1. Mastering Property Auctions
2. Achieving success as a Landlord
3. Cracking the property market in 2013
4. Get smart during the silly season
5. Economic wrap
Dear Valued Clients,
While we received an early Christmas present this year with the Reserve Bank dropping the cash rate by 25 bps, many lenders have only passed on a 0.2% rate cut. So now is a great time to find out whether you are still getting a good deal with your current lender by contacting us for a Finance Health Check.
As we move into the warmer months, the traditional property selling season is getting into full swing.
Nothing sums it up more than increases in the number of auctions, and if you’re searching for property at the moment, there’s a good chance you’re going to be attending a few.
In this issue of Mortgage News, we show you how to approach the often unnerving prospect of an auction with confidence and how to prepare for success.
We also discuss the pros and cons of DIY property management versus using a professional property manager, in case an investment property is on your buying radar.
If you’re planning to get into the market in 2013, the summer holiday break offers the perfect opportunity to ask yourself some key questions that will help you develop your investment strategy.
Lastly, we share our top tips for surviving the silly season without breaking the bank.
So if you’d like to discuss any home loan options such as a Finance Health Check or a new property purchase, please don’t hesitate to get in touch.
Yours Sincerely,
Galvin Dawson
Director
Finance Edge Australia Pty Ltd
If you’re in the market to buy this summer, chances are you will see many properties going to auction – but don’t let that scare you off.
The prospect of purchasing at auction needn’t be daunting, so long as you’ve done your research and you’re well prepared.
Start by attending property inspections and auctions in the area in which you are looking to buy; online data research will only get you so far.
It is important to find out what properties in the area are selling for and what techniques buyers are using to secure the best outcome on auction day.
Next, get your finance organised by ensuring you have a loan pre-approval. This will demonstrate to the vendor that you are committed to – and prepared for – the purchase.
Pre-approval will also allow you to set yourself a spending limit. It is easy to become caught up in the excitement of an auction, so developing a budget and sticking to your upper limit is essential.
It may be a good idea to nominate a buyer’s agent to bid on your behalf if you have become particularly attached to the property and think you might get overly emotional at the auction. Once given an upper limit, the agent won’t go over it.
A buyer’s agent is well worth their fee since they can also give you advice on the value of the property and provide added insight into the area that you might not have uncovered during your research.
Remember that if you are the winning bidder at an auction, you are required to hand over a deposit to the vendor on the spot – this includes in cases when the property is passed in and you negotiate successfully with the vendor.
Make sure you visit the property prior to auction and inspect it thoroughly. Building and pest inspections should be completed before auction day since this will ensure there are no hidden surprises that end up costing you heaps down the track.
Finally, remember to treat an auction like a business deal – leave emotion out of it. New properties are put on the market every day, so if you aren’t successful first time around look at it as a practice run and prepare yourself for the next property.
Once you’ve purchased your investment property, you need to decide – as a new landlord – whether to manage the property yourself or to engage a professional.
So, you’ve spent months – maybe even years – saving to purchase your very own investment property.
You’d like to assume the hard work is now behind you.
There is, however, an important question to ask yourself as a new landlord: ‘Do I manage my own investment property or hire the help of a professional property manager?’
Effective property management involves much more than collecting the rent on time. Maintenance, liaising with tenants and dealing with disputes or concerns are also important parts of the role.
There are pros and cons both to doing it yourself and to using an agent – deciding who should handle these and other property management tasks is not always easy.
Benefits of doing it yourself
Saving money is the key benefit of the DIY approach since a professional property manager will charge you a fee.
These fees vary from agency to agency, but you can expect to pay anything from 5 to 12 per cent of the weekly rental income.
If you plan to manage your investment property yourself, you may want to consider purchasing close to your primary place of residence. This will allow you to liaise more effectively with your tenants as well as perform common household maintenance tasks more conveniently.
It may eat into your spare time, but by dealing with your tenants yourself and carrying out your own basic repairs you could save hundreds, if not thousands of dollars each year.
Using a property manager
Having the help of a professional property manager can make a great difference when you need to handle tenant disputes or sensitive issues such as rental increases. In fact, you won’t even need to have any contact with the tenants.
A property manager is also likely to have a greater understanding of market trends and can advise on whether you are charging too much – better yet – too little.
Finding good tenants is also all part of their job.
Some property managers handle large numbers of properties regularly. While this might allow them to find a new tenant for you quickly if your existing one moves on, you should be careful that they are not spreading themselves too thinly and will be unable to give managing your property the attention it requires.
How you manage your new investment property is, of course, up to you, but ensure you weigh up the pros and cons before making a decision.
The Pros
- Professional advice and service
- Disputes and issues handled for you
- Regular inspections and rental collections
- Extensive pool of possible tenants
The Cons
- Fees take a bite out of your cash flow
- Significant variance in fee amounts
- Risk of manager not being attentive
If you’re looking to crack the property market in 2013, the summer holiday break would be the perfect time for you to ask yourself a few key questions.
Have you considered your home loan options?
Often buyers go through all the hard work of finding their dream home only to discover no lender will finance their purchase. Give us a call to discuss your current financial situation and discover what options are available to you. A pre-approved loan is always handy too!
Where are you looking?
You’ve heard it a thousand times before and you’ll hear it a thousand times again: location, location, location. When it comes to property investment, nothing is more important than finding the right area or suburb for your purchase. Be sure to do your research – but also, have a chat with us prior to making any purchase decisions.
Have you got an investment strategy?
Your investment strategy will determine many things, from the type of property you buy to the location to your home loan options. In fact, your strategy will affect nearly all your investment decisions. Be sure to devise a well thought-out plan and, once again, give us a call today to discuss your investment plans and aspirations prior to making any decisions.
Pre-approved finance is a powerful tool for all investors and something you should carefully consider this summer.
A pre-approved mortgage will allow you to know how much you can afford to spend as well as the amount you are likely to pay in mortgage repayments.
Pre-approved finance is also a powerful negotiating tool with vendors. Sellers will know you are serious about making a deal and that you should have no issue securing finance when the time comes to sign on the dotted line.
Drop by this summer and discover what you can achieve with the power of a pre-approved loan.
Sick of starting the New Year with a massive Christmas ‘debt hangover’? You don’t need to be.
Christmas is a time best spent with family and friends but, unfortunately, it tends to come at a cost – one that puts a dent in your savings.
If you’re one of the many who tend to go a little overboard with Christmas cheer, there are a few tips you can follow that will help you manage your money more effectively.
For example, avoid breaking the bank by adding a few personal touches to your Christmas gifts or gatherings.
The cost of wrapping paper and gift cards can quickly spiral so try creating some unique and thoughtful cards of your own. Arts and craft supplies can be found in most department stores, discount stores and news agencies – and best of all you’ll get more for your money.
Avoid spending hundreds of dollars on gifts this year by hosting a dinner party or gathering.
If you have a larger gathering in mind, why not hold it at a local park or beach? A meal and conversation is the perfect gift for holiday time with family and friends.
Having a realistic Christmas budget is the secret – list the names of everyone for whom you intend to purchase gifts and outline your anticipated costs.
Don’t be afraid to cut back, and ensure you stick to your budget!
Your well thought-out game plan will not only save you money this Christmas but help you create many memories to share with your family and friends.
Sticking to a budget is hard enough during the year, but even more so during the festive season. Effective Christmas book keeping is the best way to ensure you stay within your financial limits.
List everyone for whom you want to buy gifts and the amount you want to spend. Be sure to shop around for the best possible price.
When you’re putting together your budget, don’t forget that your regular phone, electricity and credit card bills don’t go away just because it’s Christmas!
Keep all your receipts in a folder and mark off each name and the amount you spent as you go. By going through your list systematically, you’ll ensure you haven’t missed anyone this year – and that you have stayed within your limit.
Happy New Year!
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Warmer weather has seen the Australian economy thaw a little, with loan approvals on the rise and building activity gathering pace.
New data from the Australian Bureau of Statistics (ABS) show home loan approvals in September were up 1.5 per cent, seasonally adjusted, compared to August and up for the quarter by 3.6 per cent compared to the corresponding period in 2011.
Approvals increased most markedly in the resource-driven states of Western Australia, Queensland and the Northern Territory.
Building approvals are also on the rise. According to ABS data, approvals increased by 7.8 per cent in September, a second consecutive monthly improvement.
The result took the number of approvals to 13,388, the third highest monthly result in more than 12 months, according to the Housing Industry Association economist Geordan Murray.
“New South Wales was the standout performer,” Mr Murray said. “It seems the state government’s combination of stamp duty concessions and grants may be having an effect.
“From a relatively low base in August, total approvals in New South Wales were up by 22.8 per cent in September. Underpinning this result was a 48 per cent increase in the multi-unit segment.”
Meanwhile, a recent survey has found that almost three quarters of homebuyers think now is a good time to buy.
According to the Domain 2012 Spring Homebuyers Survey, 67 per cent of homebuyers believe they can get a property at a better price now than they could have done six months ago.
This is supported by new research from RP Data, released in November, which list more than 350 towns and suburbs across Australia in which monthly mortgage repayments are less expensive than rental payments.
Auction clearance rates in the lead-up to Christmas are encouraging which suggests homebuyers are realising now is a good time to buy.
For example, according to the Real Estate Institute of Victoria, the Melbourne market recorded a clearance rate of 60 per cent in the second weekend of November which compares with 51 per cent for the corresponding weekend in 2011.
