Property Investing in The 21st Century

Repossessed Real Estate

Property foreclosures are becoming more prevalent in Australia and New Zealand right now, due to a multitude of reasons. The current economic crisis that appears to have gripped the world right now adds to the amount of houses that have been repossessed.

Although having a property foreclosed on you is not a great thing to happen, it is a great thing for a property investor to take advantage of. I say take advantage, as this is not a time to exploit others misfortune.

With the average housing price in Australia appears to be sliding just a little bit further South, and people are unable to service their loans due to reasons such as redundancy and pay cuts, there will be more and more foreclosed properties hitting the market in the future. This presents a time, where you can cautiously add to your own property portfolio.

Seeking out homes that have been foreclosed is a little easier these days, due to the increasing numbers that are appearing. Often the bank or lending institution that has taken repossession, will sell the property so they can just recover costs on the outstanding loan. This effectively means, that you can purchase such an investment at a very good discount.

It is a good idea to have your solicitor run their eyes over any contracts before you make any offers though, as there can be other complications, just as there can be with any other property deal. Researching property foreclosures should be like any investment decision you make, and that means not blindly running in looking for a quick profit. Due dilligence, and the right team around you will help you make your profit.

Written by Clint Maher - 21st Century Academy
Complete Wealth Education P/L © 2008

Creating Wealth With Your Home

In our last post, we looked at how you could release equity in your home or Investment Property, and put that equity to good use, especially in regards to purchasing more investment real estate. Today, we will look at how much equity you might want to use to build your portfolio. This advice is just my own personal opinion, and when you go to use your own equity, then please consult your own financial adviser.

The last ten years or even longer, saw great surges in the average property price in Australia and New Zealand. While it has slowed down for now, the average growth of around 8% still applies. You might not get it this year or even next, yet it will all even out in the long term, and that is what we want. In saying this, it is important not to over extend your equity, or you may find yourself in the position of negative equity.

You must only use enough of your line of credit as to get in to the deal, and that means use as little as you possibly can. If you only have a couple of properties, this usually poses no issue and you can purchase another property with a 10% deposit. If you have quite a real estate portfolio though, you will probable be forced to pay a 20% deposit to secure more property.

When you start to build a investment property portfolio, it pays to use a service that help you find the best deal, such as a Mortgage Broker who specializes in multiple properties. These Brokers are usually free to use, as they will get their fee from the lending institution instead for bringing them new business.

At the end of the day, you have to be able to service the debt, so you must do your calculations as thorough as you can from the moment you begin to look at a new deal. Do not leverage yourself more than you can afford, and you should do just nicely.

Using your home equity is a fantastic way in which to create wealth, and it needs to be given the respect that is deserves. Use your line of credit wisely, and before long you will have amassed several investment properties, and from the there the sky is the limit.

Written by Clint Maher - 21st Century Academy
Complete Wealth Education P/L © 2008

Put Your Money To Good Use

In today’s post we will be looking at releasing equity in your residential or investment property, so that you can purchase even more real estate and add to your property portfolio.

The majority of home owners are sitting on bucket loads of equity that they are just letting sit there and not putting to good use to create wealth for them. This is due to a couple of main reasons, being ignorance and fear. The majority of people do not know that you can do this, or if they do, do not know how to do it. The other reason fear, is that they think they will risk losing their family home so will not release any equity to get a line of credit.

Generally on most properties, you can get a LOC (line of credit) on up to 80% of any equity that you already have in the property. Say for example your residence is valued at $400,000 and you still owe $100,000 on it, you could receive a LOC of 80% of the $300,000 equity you have, or $240,000.

$240,000 you can now put to good use. You could put some of this and invest in the Stock Market and Rent Shares to receive a great monthly income, or you could go and purchase another or several Investment Properties. Actually, you could quite comfortably to both and that is the real key for creating lifestyle and future real wealth.

To create your LOC, you must first approach a lending institution or Mortgage Broker, and preferably not the same one as which the original mortgage is held with, if you still owe money on it. If you were to approach the original lender, they can make the process quite difficult for you.

Be warned, the paperwork for an equity LOC can take some weeks to be prepared and the facility ready for you to use, so it is a good idea to arrange the line of credit before you begin looking for an investment property. Just because you have a line of credit at your disposal, does not mean that you have to use it. It is there only if you want to use it.

In the next post, we will look at how much of your equity line of credit you should use when purchasing further real estate investments so as not to over extend your financial position.

Written by Clint Maher - 21st Century Academy
Complete Wealth Education P/L © 2008

Are You Ready For Real Estate?

It’s a question that you have to ask yourself right now, as the time has come to start adding to your investment property portfolio. The local (Australian) Real Estate Market has copped a hiding lately, and that is great news if you are a smart investor.

Look at it this way, many suburbs have experienced growth of between 15-25% for many years now, and all we are seeing is prices falling back in line with long moving averages to where they should be right now. It’s not so much as properties are going down in value, yet rather their growth is flat while the moving average catches up.

Interest rates are coming down, and coming down quickly. Rents are continuing to go up still. What this means is that there are a lot of great quality properties coming on the market right now where if you do your homework, you could have a neutrally geared property. Your rents received could cover your interest only mortgage repayments, or at least come very close.

Saying this, you still have to find the right properties, and in the right areas. Not all investment property is created equal, and having  financial knowledge and foresight is very important. Much of the  Real Estate on the market right now, is not a suitable investment, especially those in the mortgage belts and in rural areas.

This is a great time to become financially educated and learn as much about Property Investing as you can. The 21st Century Academy Homestudy was the one that taught me what to do, and what not to do. The buying opportunities right now offer massive potential to build real wealth in the future.

Written by Clint Maher - 21st Century Academy
Complete Wealth Education P/L © 2008

How Do You Go About Purchasing A Foreclosed Property?

In today’s post we will have a look at a strategy that many people are interested in as it allows them to purchase an investment property at a price that may be well under the properties true value.

A foreclosed property is usually one where the owner has been unable to keep up with the repayments for whatever reason, and after a certain point the lending institution takes legal action and takes possession of the real estate in question. The bank or lender can then put the property on the market to recover any costs still outstanding from the original mortgage.

It is important to remember that if you do want to buy Real Estate that has been foreclosed, then it is advisable to let you property team know your intentions. Your solicitor will be able to run their eye over the finer details, and ensure the property is free from any other creditors or encumbrances.

Finding foreclosed properties that are for sale can be a difficult undertaking in Australia, as they are not blatantly advertised as they are in the US for example. This is where it really helps to have some excellent contacts in the Property Investment world.  Having contacts at a Real Estate Agency is a massive bonus here, as they can get access to properties that are being sold. Having contacts in Banking circles is another way to get some quality information to help you on your way.

When a property does come on the market due to foreclosure, the Bank or lending institution is usually only interested in getting anything owed, plus some administration costs. Usually, they are very strict on the minimum price and will not budge below their reserve. If the property is worth it though, there is no point trying to get it at a further discount as you would have already got instant equity in the property if the deal was already undervalued.

Purchasing foreclosed property is somewhat of a specialized subject, and today I have only touched on it a little. There are plenty of excellent resources available on the subject if it is something that you are interested in, including on the free DVD from The 21st Century Academy.

Written by Clint Maher - 21st Century Academy
Complete Wealth Education P/L © 2008

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.

Written by Clint Maher - 21st Century Academy
Complete Wealth Education P/L © 2008

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.

Written by Clint Maher - 21st Century Academy
Complete Wealth Education P/L © 2008

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.

Written by Clint Maher - 21st Century Academy
Complete Wealth Education P/L © 2008

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.

Written by Clint Maher - 21st Century Academy
Complete Wealth Education P/L © 2008

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.

Written by Clint Maher - 21st Century Academy
Complete Wealth Education P/L © 2008