrs but longer terms are still fairly high. I will be locking in inv prop at as soon as i can get a longer term for anything under 5.5% . But make sure the loan is portable even if locked, as several people i know did this in 2001 in the last cycle only to get caught in locked positions at the peaks of the last cycles around Dec 2003.
The trap is finance. They usually have to be over 40m2 to get 70% LVR and over 50m2 to get 80 LVR. Also most go onto commercial loan at higher rate. St George and a few others will do it at residential rate.
They are good in that you have less tenant issues, but you need a good mgmtcompany with proven track record in that location. It seems far better to go into one where they have been established for 3 or more years, as these apartmentsrely heavily on repeat customers for 30%+ ofthier business.
Another pitfallis long leases with low rent review figures. Try to get one that has CPI or greater and annual increases. Some have bi annual but that way your getting your increeases 12 months behind all the time.
Also check to see who pays for refurbishment,how much it costs and when its due.
Long leases will lock you into low capital growth if thier is no possibility of owner occupation and they cant attainhigher yeilds for the property. So great up keep of the building is essential. Some mangers run them into the ground over 20 years then walk out the door.
High mgmt costs canbe a real trap on some properties. Check them out closely. Im familiar with one on the GC with over 50% of rent in mgmt costs. There is also one on the River in Brisbane with over 15% of Net in mgmt costs.
Ask the hundreds of ex-farmers from the late 80's how borring cheap asian finance worked out for them. The excha/nge rate moved at the same time asian rates rose andthey lost thier farms by the hundreds. It also happened again in 1996 ? 1997 ish when the AUD hit 50 something US cents
Yeh its possible and if you structure it and hedge it right it may all work out perfectly, But get it wrong and kaboom. You better have a get out plan. Certainly not advisable for anyone but the most seasoned investor . And secondly make sure your got some equity up your sleave in AUD to renegotiate quicksmart if the rates and exrate both move against you in a hurry. This is more a currency player than property investor.
There are far safer and easier ways trade currency then have them mortgaged in iliquid properties.
its tempting with the record exchange rate but with the NZ$ predicted to drop to 65c US in the next 6-12 mths and the AU predicted to have a much slower and later drop if at all the exchange rate to the Kiwi is likely only to get better. See google news todays business section.
Also having just returned from NZ if people think Ausie prices are rediculous then given the kiwis limited earning capacity , lower wages and lack of substantial population growth , the prices are completely out of whack.
The fundamentals are not in place for any sort of immediate recovery like they are in Sydney and Brisbane.
Firstly if we have a recession economic interest rates will be low as an RBA tool to stimulate growth,
Secondly I totally agree about education and information making investment decisions easier. The tools available on the internet make researching demographics, market stats, etc so much easier. Sites like this, realestate.com.au etc etc and reports like myrp etc provide masses of information to help produce better quality investment decisions.
I work in education with many highly educated academics and everyday i never cease to be amazed at how poor the populations financial eduacation is.The media headlines on Credit Card debt cannot be taken on face value. While i dont doubt for a mooment there are heaps of people out there with rediculous credit card debt, I myself would feature in these statistics yet on a false and misleading ledger.
My wife and I are on decent income and we put all our monthly expenses on credit card then pay the entire balance on the due date without fail every month. We are just like many hundreds of thousands of others that would be putting $5000+ per month on credit card then paying the full balnce without ever paying a cent in interest.These media grabbing statistics do little to reflect the true situation. If we were insulated from the world markets wed still go through cycles of reaching unsustainable debt, then slowing to recover, then rising debt etc. The fact is humans including Austrailians like to have what they can today and will borrow to get it. At present the US is paying dearly for over indulgence, however they will bounce back in a few years as will we.
As long as our population keeps growing and our wages keep increasing well located property that people will compete for will continue to rise in value over the medium to long term. With the pent up supply shortage for property currently in Australia, rest assured as soon as debt consumers regain thier confidence there will be a great deal of profit to be made in property.
The only question that remains in my mind is how many rate rise will it take to control the current inflation problem. In the mean time the properties that affluent buyers compete for will continue to enjoy the spoils of a bouyant economy.
Sorry about spelling or typos in a hurry.
People need to take an emotionally intelligent stance when it comes to these sort of topics. If you jump in and pre judge one as being better than the other you are simply displaying a lack of disciline and emotional intelligence. There are too many un measurable or unquantifiable variables at play here to judge one or the other as being better. It would seem from the experience of many people that both can be very good investments.
On face value land apreciates and buildings depreciate, so many people are quick to belittle the value of units as good properties for capital gains. However look at any property reports and data and consistently over the long term well built and located units are capable of equal growth to many houses, terraces or vacant land.
If you then question the relevance of past performance and look to future property performance you only have to read ANZ or Westpacs property reports to name just two that show there is going to be a massive shortage of smaller dwellings located in secure buildings well above ground level in the future.
http://www.westpac.com.au/internet/publish.nsf/Content/BBPR+Property+Market+InformationThe key to me for the argument of units verse houses is the aims of the investor, not so much the relative returns, as both can offer good returns. For those wanting more passive investment clearly units offer a significant advantage as the body corporate maintains the building and grounds. For those wanting to value add or redevlope, clearly houses are more flexible and generally offer better opportunities. But we need to be carful generalising as i know many people who have generate terrific profits from remodelling units or dual keying units or consolidating units.
The key to effective unit investment or for that matter any property is to go for scarity. Just simply buying the ordinary run of the mill unit in an ordinary loaction with no particular view or outlook is a cause for concern. Any two bob developer can produce endless quantities of new units that offer the same only newer so this will limit capital growth to below the mean. But going for units in unique locations, with unique views, ammenities or localities should offer similar growth to many suburban homes and teraces. Sure many units have little land content, however, the value per m2 of well located units is often considerably higher than that of any other land in its vicinity. Additionally the development application costs and construction costs of units has gone up exponentially in recent times. This will cause new developments to be considerably more expensive which will in turn increase the value of existing units.
Another benefit to owning multiple unit properties in the one state is that you can own many units before you become liable for land tax. Sometimes up to 7 or 8 very scarce units before land tax kicks in.
A lot of the peole that instantly jump on the anti-unit bandwagon would do well to open there eyes and consider some of the information out there before eliminating units as very viable investment vehicles.
I personally have a diversified approach, in apartments, houses, land and shares. I regard investing like transporting the royal family. Dont put them all in the same car or convoy in case of accident or ambush. But make sure they are all in high quality vehicles that will perform as required.
yes trustee not appointor. my bad.
Ross
Both my wife an i are currently in the same tax bracket despite me being on about $25000 more than her, and with the new tax scales will probably remain so until our investment earnings kick in.
So at the immediate and near future no benefit is derived.
Also important to note is that when i went digging in literature, with proffessionals and on this forum nearly every body pedals hybrid trusts, not discretionary trusts.My accountant confirmed what you are saying about discretionay trusts being at the discretion of the appointor, but both said the rules of distribution patterns still apply and fluctuating or rapid changes in distribution pattersn would attract the wrath of the ATO.
Id be real interested if anyone else in here has had similar or conflicting advice.
Maybee both these accountants are too conservative. Although they are both pretty savy investors themselves.
You are correct it was the federal court, not the high court.
As far as the discretionary nature of income distribution, both accountants advocate that to move income or capital from one person to the other is likely to cause a mjor problem and that it would be definitely against the rules of the ATO.
They both said that the ATO looks at patterns of distribution and that you cant simply switch income or capital from one person to another. Any movement must be very gradual and in a progressive pattern. So if yes it is useful over the long term as a neg geared prop becomes positive, however it cannot be used for short or medium term selling or trying to offset CGT legitimately.
You cant move income to your wife when she stops work for kids and then take it back off her if she retrns to work and earns more than you. That would fail the patterns of distribution test.
So do tell who lends and what rate.
Theres two ways. Neither is entirely accurate but both will give a good indication.
The first is to work out the Total land area of the site.
Then take the number of floors and floor area on each floor atttributable to apartments. Multiply it out to see how much floor space the total building has. Take off 4% for retail / lobby leasee.Then divide your floor area into this. Thats your share of the total land content.
The second and easiest way is to simply divide the total land content by the number of apartments in the building. Give or take a bit if you have an extremely big or extremely small aprtment.
There are several issues with apts. Just to name a few:
1. Its far easier to get an oversupply of apts than houses.
2. Low land content = lower capital growth in most cases (however apts in prime locations can in fact have a high land value and high growth). This needs to be calculated.
3. High body corporate fees and or onsight management fees.
4. Get a building inspection and get a body corp report and check the sinking fund has an appropriate balanceHaving said all that ive found some extremely +CF apartments in no time flat with high land value and low BC fees.
The biggest problem to me seems to be developers have a large influence on the new apartments and thus lots of first time buyers get burnt by the developers and hence there is a lot of stigma attached to apartments.
But if you just crunch the numbers thoroughly and predominantly stay in the second hand market or only deal with developers that are being forced to sell than its way safer.
Additionally what you will find in this forum is a dislike for apartments because ultimately many people in here like to do the developing to make the cash, and you cant do that much with apartments.
