Property Investing in The 21st Century

Renting Out Investment Property Part 1

In today’s post we will look at getting your investment property ready to rent out, and some advice and tips that will make the process a little easier and give you some piece of mind.

Many people are scared away from buying a real estate investment as they have heard to many horror stories in regards to unruly Tenants. We have had a look at these fears in an earlier post and we know that we can protect ourselves and our assets as well.

Finding a good property manager can be a difficult thing in Australia. In the years that I have been involved in property investing, I have met some terrible Real Estate Agents that have done some very questionable practices. The best way to find a good management team is to ask any successful property investor friends that you have. If you don’t have any successful friends then get in touch with someone who is, and ask them for a recommendation. Sometimes the investment will not be in your local area, so you will have to do your research well, to give you piece of mind down the track.

If you want to become a successful Real Estate Investor, then it is important to realise that you should not manage your own properties. Do you want phone calls at midnight about a leaking tap or a blocked drain? It is important to keep a respectable distance between yourself and a Tennant, as then you will not become emotionally involved with them. Leave managing a property up to the experts, while you get on with the real work of investing and enjoying your life.

Having the correct insurance is a must before you rent out your investment property, and you should seek the advice of a good Insurance Broker. The product you want to be looking at is dedicated Landlords Insurance, and ensure that it is covered for things like malicious damage and extended non payment of rent. Read the fine print in any insurance contract so you know exactly where you stand.

Landlords Insurance is surprisingly inexpensive, and on a month by month basis you will not notice the cost. The best part of Landlords Insurance is the peace of mind you get, and the sleep at night factor.

In the next post we will have a look at some things that you can do to attract a better type of tennant and some other advice on renting out your investment property.

Investing In Australian Residential Property

Today we are going to look at Investing in residential property in Australia, and how that it is one of the most lucrative methods to generate long term wealth. Just have a look at the BRW Top 200 Rich List and you will see just how many of those people built their massive fortunes using residential property.

Residential Property is such a great investment as it a realistic to most of Australia’s population. It is possible for nearly everyone with a full time job and a deposit to get an entry in to this wonderful investment vehicle. You might not be able to purchase your dream property due to not being able to get a great deal of finance, however you will be able to purchase something that will still make capital growth.

Historically, residential property in Australia has appreciated at between 7-12% on average for over 100 years now. Throughout the same time, many media institutions and experts have openly suggested that there is no way property prices can go up any more as it is just not sustainable. History also suggests that all these opinions and reports have been incorrect so far.

Right now in just about every paper that you read, there is doom and gloom over the falling price of residential real estate within Australia. It is true that property prices have been coming down, a couple of percent. A couple of percent is not a big deal, and now offers the smart investor a fantastic opportunity to purchase property that they might not have been able to secure this time last year.

The property markets are changing, however buying real estate in areas that have fantastic infrastructure and a growing populace is still a very smart business decision. It is supply and demand in its most simple form. There are more and more people relocating to the major cities everyday, and these people need somewhere to live.

In my own view, I really think that this and the upcoming economic downturn is an excellent opportunity to add to your property portfolio.

Do You Have A Property Team?

In today’s post we will look getting a great property team together when you decide to become a successful property investor. Trying to do everything yourself when purchasing a property might save you some money initially, yet in the long term it will cost you a lot more than you save.

A Real Estate Agent

A decent Real Estate Agent can be hard to find, although one you have tracked one down, keep hold of them and befriend them. Send business their way if you think that they really are good. They will love you for that and will keep you informed of property deals before they are advertised and can give you a lot of information that is usually privy only to other Real Estate Professionals.

A Property Solicitor/Lawyer

Show your Solicitor any deeds and contracts of the investment property before you put an offer in. They will be able to explain to you the fine print and anything else that may be important to know. Try to find a solicitor who is an active property investor themselves, to ensure you are getting the most relevant information.

A Sworn Valuer

When you are buying a property, utilise the services of a valuer who will offer you current and real market prices. This way you can be confident that you are offering a fair price on any investment properties. Look for one who is a little on the conservative side too.

An Accountant

Have an accountant that themselves is a property investor. They will provide you with some figures that will quickly allow you to make decisions, and will also show you the best ways to protect your assets too. Ask any other successful property investors that you know to recommend a good accountant.

So you can see there are certain people that you will need in your property team in order to become a successful property investor. You can do it without their help, although why not use your team as leverage to get you to where you want to be a lot faster.

Renovating a Property For Profit

In today’s post we will begin to look at renovating an investment property in order to make a profit, or to get some instant equity in the property. In my eyes, instant equity is profit as well.

Renovating real estate is not for everyone, as it can be a stressful and consuming time for all involved. If you get it wrong, it can also effect your bottom line dramatically. Many people who are new to property investing  may decide to renovate in order to get a foot in the market. Other investors really like the challenge and the work and use renovating as their primary investment vehicle.

Before you purchase a property with the intention of renovating it, you must first decide how much of the work you will be doing, if any. Some choose to complete the entire renovation themselves, some choose to use contractors for everything, and of course there is everything else in between as well. Doing the work yourself will save you money, if you know what you’re doing. It may not save you time though, as specialised contractors can be in and out rather quickly.

Once you have worked out your method of renovation, you must of course work out a properly planned budget for the work to be done. Always use conservative figures, and add an extra 10% for unplanned expenses. Something always seems to come up when you least expect it. If you get your budget wrong, then you will end up making a loss on the project, and we do not want that.

When you are looking for properties that you are considering renovating, it is an absolute must that you get a genuine builders structural inspection completed. It is best that you do not touch any properties that have any structural damage at all. Go for real estate that has cosmetic damage, and can be easily fixed, and fixed for a low price.

When deciding your capital expenditure for the renovation, be careful not to over capitalise, and only allocate the bulk of the finance to certain areas. Areas such as the bathrooms and kitchen should always come first when it comes to renovating. Spending money on things that simply do not need them will greatly effect your profit margins.

Renovating real estate can be a very rewarding investment if that is the path you choose to go down, although in your first project, there will be lots of testing moments and a lot of lessons to be learnt. It is still one of the best ways to quickly add a lot of instant equity to your investment property.

Where Are The Best Places To Purchase Property

Today we will look at what areas you could look at when you are considering purchasing an investment property. As smart property investors, we want to look at areas that will not only appreciate over time, but also remain strong in times of economic downturn or if there is ever an over supply of property.

We will concentrate on the Australian property market, which is where the majority of the readers are based. Historically, over the last 150 years, the majority of property prices have risen at an average of around 8% per year. Some have done much better, and some have done much worse. Still, at the end of the day, if you have owned property in Australia at all and held it for even a few years, then you would have made some considerable returns,

So what are the best areas and suburbs to purchase property? This changes all the time, however there are some great guidelines that I can give you that will put you in the top 1% of successful residential property investors.

• Purchase within 12km’s of a state capital city
• Try to purchase a house or villa as opposed to a unit
• If you must buy a unit or flat, ensure there are not more than 20 in the complex
• Do not purchase on a main road, although one o two streets back is great
• Choose suburbs that border the more affluent suburbs
• Choose a location near (not too near) schools, parks and shops
• look for areas that are undergoing gentrification

The guidelines that I have put above are some simple, yet excellent real estate tips that will without  doubt give you a great head start when you enter the property market. Many peolple ry to overcomplicate property investing, or are more interested in nice new houses out in the mortgage belt. A boring small house in the inner suburbs will always outperform those in e outer suburbs, 25km away from the CBD. It is the land that is appreciating in value, and it matters little the dwelling erected on it.

Property Investing For Beginners Part 3

This is the third post in a series designed for the real estate investor beginner. Today we will look how you could protect your asset.

Asset Protection

If you intend to purchase more than one investment property, it is a good idea to think how you will structure your investments to protect them and you against any unforeseen circumstances. There are a number of ways that you can do this, and I must stress to you that you seek advice from an Accountant who is also a successful property investor. They will know what the best structure is for your needs.

Let’s have a look at why we would want to protect our asset. The main reasons is if someone has an accident while on your property you as a person are protected from legal backlash to a considerable extent. Another reason that is important to consider is that if you intend to keep your property investment for life, then you will want to ensure that on your death the beneficiary such as your spouse or children will not have to meet with any death taxes or Stamp Duty.

There are many more reasons why you would want to protect your assets, although we will leave them for another time.

The most common way of protecting your investment property is in the form of a Trust structure. There are many different types of trusts, and as mentioned before, you will have to seek expert advice to determine what trust is most suitable to your needs. By having your investment in Trust, you do not physically own the property. Another good idea is not to be the Trustee of the Trust, as this will legally attach you to the Trust. Instead, you could appoint a Corporate Trustee, which is basically a two dollar shelf company that you own.

There are many combinations of ways to set up your Trust and Company structures, and I can not stress enought that you must get good advice before purchasing your property.

Property Investing For Beginners Part 2

In the last post, we looked at a couple of thing a beginner in the property market should be aware of before they purchase their first investment property. Today, we will look at investment finance, and some of the things you should be aware of.

Investment Property Finance

It is a good idea before you go out in to the property market, that you have actually organised finance, or at the least, see how much finance you can access. This will of course determine what and where you will be investing, to a large degree.

If you are using equity from your own home, or another investment property, then you may want to lend with someone other than the Bank who holds the first mortgage. This makes it a lot easier to get finance, and when you have several investment properties, your lender may make things very difficult for you if you try to obtain more finance.

It pays to look at as many products from lenders as possible and to compare them so you end up with the package that is best suited to your own needs. If you use the services of a reputable mortgage broker, then they will work with you to find the best deal. On the same note, be wary of mortgage brokers who are quite keen to push you only one or two financial options, as the commissions that they receive from these institutions may be their driving force. Ask to see the mortgage brokers fee disclosure schedule, so you can see exactly what they will earn from the lender you end up going with.

Once you have found a good mortgage broker, it would be wise to stick with them, as a good firm will help you grow your property portfolio over the years.

Once you have finance arranged, this will add a lot of weight when you do go to put an offer in. A vendor who wants to sell will quite often take a lot lower price, if they see that you are a genuine property buyer, and not a time waster.

That concludes today’s post. Next time we will continue the series, and look at further tips on property investing for beginners.