Mistakes Not to Make When Investing in Property

Buying in investment property can be both exciting and daunting at the same time. Here are some mistakes you don’t want to make when it comes to investing in property.

Waiting for the Perfect Timing or Perfect Property

In a changing market, waiting for the perfect time to invest in property may see you miss out on opportunities. The property market is essentially imperfect and has many variables. Trying to successfully time it is unrealistic and you could find yourself stuck in analysis paralysis with solid investments passing you by.

When it comes to the actual property, it is very unlikely that you will find one that ticks every one of your boxes, so you need to consider something that covers most of them. It can still be an excellent investment, even if it is not exactly as you envisaged.

If you have decided you want to invest in property and you are financially ready, you need to take action. Remember, property investing is a long term strategy and waiting for the perfect time or property can mean you miss out on properties that will see you do well in the future.

Working with a trusted property adviser can help you achieve your property goals, whatever the current market conditions may be.

Becoming Emotionally Involved in the Property

When you are buying an investment property, things that are important to you for your own home may not be as important to those looking to rent a property. It doesn’t need to be something you really like and would want to live in, it needs to be what potential tenants would be looking for. The area and property type need to be attractive to the type of tenants you are seeking. You don’t necessarily need to be in love with the property and/or the area for it to tick all of your investment requirement boxes.

Generally speaking, an investment property purchase involves business-like decision making so you need to take the emotion out of the equation.

Not Understanding the Area and the Demographics

An area may have a certain appeal to you, but it may not to renters. For example you may love a leafy, quiet suburb as a home owner, whereas a potential tenant may be looking for better access to transport, universities, or perhaps a thriving entertainment hub.

Another thing to consider is just because a property seems inexpensive, it doesn’t necessarily mean it will be a good investment. It may well be, but you want to understand why the area is cheaper and the likelihood of being able to rent the property out easily, as well types of tenants you are likely to attract.

Contact us and we can help you source a property suited to your ongoing needs and avoid these mistakes!

Renting Out Your Property

Once you have made the decision to rent out your property, it is important to make sure you are prepared. This can maximise the chances of better rental income and calibre of tenant. You are more likely to get tenants who take care of the property if it is properly prepared and shows that it has been cared for. So how can you maximise the benefits of your rental property?rental property

The first step is to ensure the property is clean and well maintained. It is important to fix anything that is needs repair or replacement. While you might be ok living with something that you plan to fix in the future, a tenant most likely will not be, unless perhaps there is a discount in the rent as a way to compensate them. Fixing any problems now can help avoid issues in the future. Making sure the property is thoroughly clean means the property is more attractive to the tenant. This includes outside areas. It is also worth considering if you will put garden maintenance as part of the rental agreement or if the tenant will be required to maintain it.

Make sure what is in the property is durable and will be able to withstand the wear and tear of the tenants. If you are leaving furniture or appliances in the property, make sure they are in good working order. And remember, if the property is rented out with these items and they breakdown, you will be required to fix or replace them.

While you should already have building insurance in place (either individual or body corporate) there are other insurances that it is wise to also put in place, particularly landlords insurance. Speak to an insurance professional to make sure you are covered here.

You will need to decide if you are going engage the services of a property manager, or try and manage the property yourself. Using a professional property manager has a number of advantages, including helping you make sure you are compliant with all legal requirements relating to the condition of the property, as well as the documentation and processes. They also offer the benefit of having access to a tenancy data base to weed out potentially bad tenants.

For more information on renting out your property and how we can help you contact us.

 

Co-Buying a Home

The rise in property prices and the challenge of raising the required deposit has seen an increase in people buying property with someone other than a spouse or partner. This can be a great way to enter the property market or build an investment portfolio. There are however, some things you need to be mindful of.

Purchasing Structure

Most co-purchasers who are not in a relationship (and some who are) will choose to purchase the property as Tenants in Common rather than Joint Tenants. This protects each buyer’s interests in the property. It is particularly important if one purchaser is contributing more than the other and therefore will expect a greater ownership share. It is also important in the case of the death of one of the owners. It is imperative that you obtain legal advice to make sure the structure is set up correctly for your circumstances.

Plan for the Break Up

When purchasing a property with someone who is not your partner, it is highly likely that you will eventually need to go separate ways. This could be due to changes in one or all persons’ individual circumstances that mean they no longer can or wish to continue with the arrangement. It may be that one party wishes to purchase another property on their own and the current situation is impeding them in some way. It may also be that there are disagreements. If you have a plan from the beginning, the process to buy out or sell can be easier to negotiate.

Have Clear Rules

Apart from the above, it is important to consider what will happen if there are general decisions that need to be made for the property. You will need to know how you are going to manage such things as repairs, selecting tenants for an investment property, rental increases or decreases – i.e. do both parties need to agree and sign off on it or will it be ok for one person to make the decision? Clear rules mean everyone knows where they stand and this can help avoid future issues.

Finances

There are options with mortgages where you can have separate splits for the loans so each person can be in charge of their own split, but it is important to remember you are each guarantor for the other person’s loan. If you are paying a joint loan you will need to factor in how much you will need to contribute to the account the mortgage payments will come from. You will also need to establish how and what you each contribute for such things as rates, body corporate fees, maintenance etc.

Purchasing a property with someone other than a spouse may be a great way to enter the market. With the right steps in place it can be beneficial to all parties.

Contact us to see how we can help you with your property purchase.

 

Do You Need Landlord’s Insurance?

If you are a property investor chances are you have already heard of landlord’s insurance, or even have it in place. While it is common for owners to make sure they have building insurance, landlord’s insurance often gets ignored, or the landlord is simply unaware of how it can protect them.Property, Landlord insurance

What are the types of things you might want to be covered for?

Damage:

One of the main things landlords might want to be protected against is damage to the property. This can be caused by the tenants, either accidentally or wilfully. Even the best of tenants can have adverse things happen to them or people they know, and that could result in damage to your property. It could even be damage caused by the tenant’s pets, or from other unforeseen circumstances.

Loss of Rent:

The other major thing you might want to be covered for is a loss of rent. This can be the case, for example, if your tenants vanish in the middle of the night, are behind on their rent, and you have no way of locating them. While this scenario is not terribly common, it happens so it is a good idea to have protection in place.

Personal Injury:

Some policies potentially cover personal injury that may result from negligence of the owner or even the property manager.

Policies can vary in what they cover you for. To find out the right type of policy for your needs, speaking with an insurance professional is a must. Landlords insurance is generally not included in your basic building insurance policy so it is important to check and make sure you have the right cover in place.

Premiums can also vary across policies, but might be more affordable than you think!

Contact us to find out more.

 

Financing Your Property Purchase

A property purchase is a major investment so when it comes to financing that investment, being prepared is important. There are a number of finance factors to consider to make sure your purchase goes as smoothly as possible.Purchase property

Lender

You will need to decide if you will be going to your bank directly or consulting a mortgage broker. The options available may differ between the two so an informed approach is important. It is ideal to try and take advantage of the current historically low interest rates. You may wish to apply for a pre-approval prior to making an offer on a property so you know where you are placed beforehand.

Deposit

The amount you have available for your deposit and where it will come from can make a difference as to the type of mortgage you may be looking at. Will you be providing security in the form of equity in another property, using funds from your own savings or a gift from family as a cash deposit, or perhaps going with the help of a guarantor? The amount and form of deposit you are able to put down can affect the financing options you have, so knowing this early on will see you prepared when you make your offer.

Loan to Value Ratio

The loan to value ratio is the difference between the loan amount and the value of the property and is linked closely to the deposit and / or equity you contribute. If you have a low LVR it may mean you qualify for a lower interest rate. At the other end, at times there can be restrictions with higher loan to value ratios, so it is important to know where you are placed.

Credit History

Understanding your credit history before you apply for a home loan will help you know what your options are. A clear credit history is ideal, however, if it is somewhat adverse there are lenders who may still be able to help you.

Costs

The costs involved in purchasing a property can vary. You need to factor in things such as stamp duty, conveyancing and, potentially, building and pest inspection fees depending on the type of property you are purchasing. Ongoing costs such as body corporate fees, rates and insurances should also be put into consideration.

For more information on how we can help you understand what is involved in financing your purchase, contact us.

 

 

 

Making Sense of Stamp Duty

When you purchase a property, be it residential or commercial, State Government stamp duty usually comes into play.

There are a few variables that affect how the stamp duty is calculated. Those include the proposed use of the property, the type of property, the purchasers residency status, and whether or not they are a first home buyer.stamp duty property

Purpose

Some discounts apply to stamp duty if it is your principle place of residence rather than an investment property. Commercial properties are generally treated the same as residential investment properties when it comes to transfer stamp duty, although there are potentially other tax implications such as GST so it is advisable that you consult your accountant.

Type of Property

If you are buying an established property, stamp duty is payable on the entire value of the property. A to-be-completed property, such as an off-the-plan property or a house and land package, often comes with a lower rate of stamp duty and is generally calculated on the value of the land at the time the contract is signed. In this case, purchasing a property off-the-plan or a house and land package can often mean significant stamp duty savings.

First Home Buyers

Being a first home buyer can also affect the amount of stamp duty paid. The various stamp duty savings and calculations can vary from state to state. Most states have a cut offs as far as the value of the property and also the date of contract, so it is wise to see where you stand prior to making an offer on a property.

Foreign Investors

Foreign investor stamp duty is calculated at a different rate to Australian citizens or permanent residents. If you are a non-resident of Australia, check with the relevant state body to ascertain what charges you will be looking at.

Stamp duty varies according to the state you are purchasing in so it is recommended that you consult your relevant State Government website for information. Contact us and we can point you in the right direction to find the information you are looking for.

 

5 Things to Consider When Buying a Business

Often when getting into business people will choose to purchase an established business rather than starting from scratch. However, there are still a lot of things to consider before you dive in. You need to make sure you are well informed and prepared in order to give your business the best chance of success.business

Reason for Sale

Knowing the reason the vendor is selling is useful as it can help with your decision to purchase and also the negotiation. Do they need to sell and is there time pressure? Or is this perhaps their retirement strategy? You also want to find out if there are there any other factors in their decision to sell, i.e. competitors opening up nearby or environmental issues.

Due Diligence

Look under the surface to make sure what is shown initially is what is actually the case. Research the industry and market thoroughly, particularly if it is not an industry you are currently immersed in. Talking to customers and or suppliers is a great way to get to know more about the business. If the business relies on foot traffic, spend time outside observing who and how many come and go, and do this at different times of the day. Make sure nothing untoward has gone on prior to the listing, such as dropping prices to make sales numbers look better.

Conduct a thorough SWAT and risk analysis. Look for any recent changes or irregularities that may be masking something. Thoroughly look into the financials and get your own finance professional to look through them also. Investigate what the staffing situation is and if they will be staying on after the purchase. Ensure there are no outstanding legal issues with the business.

Value of the Business

Knowing how the vendor has reached their valuation of the business is important. Compare this with other valuation methods. Also, look at comparisons of other similar businesses. Establish what the goodwill covers and is actually worth. Be aware if the departure of the current owner is likely to affect the business and customer base. You also want to make sure you are clear on exactly what is being sold.

Financing the Business.

How you are going to finance the purchase of the business is a major factor and there are often a few options. Will you approach your current bank or will you need the assistance of a finance broker? If obtaining traditional financing is an issue, some vendors will consider vendor financing. Also, it is important to know your expected cash flows and what sort of financial back up you will need going in. A conversation with your accountant and lending partner prior to any offers can help you go in with the right strategy.

Legal Issues

Make sure you thoroughly review all of the legal documents – such as the full contract and any lease documents – and consult your legal representative. You will usually need to sign a confidentiality agreement prior to being shown any confidential information. Also, ensure you have the right authorisations and licences to operate the business.

When you are considering purchasing a business, a chat with a business broker and / or your accountant can steer you in the right direction. Contact us to find out how we can help you throughout the process of purchasing a business.

5 Things to Consider When Selling a Business

In every business owner’s life, the time will come when they have to start considering their exit strategy.

Here are 5 things you need to consider when that time comes.selling business broker

Value of the Business

When it comes to working out the value of your business there are a number of methods you can use. These include: market place valuation, return on investment method (ROI), using the value of the business assets, the cost of starting such a business from scratch, or the estimate of future profits. Your accountant and business broker can help you work out the best method to use to obtain the value of your business.

Marketing Strategy

The marketing strategy is important. Making sure the right audience are targeted is vital to a successful sale. Engaging a professional business broker will mean you can take advantage of both their online reach as well as existing networks.

Negotiation

Negotiation is another reason why using a good business broker is advantageous. A business broker has solid experience in negotiation and is committed to achieving the best outcome for you.

Financial obligations

Your accountant will be a valuable ally when it comes to selling a business. They will usually be involved prior to the sale with getting the financial and goodwill information in order to present to any prospective purchasers. They will also be able to help with any tax obligations that may arise after the sale. Things such as Capital Gains and Goods and Services Tax obligations, as well as finalising returns, winding up companies, ABNs etc. are things you will most likely need to consider.

Legal

You will need to engage a solicitor in the sale of your business. They will be able to prepare the contracts for you and help with any legal issues arising from the sale and transfer of ownership.

For more information about how we can help you with the sale of your business contact us.

Apartment Living

Apartment living is becoming more and more popular. While there are some drawbacks to apartment apartment property lifestyleliving, the list of benefits is a long one. From location to lifestyle, the advantages are plenty.

So, what are the pros and cons?

Pros

Location: Apartment developments are generally built in close proximity to conveniences such as transport and shopping areas. Some even have onsite cafes and shops.

Convenience: A smaller home means less cleaning and gardening requirements.

Security: Most apartment buildings come with security features you wouldn’t get in a house. For example, most require a security fob to enter the building, and many also require the fob to get the lift to stop on your floor. Some buildings have a concierge on site 24 hours per day, so security is maximised.

Amenities: Many apartment buildings come with fantastic amenities, like swimming pools, gyms, and barbeque areas. These are maintained by the building managers / body corporate meaning you don’t need to look after them.

Affordability: Price is often an attractive feature with apartments. It may mean you can live in an area you may otherwise not be able to afford. If you are downsizing, purchasing an apartment may allow you to free up cash flow while living in the area you desire.  Apartment living often means your regular expenses are lower as it generally costs less to run a smaller home.

Lifestyle: Apartment living can offer a community feel for those who are so inclined. It is also suitable to those living solo, as you are secure on your own, but you have people close by if you need them.

Cons

Body Corporation: The fees and rules associated with body corporates are sometimes off putting but it is worth keeping in mind that these fees cover the maintenance, convenience and security of your building, meaning you don’t have to worry about these issues.

Smaller living areas: There may be some adjustment to getting used to living in smaller spaces. You may have to change your furnishings to fit within the property and eliminate some of your personal items, but it can be a great opportunity to declutter.

Privacy and noise: Living in an apartment is generally going to mean more noise and potentially not as much privacy. It can take some getting used to but most are able to adapt.

Parking: Most apartments come with at least one parking space, but there are some that do not so it is wise to make sure the apartment you are looking at suits your vehicle requirements. There can also be an issue for visitors finding parking if the area is particularly built up, although this is not uncommon in inner city areas in general.

When it comes to apartment living, you want to try and make sure your apartment is in a well-chosen area, within quality development. Tiago Property Group specialise in finding apartments to suit all lifestyle choices. Contact us to see how we can help you secure your dream apartment.

6 Melbourne Growth Suburbs

Knowing where to buy is one of the most important parts of your decision when purchasing a property. As growth investment property wealth homethey say, it’s location, location, location…

Melbourne’s strong property price growth means that your ideal location may no longer be an option. You will most likely have to broaden the area that you are considering, in order to find the type of property you are looking for.

In most cases people want a location that suits their lifestyle, as well as one that offers potential growth in value. So where do you start looking?

Even with all the talk of Melbourne’s booming property market, according to the Real Estate Institute of Victoria there are still affordable options within 20kms of the CBD. As of September 2017, there were still a number of suburbs within this radius yet to reach the Melbourne median house price of $817,000.

REIV data shows the following suburbs and their median prices (as at September 2017):

  1. Albion – $665,000
  2. Sunshine North – $670,000
  3. Heidelberg West – $726,500
  4. Fawkner – $740,500
  5. St Albans – $631,750
  6. Meadow Heights – $487,625

These suburbs are gradually becoming gentrified and with infrastructure being developed they are set to become even more convenient. These areas offer people on a budget or those looking for growth potential, the opportunity to purchase a solid property and still be close to the city. There are plenty of full sized homes as well as quality developments with townhouses and apartments.

This shows there are still affordable options available in areas close to the city. To find out more about these locations and developments in these areas contact us.