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Rental yield in the property industry is a very important thing. It can mean the difference between having a successful, thriving portfolio and holding property that is as fragile as a house of cards. The Oxford English Dictionary defines "yield" in many different ways. The direct (and most obviously relevant) to property investing, is this one:
Yield: noun; the income produced by a financial investment, usually shown as a percentage of cost.
Yield can also be defined as a submission to a greater influence:
Verb; the income to surrender or submit, as to superior power
A very different use for the word, but still appropriate in the property industry, in that, sometimes you must surrender to market conditions and reassess other ways to stay afloat during the harder times.
Yield is effectively the percentage return you get, month in, month out, when holding investment property. It is the day-to-day revenue coming in after your running expenses (mortgage, managing agency fees, repairs and maintenance, etc), are deducted. It should not be confused with capital growth. This is defined as the difference in market value of an asset from the time of acquiring it, to the time of selling it on. So in a utopian world, any investment property or portfolio of properties would achieve both; supply the owner a stream of revenue whilst holding it (yield); and then providing a lump sum of revenue in the form of return when selling it on later in life (capital growth).
The reality is this isn’t always readily achievable. Market conditions, along with a barrage of complex variables in the marketplace at any given time, can upset or confuse the degrees of yield and/or capital growth that a property can deliver. As many of you are well aware, we are facing particularly challenging times in Australia in the last couple of years, during which capital values in some markets have remained flat.
This has happened before and will happen again. Property goes through cycles, and this occurs on both micro and macro levels. This means there is a general nationwide cycle, full of peaks and troughs, grouped and classified by averaging out the record-ble figures on a national scale. But then there are micro cycles, in which specific states, cities and even individual suburbs can also go through their own peaks and toughs.
The variance of say, one particular suburb can produce seemingly contradictory and mixed messages about what stage of a cycle a market may actually be in. On average, a full property cycle, from upswing (increasing values) to peak (values at the highest possible range) to downswing (values cooling) to stagnant (values bottomed out) typically lasts around seven to 10 years.
<img src="/images/stories/2012/10/clock-generic.jpg">
 
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This is where having higher yield can help to see investors through the “rough patches” of the leaner phases of any property cycle. Yes, in November 2012 we are facing some new macroeconomic challenges – a slowing local (and global) economy, a softening of international demand in the resources sector, banks going belly-up – but even under these conditions, there is always opportunity for those of us in property to better weather these storms and come out on the other side less damaged as a result.
 
In fact, unlike historical slow property cyclical phases, where interest rates were comparatively higher and demand for rental property (in most markets) was not as strong as it is today, I’d argue that this “rough patch” might not be so bad for savvy investors.
Interest rates are very low, which already reduces holding costs greatly. Also, demand for rental property in most markets remains strong, and this is unlikely to change any time soon. I say this after observing the slowing of construction project application approvals in several states and territories and the less-than-great state of the construction market in general (residential property and non-residential alike). Demand is unlikely to weaken for residential rental accommodation in most markets any time soon. In short; they cannot build them fast enough. Additionally, a significant portion of the property that is being built or planned to be built in the next five years is not being built in the high-demand areas where it is needed most.
So, providing you are holding well-located property in relatively high-demand areas, this can only be a good thing for demand – and thus the top dollar that your tenants are willing to pay – for your property. So when capital growth is in a paused, slow, or even negative-growth stage, within a property cycle creating better cashflow, or yield, will help see us through the tougher times.
So, here is a list of ways you can look to improve cashflow and thus increase your yield in your investment properties. Most of them appear quite logical – there are no secret recipe tips here – but I am constantly surprised to speak with other investors who have not considered some of these to improve their yield.
1. I’ll place this one first because it is the most obvious and easiest; but it must be said: Shop around for a better mortgage deal. Interest rates are at their lowest since 2008, and while there is evidence the RBA may add a further rate cut or two, now is a good time to find a better deal, or at least consider fixing say 50% of your loan(s) for the next few years.
2.       Shop around for a more cost-efficient property manager, but make sure the level of service remains the same. With more investors experiencing a challenging market together, property managers effectively must work harder and better for their management fees. So if you are not happy with your current agent or feel their fee structure does not reflect the level of service they can offer, look to seek out a better deal.
3.       If appropriate, consider an increase to your tenant’s rent rate. A common occurrence when markets experience stagnation in values, yet demand for residential property is high is that rental return increases. A good investor will at least annually assess a tenants’ rent rate, so whether this is upcoming, overdue, or has already been raised to market-appropriate level, now is a good time to check in on rates and plan for the next 12 months.
4.       Depending on cashflow available and the nature of your property (if it’s a detached house on a large enough block) now may be the time to do up a cost-analysis spreadsheet to consider adding a granny flat. I am by no means suggesting that granny flat additions will be relevant for many, but for a few, taking advantage of aforementioned cheap finance and easier-than-ever council approvals may make a granny flat addition add to your gross yield significantly. Now may indeed be the best time to finance one.
5.       Another less extreme way to add some more value but improve rental return is to do a cost-analysis for any improvements to the property. If your property is new or has been recently renovated, then this one is probably not relevant to you, but if your property is older and there is scope for mild renovation at a low cost (“cosmetic” renovation such as changing the wall paint, tiles, or adding built-in wardrobes, etc.) then now is a good time to assess how much this work would reward you with in terms of additional weekly rental revenue.
6.       Hit that offset account harder than ever. Most investors use an offset account to park their savings and revenue, to make sure the amount of interest they are charged on their loan is minimised as much as possible at any given time. For those who don’t have an offset account set up, get one. For those who do, look for ways to economise your personal life and spending so that you can park more revenue against it and reduce your interest payments further. This will bring your holding costs down that extra notch and improve your yield. It may only add up to a saved $10 to $20 extra, per week, but every little bit helps.
Cameron McEvoy is a NSW-based property investor and maintains a blog, <a target="_blank" href="https://propertyspectator.blogspot.com.au/">Property Spectator.</a>
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Rental yield most important in down property markets

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“Work shifting” is a bit of a buzzword in the technology sector. Many software companies are getting on board with it and providing the tools to employees to be able to work remotely in a much easier fashion than ever before. But it is a trend that few are talking about yet in residential investment property circles. However, I think it is very much worth discussing so we can identify trends that could implicate property supply and demand in the next 10 years – or even within the next five.
Having worked in the technology media industry for almost five years, I’ve observed a noticeable sharp increase in the volume of technology solutions providers that are releasing products and solutions that all work as a variety of cogs or pieces in the puzzle of providing secure, fast, and innovative remote-working solutions. This ranges from high definition online meeting software providers to online security and threat-prevention companies offering solutions to protect networks for mobile or work-shifting staff to networking solution providers interested in making sure that mainframe data is accessible, quick to access, and reliable.
Work-shifting is really just a phrase coined to identify the process of being able to work remotely with greater ease, thanks to some of the abovementioned innovations.  It goes by many names in business – ‘teleworking’, ‘mobile working’, ‘remote working’, ‘home office based’ – but it all pretty much means the same thing. Technological advancement is making it a lot easier to do many jobs from home.
While working from home is certainly not a new thing, there has until recently always been a need to live close to the physical workplace so you could go in whenever you needed to, because technology was not yet advanced enough to work efficiently from home. But now you are able to take business meetings in real time high-definition video while showing your PowerPoint screen to other users; you can also wirelessly access private networks and pull data from them, at (what will be with the pending implementation of the NBN) ridiculously fast speeds.
What this means is that for a great number of white-collar (and increasing volumes of traditionally blue-collar) jobs, the need to go in to a physical workplace is being continually minimised. The advent of online meeting software providers, Skype, remote working, CRM systems and high-definition high-speed video connections means that more and more Australians are holding jobs where they never need to physically need to leave their homes. Even for a face-to-face meeting.
So where am I going with all this and how does it affect residential property investment in Australia? I’ve been observing trends in Europe, North America and Japan, over the past few months – all markets that are at the forefront of the work-shifting trend – and there have been visible changes noted to demand for housing in areas further away from large metropolitan cities, by demographics that are quite clearly working professionals.
 
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It seems some people who can work from home are choosing not to live in large cities. What has also become apparent (particularly in the UK and Japan) is people now moving to areas that are an hour or two’s drive from a big city, possibly to enjoy the quieter lifestyle that these locations may offer with comparison to overcrowded, expensive, and congested larger metropolitan cities.
Think about this for a moment and ask yourself: regardless of whether you are a city dweller or live in a regional remote town: if you could have that big city job with the great salary, career progression path, employer etc. that you desire yet not have to live in a more expensive, traffic-jammed and stressful city, would you? If you could be sales manager of say Melbourne’s largest “X” company in “Y” industry and you did not have to commute two hours a day to an office, pay more for your groceries, your rent and your travel costs, yet still earn the same wage, would you nominate to work-shift?
Metropolitan living remains highly desirable for many city dwellers, and by no means am I challenging this notion, but I am guessing a sizeable number of people would rather live on the coast or in regional areas if they could.
One of the clients at my work place is very senior in a large global technology company, yet she actually lives and tele-works from the beach in Cairns. I called her one day and asked what motivated her change of location. She said that she could work remotely/online most of the time, taking meetings in high0definition video and sharing data remotely, yet had all of the lifestyle benefits of living in Cairns.
I asked her what these were. She said there were many – lower cost of living, she actually has a backyard now (something she’s never had in her adult life), holidaying in south-east Asia becomes closer and easier, and she scuba dives regularly on the weekend. Her mortgage is half the cost of her once inner-Melbourne shoebox, yet she lives right on the beach shore and she’s able to condense her physical meetings to one week per quarter of back-to-back meetings in Sydney and Melbourne.
My personal prediction and belief is that we will follow the trends emerging in other countries, whereby “lifestyle” locations that are near to larger cities (say, a couple of hours’ drive) could benefit most from this trend. Professional have the benefit of being a close commute to friends and relatives in the city, while also having that beachside house and relaxed small-town vibe in their day-to-day lives. 
It is certainly too early to advocate any kind of mass acquisition of regional investment property, but rather it is early enough to earmark some locations where this trend is emerging and observe if any significant demographic shifts occur in these locations. One big question this does encourage, however, is the level and degree of capital gain and/or rental return achievable for these locations. Will the “new” tree-changers and sea-changers pay handsomely to rent your property in a sleepy beachside town, where they can work remotely while still earning those big-city bucks? That is the question that should be pressing most investors reading this today. One to watch.
Cameron McEvoy is a NSW-based property investor and maintains a blog, <a target="_blank" href="https://propertyspectator.blogspot.com.au/">Property Spectator.</a>
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How telecommuting – or 'work shifting' – is changing Australia's property markets

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As a born and bred Sydney resident of 30 years, I’ve watched over the progress (or, in many years, the lack thereof) of the north-west rail link. Over the years there have been numerous proposals to extend the existing rail network to accommodate commuters living in the suburban expanse that is the north-western suburban region.
The current proposal is for eight new train stations along a dedicated line that will be a mix of underground tunnels, sky-train sections and flat land sections. Just this week, the first demolition work commenced for some structures directly in line for the proposed work, which is a more solid indication that the line will actually go ahead.
So today I thought I’d offer some theories about how the new rail line, both in the lead-up to its completion, and post-completion, could impact on the residential property markets in the council areas around this corridor.
<img src="/images/stories/2012/10/raillink.jpg">
The area in question takes in to account several large shire and municipal council areas, and according to the Australian Bureau of Statistics, an estimated population of around 648,000 people and growing. This is significant, as it reflects just over 14% of Sydney’s overall 4,605,000 current population. The proposed eight stations will connect suburbs across three main local government areas, which are some of the fastest-growing population areas in Sydney:
<ul>
<li>Blacktown City (currently around 307,800 and is not only the most populous local government area in all of NSW, but has had the fastest population increase and intake in the last five years)</li>
<li>The Hills Shire (currently around 176,500 and also in the top five fastest-growing councils by population)</li>
<li>Hornsby Shire (currently around 164,600 and showing positive population growth)</li>
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So how will this impact the suburbs close to the proposed stations? To understand that, we first need to know more about the people who occupy them and the types of households most prevalent.  Most Sydneysiders have come to know the north-west region as a family/suburban area. And they are correct – at least according to ABS data. But RP Data can also provide an insight to this audience by way of reporting on the typical size of dwellings most readily available on the market at any one time.
To keep it short and sweet, instead of bombarding you with stats and numbers, I’ll give you the general flavour of it per local government area:
Blacktown City is popular with families with very young children, who historically preferred detached houses, but recent shifts have caused a swing towards townhouses (attached dwellings), units and apartments. This is consistence with housing stock trends reflecting increased demand for units, as well as higher-than-ever new construction commencements for units and apartments in many suburbs within the council area.
Hills Shire is popular with both young families (families with very young children, as above) and also established families, but also has the highest rate of single-person households out of all three local government areas. RP Data also highlights increased new construction starts, evenly split between free-standing houses and townhouses, villas, and units.
Hornsby Shire council area contains suburbs that are typically established families, preferring detached houses, with a small but growing preference for units in most suburbs.
 
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<img src="/images/stories/2012/10/raillink2.jpg">
There is also a significant spread of median dwelling prices across all suburbs within all three local government areas, making it difficult to plot and trends, however generally speaking Hornsby contains the most expensive median dwelling prices, followed by Hills Shire in the middle, and Blacktown City after that.
The biggest question around the rail link for would-be investors interested in these areas is no doubt “Will the rail line increase capital growth and/or rental return on properties close to it?”. Without any statistics behind me and based largely on rail line extension projects completed in other areas of Sydney over the last 20 years, I would argue it is likely that some areas will record increases more than others. There are so many variables to consider before we can get more clarity around this, including:
<ul>
<li>Commuter times and ease of connection to CBD (and other high employment areas within the city) once the project is complete.</li>
<li>Speculation about Chatswood station’s congestion and overcrowding issues slowing down overall commute times for users.</li>
<li>Suburbs close to the new stations that are within walking distance will benefit from the commuter ease of access, but may lose out to noise congestion issues caused by outer-suburb drivers wishing to park in the side streets and then alight on to a train.</li>
<li>Demographic changes to the suburbs close to the new stations (more commuters, singles, and double-income-no-kids couples moving to these areas) could mean that dwelling values for larger family homes (the five-bedroom, three-car, three-bathroom variety) may suffer as demand for them may not be as strong as smaller and more affordable dwellings.</li>
<li>Residents have also only been offered speculation as to the precise travel times involved to change train services to access different areas of the city. The rail link only connects to an existing Epping line, meaning that to get to other areas of Sydney such as the south-west, southern suburbs, and north shore by rail will still be cumbersome.</li>
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Another element to consider is not only where the average north-western Sydneysider will need to work, in 10 years’ time (the rail link’s estimated completion), but how they work. More and more people are working remotely and thus are moving away from outer-suburban areas of cities, and out of cities altogether.
If the trend continues at the rates it is currently gaining momentum, in 10 years, much of our professional workforce may not even need to commute for work. This could result in a shift for Sydneysiders who select their suburb of residence in accordance to work proximity.
Someone who telecommutes could live on the central coast instead of suburban Sydney.
It is still too early to speculate more precisely on the effect of metro rail services being rolled out to this region of Sydney. There council areas affected each contain many individual suburbs, with each of these having its own market dynamics and nuances.
However, one thing is certain: opportunity for investors is always created when infrastructure advances.
My advice to those considering these areas today for tomorrow’s investment rewards is to do your due diligence as per usual, but to also research heavily the implication on traffic congestion on the road caused by changes the way people reach their train station for weekday commuting.
Cameron McEvoy is a NSW-based property investor and maintains a blog, <a href="https://propertyspectator.blogspot.com.au/" target="_blank">Property Spectator.</a>
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What the north-west Sydney rail link means for property investors: Cameron McEvoy

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I love comparing apples with apples. When it comes to property managers, this is something you can easily do. In theory, property management is pretty much the same everywhere. Or at least it should be. Strong customer service to you, superior management of tenants, and prompt notification (and resolution) of any issues that fall in between these two parties – these are the skills you should be seeking when shopping around for a property manager. This is also the expectation you ought to have when selecting the manager for your property.
Excellent property management is such a crucial element to a successful investment. Like any investment or business venture, poor management of an asset – no matter how strong the asset is – could seriously compromise the viability of your entire investment.
Think of your investment property like a small business. For example, let’s say a corner sandwich shop. You’ve done all your due diligence on the sandwich shop before purchasing the business, so you’ve checked the figures: inventory, turnover, growth, and depreciating asset values. But if you hire mediocre staff to manage and run the business day to day for you, poor management can drive it in to the ground and turn a profitable sandwich shop into a one that is not profitable.
Of course, that manager you hired during the interview sold his or her skills and assured you he or she was highly capable, yet this has not transitioned to successful business management.
You must think of your property manager as your business manager. They control the quality, checking and ultimate appointment of tenants, the (swift) sourcing of new tenants should current ones choose to vacate, and the satisfaction of tenants by way of prompt responses to repair requests and general enquiries.
Finding good tenants is only half of the battle; the other half is keeping them. Retention is so important because it is effectively the cream on the top of an already great investment. Most property investors, including myself, will factor in two or three weeks of vacancy per year in their overall holding costs, so when you are canvassing properties you are considering for purchase, in your cost analysis you should always factor in at least two weeks per year of vacancy.
If your property manager is competent, they will work hard to keep good tenants happy, and you may find yourself in the fortunate position I have been in for one of my properties, where I’ve had the same tenant for three years. This is great because to my bottom line, that’s six weeks of additional rental revenue I had not actually budgeted for. Sure, as an owner you should always act promptly to requests from your property manager on behalf of the tenant, but what good is this when your manager did not even report the problem to you for three months to begin with?
Finding a good property manager can be tough, and sometimes it is hard to distinguish two candidates from one another. And once you do find a good property manager for your first property, what happens when your portfolio starts growing? How do you manage multiple properties with multiple property managers? At what point do you consolidate, and how easy is it to transfer and change property managers?
You may get to a point, after acquiring several properties, where employment of a different property agent company for each one becomes too complex and tough. At this point you may want to consolidate this management to a company or manager who is capable of managing all of your properties, regardless of geography. There are many experienced management companies out there offering such services that can manage portfolios across multiple states and territories.
 
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So what are the best attributes to look for when appointing and agent? And what things should you avoid? Today I’ve put together a list of things to keep in mind when seeking a managing agent:
1)      Don’t just settle for the real estate agent you happened to have purchased a property from. As a forward-planning investor, when appointing managers you must look beyond the here and now and think of property managers that are capable of managing outside of the immediate suburb/council district/city/state that your first property exists within.
Selling agents see the easiest (and perhaps laziest) “up sell” in the property world as selling a property to an investor and then offering to manage it. And in some instances, this will make sense. If the tenant has already been there long term, and the same agent has managed them the entire time, then the relationship between the tenant and the agent is usually pretty solid. So why fix it if it isn’t broken? However, this is also something to be wary of. Ask the agent what his or her growth capacity is, and then ask what discounts you’ll be entitled to should you opt to choose him or her, and then grow your portfolio.
2)      Let agents you speak to know that you are speaking to other agents! This is a common business tactic that is effective in almost any industry, and property management is no exception. You must position yourself as being a client worth fighting for. Let them know that you are a serious investor and that you are “looking for a partner to grow together with”. This sounds so much better than “I need someone to look after my place for me”. Agents worth their salt will go the extra mile and fight hard to win your business. You’ll quickly distinguish those who agents who consider you as being “too tough a client” to those who see the potential in winning your favour.
3)      Experience, credentials, testimonials, and references – do you due diligence. This is actually the most important one. Look at websites for property managers who have loads of testimonials. I always go by these. And I’m not shy about “stalking” some of those testimonials on Linked In or Facebook, sending them a message telling them I am an investor and checking personally their view of their managing agent. Ask to see references or ask for a list of long-term customers whose portfolios they are managing.
4)      Negotiation, economies of scale, and “buying in bulk”. Of course, top-notch service is the priority when appointing a property manager. But so too is the bottom line. Regardless of your investment strategy, and whether it is a short term or long term one, we are all in the property investment profession to make money, so one way to help increase revenue margins is to reduce your overall holding costs.
Sure, when you have just one property, the difference between say a 6% property management fee and a 4% one may not seem that great. But again think of that scenario in 10 properties’ time. Let’s say your weekly rent on one property is $350, the 2 percentage point difference per month in management fees is only $84-$56 = $28 per month, so $336 per year. However, when you have 10 properties, that annual savings translates to $3,360, which is a serious saving. Look for property management companies that are able to manage in this way: in other words; wherever your next portfolio purchase may take you. 
 
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5)      Think beyond real estate agents. Real estate businesses make the bulk of their revenue from property sales, not property management. No discredit to agents, but why partner with a company that, from the outset, is not as driven to provide the best management service because its primary revenue does not come from there? It is like comparing the quality of bread sold from a major supermarket versus a boutique corner baker. The boutique will almost always be better, because baking is all they do. They must hang their hat on baking as a skill or else their business fails. Estate agents sometimes see property management as merely an ‘add on’ to their primary revenue stream.
6)      Regular inspections and tenant screening. Ensure that whoever you appoint has, in writing, that their service to you will include twice-yearly (at minimum) inspections to your property. Even if the tenant is a long-term one and looks after the place, it is important for the tenant to know that the agent is actively checking up on the property regularly. As for tenant screening, ask many questions around their process of tenant selection and appropriation. Have a copy of their rental application form emailed to you and inspect it. Generally speaking, the more thorough the application forms, the better quality of property management it is.
Success in holding investment property as an asset class short or long term is significantly dependent on management. Unlike investing in say gold, or managed funds, which are typically “set and forget” investment classes, property allows you to be dynamic in the management process, which in turn can help you increase your return significantly if managed well. Just make sure you partner with people who will help this vision, not hinder it.
Cameron McEvoy is a NSW-based property investor and maintains a blog, <a href="https://propertyspectator.blogspot.com.au/" target="_blank">Property Spectator.</a>
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Six things to look for when choosing a property manager

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With so much negativity in the broader Australian property investment industry recently, there has been a lot of backlash against the “value” of property investment and the potential for success within it. Today I want to share some perspectives on this subject and discuss how some of the negatives should really be considered ‘positives’.
I want to begin by sharing an article by <a href="https://www.propertyobserver.com.au/residential/refurbishment-renovations-or-redevelopment-is-the-way-the-rich-make-their-money/2012082356217" target="_blank">Michael Yardney about how the rich make their money.</a>
He effectively states that you’ll “never get rich by working for ‘the man’”. I believe this to be true also. I think true financial freedom comes from stepping out independently and making your fortune. Doing it “your way” allows you to take control of which partners you choose and how much you are willing to pay others to help you get closer to achieving your financial dreams. He cites capital growth as being the main way to get ahead, make money, and get closer to becoming rich.
But with capital gains hurt recently in the Australian property market, it becomes hard to really look at property (and to some extent the share market) as an asset class objectively, when other investment classes such as gold and resources are offering more incentivised capital growth prospects.
So why invest in property in a climate like this? With plenty of negative sentiment about, some states and regions actually going backwards in growth numbers, and the immediate future looking to show no immediate dramatic improvement, property as an investment type must seem pretty unappealing right now – to the uninitiated, at least. Well, I am not going to argue with this. Sure, things right now are not as great as we’ve seen in the last 10 years, so why invest?
There is no easy answer to write in one sentence. But if I were to try to, I’d simply say this: everybody has to live somewhere. Think about that for a moment and let it sink in. A roof over our heads is a pretty basic human need. And people need to work to live. Basic logic says that people thus need a place to live that is also within easy access to their place of work, so they can, well, make a living.
“Need” translates to supply and demand. If there are way too many properties in a market, demand will be low because everyone is already housed. This is where Australia offers such great opportunity. Because we are a young country, still growing and most places do not have enough property available to meet the demand of their markets, demand for property will remain very strong in places for years. Regardless of the volume of construction projects that get approved, Australia will always be “chasing its tail: to make sure there are enough properties available for people – where we need them, that is. This is a very important state of play for Australia and sets us apart from highly oversupplied markets such as the US, Dubai (and all of the United Arab Emirates, for that matter) and even Japan, which is beginning to shift more towards oversupply.
What I am getting at with all of this is: although values may fluctuate, this is all part of the process. This market correction we are going through is nothing new; it happens every 10 years, really, and is a normal part to any property market cycle (peaks, troughs, and everything in between). If your strategy is a long-term “buy and hold” approach, you have nothing to worry about on the capital growth front. The truth is, if prices were dipping so badly, this would not (and does not) change the dynamics of supply and demand.
Yes, the same number of people will front up to a Saturday inspection of a tiny one-bedroom apartment in Bondi, hoping to get that lease, regardless of whether the place is worth $250,000 or $500,000. What this means for investors is that in times of slow capital growth, if you buy property that provides good rental return, you won’t feel this so much. That one-bedroom in Bondi will still continue to rent for $500 per week, regardless.
 
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This is where demographics come in. The great thing about living in a very large country, but one with a low population, is the concentration of employment centres to just a handful of major cities, along with regional centres that are one-stop economies. In this way, Australia and Canada are quite similar.
Let’s be honest, if you live in either country, and you want a decent professional/office/services job, you are really restricted to a few major cities ( Sydney, Melbourne, Brisbane, Perth, Adelaide in Australia, and Vancouver, Toronto, Montreal, Ottawa, Edmonton in Canada). If you want a regional resources “one-stop” job, you are also restricted to key areas (in Australia, mining towns like Kalgoorlie, Mt Isa, Bowen Basin, Coober Pedy, and in Canada, oil/gas/mining towns like Estevan, Wood Buffalo, and St Albert). What this means for both countries is that demand for residential property is driven mostly by a small volume of towns/cities. There is simply not the variety of job options in many cities that there are in other countries such as the US.
All of this translates to ever-increasing rents in areas of high demand. This then translates to increased rental return (aka monthly income) from your rents. This is good news when coupled with some of the very cheap interest rates being offered by lenders currently and moving in to 2013. Higher rental return and lower interest rates can literally add hundreds of dollars per month to your bottom line when holding a residential rental property. And we have not even begun to take capital growth in to effect.
Buying in a depressed market, providing you buy the “right” property (if I haven’t made it obvious enough already in this article – location, location, location – it is all about buying property in close proximity to employment centres), offers additional benefits. You can negotiate great discounting on areas (such as I have done twice in the last 12 months), as well as get a feel for the true value of property in your target postcodes. As you enter into the “due diligence” phase, you’ll learn about where values have diminished some and settled back to reflect the true value of that area.
We always knew that the property boom of 2003-07 would not be a long-term thing. Yes, values are reduced right now, but an opportunist such as me sees this only as a positive thing. I say this because you get double benefits: you buy at the cheapest rates possible, with great rental return and holding costs kicking in for the next few years, then within the next five or so years start to see values creep back up.
So why choose property investment in this climate? Well, choose it for the same reasons that you’d choose it in a more “prosperous” climate – as long as your foundations and due diligence check out from the beginning, that is all that matters.
Cameron McEvoy is a NSW-based property investor and maintains a blog, <a target="_blank" href="https://propertyspectator.blogspot.com.au/">Property Spectator.</a>
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Why property investment is still a way to get rich in the current climate

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Today I want to offer the community seven tips for investing in property. It was a challenge to list just seven because there are so many that I feel I could pass on – and I am very much a “beginner” investor myself!
That said, I genuinely believe that beginners can offer some of the best tips and advice to the market, for three reasons:
<ol>
<li>Beginners make the most mistakes. It’s true!</li>
<li>They are always making the “freshest” mistakes, so their advice is usually the most current. For example; new first-home owners’ grant changes and lessons learnt for those undertaking new loans around these</li>
<li>As less “seasoned” investors, beginners are more likely to be outraged by little stumbles they come across along the way, versus experienced investors who are less likely to be vocal about mild stumbles. This is also probably because experienced investors tend to make fewer mistakes. Or if they do, they are more obscure mistakes, and ones less relevant to new investors. For instance, dealing with a builder pulling out of a 20-unit development at the last minute. I would not imagine many young aspiring investors to find themselves in any kind of 20-unit development issues! </li>
</ol>
But it is not all about mistakes, sometimes the best tips to pass on are ones learnt from personal innovation. So today I’ll draw from actual personal experience, mistakes, successes, and learnings that I’d made in the first five years of my investment career.
1. Choose an investment strategy (and stick to it). I’ve put this tip first, because it is probably one of the first decisions you need to make (After, of course, you’ve made the decision to explore property investment to begin with!). Choose a strategy that is as flexible as you think you’ll need it to be, and one that is akin to your personal risk profile. Some investment strategies to consider include:
<ol style="list-style-type: lower-alpha;">
<li>
Buy-and-hold. This is where you grow a portfolio of numerous properties during an acquisition phase, then hold on to them for at least two cycles of the property market (so, at least 15 years, but ideally longer) and sell off most of the portfolio gradually as you get closer to retirement age.</li>
<li>
Renovate-and-hold. This is similar; you slowly acquire a portfolio of multiple properties over time but buy properties that are undervalued; do some cosmetic (or with more experience, non-cosmetic) renovations, then keep the property mid-long term, creating </li>
<li>
Flipping. This is in effect buying undervalued property, renovating as per above and quickly selling for profit. A strategy best used for more experienced investors due to the high costs associated with buying/selling property quickly. </li>
<li>
Property development. Again, more for very experienced and seasoned investors; this may be the area where some investors hope to end up in their career. Involves designing, building, selling (and/or holding) a development of units/townhouses etc from beginning through to completion. </li>
<li>
Create your own strategy! There is no “right” or “wrong” approach, provided you have a detailed strategy documented from the beginning, with clear goals in mind.</li>
</ol>
 
2. Build not just an invaluable “crew” around you – but an invaluable “network” as well. Many experts and seasoned veterans are quick to write at length about building your “crew” around you (key accountant, solicitor, broker, financier, tradespeople, and mentors). While this is of vital important, my tip is to think beyond these immediate people’s value and think to your peers and like-minded groups around you. Think networking. Attend property investment seminars, shows, and talks.
Have logins to the key blogs and networking sites and read/post on them regularly. The good ones (Somersoft Forums, for example) will have threads on virtually every topic imaginable within property investment. Also, if you don’t already have one, get a LinkedIn profile and search for some great user groups/communities that are actually freely engaging and blogging on specific topics within property investment strategy. I’m a member of several Linked In groups and would recommend these ones for those starting out:
<a href="https://www.linkedin.com/groups/Investment-Property-Australia-New-Zealand-2916736?gid=2916736&amp;trk=group-name" target="_blank">https://www.linkedin.com/groups/Investment-Property-Australia-New-Zealand-2916736?gid=2916736&amp;trk=group-name</a>
<a href="https://www.linkedin.com/groups/Real-Estate-Investment-In-Australia-2920696?gid=2920696&amp;trk=group-name" target="_blank">https://www.linkedin.com/groups/Real-Estate-Investment-In-Australia-2920696?gid=2920696&amp;trk=group-name</a>
<a href="https://www.linkedin.com/groups/PropertyWizz-Australia-2950747?gid=2950747&amp;trk=group-name" target="_blank">https://www.linkedin.com/groups/PropertyWizz-Australia-2950747?gid=2950747&amp;trk=group-name</a>
 
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3.Run your numbers; then run them again. This is a very common-sense tip but one that must be mentioned. Run the buying/holding costs against current interest rates, but then run them again, a full three percentage points higher than the rates of the day. What you are doing is checking to see if you can still afford to hold the investment at these rates. If you can’t, you should reassess your plan of attack.
 
4. Target market should be at the heart of all you do. Another tip that falls under the “due diligence” category is this: “target market is king”. Property investment is a business, and as such you must treat your property(s) as your product that you are “selling”. What do I mean? Well, your ability to hold your first property cost-effectively (which in turn gives you good breathing space so you can buy your time, allowing equity to grow in this property, in turn allowing you to springboard to property number two, three, fourand beyond) is all dependent on your ability to get the maximum rent return for that property. How do you do this? You have to know who your target market for that property is and then play to that. For example, a one-bedroom apartment in an outer-suburban, family-focused market will not have much demand for it.
This means that even if you purchase this unit for a cheap rate, the rent you can command for it will also be dirt cheap, making it expensive to hold onto. Know who your target market is and who your ideal tenant will be for any property purchase and then play to it. The example I gave was an easy/logical one – but real life is much more blurry. For instance; in the middle to inner suburbs of a city, is it smarter to go for a small two-bedroom unit without parking or a larger one-bedroom with study/home office enclave, and parking? You need to know who your target market is beforehand.
 
5. Consider an early access clause when buying. This is most relevant for those looking to renovate and hold, or to “flip” a property. In most states and territories, settlement from the point of exchanging contracts to actually owning a property is typically up to six weeks. If you’re able to negotiate early access to a property before you actually retain ownership of it is a great way to save money.
Why? Because if you need to carry out any works on the property, you’d typically have to do this at settlement – which means you would need to be making mortgage repayments while you spend however long you need to tarting up the property. However, if the renovations are only light or “cosmetic”, these works can be carried out in a matter of weeks, and if you can do this work before actually taking ownership, you’re already ahead. Another tip within this, from a tax perspective, is to attempt to get any tradespeople or those sending invoices for work done to do this after you settle. If works are carried out and invoiced with dates earlier than the final settlement date, you may not be able to claim these works in your income tax assessment at the end of financial year.
 
6. Prepayment before end of financial year. Another tip, again around finance and works carried out, is to pre-pay any rates/levies/works by Jun 30th of that financial year for the year ahead. For instance, if you’re able, it can be better to be pre-invoiced for some repairs and renovation works that are to be physically completed in say September or October before June 30th, as a portion of your deduction entitlement will be attributed to that financial year instead of having to wait another nine months or so for tax deductable incentives.
 
7. Remove all personal taste from the picture. Sounds easy, but this can be one of the hardest things to do. I read a psychology whitepaper recently that was focused on the psychology of why human beings become so attached to the places they live in and the “sense of home” we attribute to bricks and mortar. Even with your “investor” goggles on, it can be sometimes hard to inspect a property and not start having thoughts about things you personally like or dislike. Instead, become like Neo in the Matrix – he sees the artificial world of the Matrix for what it really is – a series of computer programming code. Like Neo, you need to see the potential for profit and revenue from a property – and not the fact that you don’t like the curtains in the kitchen, for instance. Let’s say you’ve nailed down your list to two candidates – two great properties.
Let’s say they are outer-ring capital city apartments; both in the same suburb, on good/quiet streets, have similar quarterly outgoings, and on the market for the same price. One is a top-floor two-bedroom of 85 square metres, separate bath/shower, internal laundry, balcony, and lock-up garage. But the paint work is hideous, the bathroom tiles outdated, and the light fixtures yellowed with age, and the building is a not-too-pretty 1970s yellow-brick walk up. The second apartment is a two-year old modern apartment, 65 square metres, on the ground floor, with one bedroom only, no bath, and on-street parking only. But it’s pretty. It looks like the kind of place you could see yourself living in. Well that’s great, but you’re restricting your potential target market more with the modern apartment. It would be smarter to go with the one you think is ugly.
Most times, the aesthetic negative factors of a property aren’t a major issue to would-be tenants. And besides, cosmetic touch-ups are easier to sort out between tenancies once you are holding the property.
Cameron McEvoy is a NSW-based property investor and maintains a blog, <a href="https://propertyspectator.blogspot.com.au/" target="_blank">Property Spectator.</a>
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Seven tips for beginning property investors

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On Saturday I attended Australia’s biggest property investment convention – the annual Home Buyer &amp; Property Investor Show. And, what a day it was! Crowds were in high attendance on Saturday, and I’d even argue there were more people in attendance than last year’s event.
Today I thought I’d cover off some highlights of the event by expanding on some trends I noticed while roaming around the Sydney Convention &amp; Exhibition Centre. US property investment, while always present at this expo, easily had the greatest presence I’ve seen, in terms of the number of exhibitors in attendance. I counted at least six different exhibitor stands of companies with American investment products and offerings. There were a variety of offerings from these companies; some offering completely integrated finance and property sales solutions; others offering only the property purchase process in itself, but across many different US cities/markets. There was even one company, Select American Homes, that offered property only (no finance) to exclusively one market – Atlanta, Georgia. I sat in on a seminar from them and was quite impressed as to the scope of their offering. This company had an integrated Australian and American team who, while not offering or assisting with finance, charge one lump sum fee that covers off the entire acquisition, renovation, LLC company structure (for finance), and ongoing tenant property management. Their degree of due diligence on their focus city was second to none. The sophistication of US property investment options on offer at the show is, in my mind, an indication of the degree of maturity that American property investment has reached in the Australian marketplace. A few years ago we’d have been lucky enough to hear from perhaps one or two such companies, with a “take it or leave it” approach to their offering. Fast-forward to today and the degree of sophistication and product offerings in the US market is clearly apparent. Some, including myself, would argue that the jury is still out when it comes to success in this type of investment, but judging by the crowds flocking to the stands in droves, clearly interest is at an all-time high.
<img src="/images/stories/2012/show-2.gif" alt="show-2" height="300" width="400">
(photo taken Sunday 5pm suggesting sales tally after three days spruiking)  source Jonathan Chancellor 
There was also an increase in non-US offshore property investment options. Luxury high-end villa developments in Bali, resort-style beachfront developments in Thailand, and also one company focusing entirely on New Zealand were all present. The New Zealand market has had substantial growth in the last two years (compared to flatter growth in the two years previous to this), and does offer some interesting incentives, such as zero capital gains tax. Another trend I observed was the offerings from the finance exhibitors. While seeing many traditional bank and non-traditional lender exhibitor stands present was nothing new, seeing their primary product offerings all together did highlight a common theme. The interesting trend I noticed was that most banks and non-traditional lenders present were offering incentivised loan products. Most of these were some sort of cash back or gift voucher promotion (UBank, ING Direct and RAMS Home Loans were all offering vouchers or gift cards to the value of $500-$1,000), which may seem like one of the oldest tricks in the book, but with today’s low-rate environment giving way to highly competitive product offerings from lenders, vouchers and cash-back schemes must be an easy way for these finance providers to get noticed. Also on finance, I noted an increase in the presence of superannuation financiers for investment property specifically. Three exhibitors I spoke to were all offering finance, leveraging the initial deposit of a superannuation fund to become a self managed super fund investment property. One of these even operated exclusively in using one’s SMSF to purchase, yes, you guessed it, US properties with it. This could be a real game changer. <a href="https://www.propertyobserver.com.au/residential/why-buying-property-with-super-is-hard-for-young-and-low-income-investors-cameron-mcevoy/2012042254378">I wrote not too long ago</a> about the challenges of drawing from one’s superannuation fund to finance a deposit for an Australian investment property. The biggest challenge was that with Australian investment property, you’d struggle to find any property for less than, say $200,000, that offered great scope for growth. This means that to “unlock” enough superannuation for an initial deposit, you’d need to reach a seriously big “critical mass” of super before you could act on it. For most Australians, this means you’d have to wait for your super fund to grow a big enough balance (either organically, or by contributing additional funds other than that of your employers’ in to it). However, with US properties one can enter the market for as little as $30,000 or so, meaning a much smaller initial deposit from one’s superannuation fund. It will be interesting to see where and how this trend develops.
<img src="/images/stories/2012/show-1.gif" alt="show-1" height="300" width="400"> So what was new and trending well in the Australian property market then?
Granny-flat developer exhibitors had more presence than last year. Interestingly, I also observed several granny-flat specialist exhibitors at the Sydney Home Show (another show that is more geared towards home owners and home renovators versus property investors, however there is a degree of crossover between both of these). Again, it was not about the volume of exhibitors specialising in granny-flat offerings, but the variety and sophistication of the products and solutions they were selling. Some of them offered purely the kit homes; others offered end-to-end planning, design, construction, fencing, water main splitting and driveway allocation all as part of one offering. There were also a couple of exhibitors focusing on property management, more so towards “portfolio management” as opposed to singular investment property management. Some providers were offering 4% flat rates for the greater Sydney area, with others offering from 5% across any state and territory in one’s portfolio. Another way to observe the popular topics and ideas trending well was by looking at the seminar calendar and the topics covered within. One big shift this year compared to previous years is the volume of seminars geared towards knowing which markets are currently in the best position to start an investment career in, along with superannuation in general (buying property leveraging your superannuation, and also thinking about “superannuation-gearing” versus “negative-gearing”). All in all, an excellent and busy few days, with a great deal of information on offer and some industry “juggernaut” voices providing great integrity and wisdom. Bring on the <a href="https://www.homebuyershow.com.au/melbourne/">https://www.homebuyershow.com.au/melbourne/</a> next show!
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Investor eyes on the USA by Sydney Home Buyer & Property Investor Show attendees: The wrap up

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I want to begin by saying this: I do not house any hostility towards lenders. In fact, I’ve written many times in the past about how lenders can be your best friend when it comes to starting out fresh in your property investment career. Let’s be honest; if you’re like most new investors out there, you don’t have suitcases of cash just lying around, ready to buy real estate with, so lenders can absolutely be the “determining force” in your decision to get into property investment. If no one will lend you money, well, your pipe dreams can be quickly flushed.
All of that aside, lenders are simply a means to an end. Providing that you find a lender that offers the best rate and features relevant to you, they are all pretty much the same. For many years, lenders had, quite cunningly and cleverly, marketed themselves as more of an authority over you. They did this by using a certain kind of language when discussing and corresponding in paperwork the nature of their products. Basically, they made it seem like you were locked in forever to their mortgage products. One way they did this was to charge excessive and complicated “break fees” should you ever look to shop around and move to a different financier.
The industry watchdogs, and eventually government bodies, cottoned on to these tactics and established legislation to remove all of these break fees, effectively making it much easier to switch your mortgage to a better/cheaper product in the marketplace. So you know (and it goes without saying, you need to double-check this yourself should you actually be looking at breaking a mortgaging product), banks cannot charge their exit fees anymore, however you will always have to pay the government processing fees – usually a couple of hundred dollars only – to get out of a mortgage.
There was initial fear that as a result, lenders would recoup these losses by charging heavier entrance fees into new mortgage products; however this has not really happened as yet, at least to extremes. The beauty of the removal of break fees meant that the marketplace has become more competitive, and lenders now actually have to fight their competition to get a slice of your potential custom.
For any would-be switchers out there, my advice is to do up a spreadsheet and calculate all the costs to switch out from one product into a new one. If the savings in one year’s interest repayments at the new lender’s rate is greater than double the cost to switch, it is an exercise worth doing.
When approaching lenders as a property investor – even if it is your first property – you should always make clear mention of your growth potential and desire to hold a large portfolio. Although it won’t win you any brownie points in terms of qualification and verification for mortgage products, mentioning your growth plan to them will certainly make them earmark you on their computer systems! No jokes – I’ve seen lenders who literally input an asterisk against someone’s details, which is pretty much code for “keep an eye on this one; he could be a repeat customer!” I would encourage everyone to do this when buying their first property, even if you only intend on buying a home to occupy and never an investment property.
It is therefore important to remind a lender at times just how valuable you can be as a potential “repeat customer”. Having a great mortgage broker working for you can help with this – they are able to leverage – and effectively vouch for – your future portfolio growth expansion/potential and use this as a bargaining chip to negotiate better product offerings back to you, but I strongly believe that it is always important to have a direct and solid relationship with your lender(s).
All of this is especially important when considering the times we’re living in. Finance is edging further and further down, and interest rates could fall to all-time lows. Lenders know this. They understand how the cheaper rates in market will truly change the dynamic for everyone. In fact, I attribute the recent increase in lender marketing campaigns, which heavily promote “switch to us” themes in their tactics as a response to this trend. For example, UBank from NAB has released an online home loan product offering a variable rate of 5.62%, one of the cheapest currently on offer in the market. But the bank is very quick to point out the product is only available to new customers and switchers from other lenders. Existing customers cannot get access to this product.
So as the market – investors and owner-occupiers alike – respond to cheaper finance products hitting the market, consumer confidence may begin to return. This could mean that would-be buyers, who previously held the mantra “the entire global market is too unstable; now is the worst time to take a risk” change to a mindset of “the global market might not be so stable, but darn it, rates are probably not going to be this cheap again anytime soon, so I should give this a second look”.
I’d love to hear from the community about experiences in mortgage switching – was it easy? Were there in fact hidden costs (whether it is a government cost, lender cost, or other kind of cost)? And did the old and new lenders make the process easy or hard? Also, when leaving your lender, was there a last-dash attempt to keep your custom, or did it let you go easily?
Cameron McEvoy is a NSW-based property investor and maintains a blog, <a href="https://propertyspectator.blogspot.com.au/" target="_blank">Property Spectator.</a> 
{module Have you changed lenders in the last six years?}
{module What do you intend to do given the current interest rate fluctuations?}
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Why mortgage holders should talk to their lenders and consider refinancing: Cameron McEvoy

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Both the <a href="https://www.propertyobserver.com.au/residential/rate-cuts-help-housing-market-recover-in-june-with-1-rise-in-capital-city-dwelling-prices-rp-data%E2%80%90rismark/2012070255375">property media</a> news sites and <a href="https://www.smh.com.au/business/home-prices-jump-after-rba-cuts-20120702-21bv4">generalist media sites</a> this week have been reporting heavily on the latest capital cities values figures:
If you are a young, new, or aspiring investor who is learning the ropes of how to interpret published metrics or figures you may see mentioned in the media, it can be challenging. I say this because just like many other areas of property investment, not only is discerning real metrics and stats from vague and ambiguous figures not easy at the best of times; but it can be especially hard when you find two reputable sources who report on the same data, but with completely different results observed. “Analysis paralysis” really is an industry illness when it comes to property investment.
And take it from me, this process does not get any easier the further down the track you go. My suggestion is this: do your research always, and do take note of what the experts and third-party data sources feed back to the community at different times. But also know that property investment can really only offer, in analysis terms, retrospective feedback and not real time feedback. Well, not yet, anyway. Property investment is a slow-burn investment type. This means that unlike shares, for instance, where assets can be bought and sold in minutes and completely fresh data is made available in what is practically real time, the slow exchange of assets with property makes for slower metrics and means that data cannot be reported back immediately. It tends to be reported back retrospectively for the quarter that just passed.
The flow-on effect of this delayed data means that sometimes (but not always) market indicators are not really observed as part of a consistent trend until that trend has already passed. This gives us a good explanation as to why people sometimes only realise a market has, for example bottomed out after it has already moved into upswing phase.
So what are we to make of the latest data?
The consensus from several media sources appears to be this: early signs of recovery are emerging in the property sector as the market begins to respond positively to several interest rate drops occurring in recent months. We know this because property industry figures are generally reported for the quarter previous and published early on in the following quarter. The key metric to focus on is “overall capital city performance” occurring in the month of June. In light of the recent mortgage rate cuts in May (with a smaller rate cut issued in June), capital cities of every state and territory, when averaged out, showed an increase – albeit a small one – in property values for that month. This is significant because no other month during the last two years has fruited a positive number for this capital city metric.
It is important to note that the capital city performance figures are not the “be all and end all” of reporting metrics used to measure the industry at any given time, however this number is very important in the “knock-on effect” it can bring when transcending to regional, coastal, and other non-city markets. Capital city indicators often influence and thus have a direct effect on these other types of markets in Australia.
So the question is this: is this a positive sign given in the month of June just a blip on the radar? In other words, it could be an initially positive – but temporary – response to recent interest rate cuts and will likely go back to further declining numbers over the new few months. Or should we take this encouraging indicator for what it may really be – a sign of a trend forming, that perhaps the capital city markets are, overall, moving on from the market stagnation we’ve seen since late 2010?
Many influential Australian property industry experts are always quick to assert that the Australian property market is not one cycle, but rather hundreds of mini-cycles, all operating independently. These commentators believe that the upswing, peak, downswing, and bottomed-out main market cycle phases cannot be used to describe the Australian market broadly. Rather, each suburb within a city, each regional town – and each post code pretty much –need to be assessed independently when it comes to figuring this stuff out. This seems logical enough, however sometimes these same commentators are quick to mention that an entire capital city is in one phase, which contradicts the above statement about every post code being unique. For example, Melbourne is consensually agreed upon as being in a flattened, or bottomed-out, cyclical phase.
I’m no expert myself, so I tend to heed their advice, however it does seem that if we are to “trade” in the currency of sweeping statement assessments about entire capital city markets, it seems only fair to genuinely consider the figures posted in the media this week as a step in the right direction for the capital city markets. From the research I’ve done, stories I’ve read, and even the handful of post codes I randomly programmed RP Data with (which I watch over time to observe market trends when it comes to fluctuating values), I’m of the belief that most capital city markets have seen the worst of the price/values softening, and an early upswing is starting to take place. Time will tell, so watch this space, and let’s keep an eye on the next month, quarter, and indeed annual, figures upcoming, to see how the state of the market really is.
I'm keen to hear from the community on this possible trend emerging and what this means for you in your future investment strategy and approach.
Cameron McEvoy is a NSW-based property investor and maintains a blog, <a target="_blank" href="https://propertyspectator.blogspot.com.au/">Property Spectator.</a>
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What early signs of market recovery mean for property investors

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Today I am writing with the intention of contradicting myself. Yes, I am encouraging people to spend time on an element of the property investing process that I just <a href="https://www.propertyobserver.com.au/residential/buying-is-just-a-small-part-of-residential-property-investment-cameron-mcevoy/2012052754849" target="_blank">recently advised people not to spend too much time on</a>! Let me explain. While I did write about the “purchase” itself being the area where you actually invest the least amount of your time in (compared with pre-purchase due diligence and post-purchase ongoing management, of course), I'd like to take some time to address the actual purchase process itself, and give an overview of what to expect once you've done all your due diligence, crunched the holding cost numbers, made an offer and had the offer accepted.

Once your offer has been accepted, you'll need to act very quickly to meet a lot of deadlines, which can be very stressful, not because the work needed to reach them is hard, but because there are just so many little things to do, so many people to engage with (and sometimes chase up when they don't act) and little deadlines to meet, all before that “holy grail” of the process: final settlement.

[smartcode_project:default project_id=3494]

An acceptance of offer can be stressful for new investors because there are so many hard and fixed deadlines to meet – yet there are “unknowns” that need to become “known” , ducks to get in line and new processes you'll need to learn in order to achieve them. And all the while you'll be questioning yourself. Questions like: “is it normal for a solicitor to ask for this form?” or “why does this part have to take so long?” are common, along with more stressful questions like “what am I getting myself into?”, or even worse “I didn't budget for that cost and I've maxed my borrowing capacity, but it's too late to back out – what do I do?!”.

So to best illustrate this I thought I'd run you through the typical steps/actions/stages that I tend to go through my offer has been accepted on an investment property. I do not have all the answers, but I think I can shed some light on some of the hoops you'll need to jump through, some things to look out for, and why time really is your enemy during the process. It's a pretty specific part of the overall process and is actually one of the most stressful.

[smartcode_project:default project_id=7275]

1) The first deposit. To secure your offer and prevent being gazumped, you'll need to get to the agency very quickly, sign contracts, and put down a 0.25% deposit. Let's say your property purchase amount is $350,000. This means a deposit of $875 will need to be supplied to the agency. You sign contracts (of course, assuming you've had your solicitor/conveyancer already review and discuss this with you) and are now entered in to a “cooling off period” of five to 10 business days. Please be wary that some states such as Tasmania have a completely different approach for offer acceptance, so you should Google your state's policies on this. But the most populous states tend to follow this process. Additionally, if you didn't already do this at previous inspections of the property, ask to see it again, taking notes, pictures and videos, along with measurements where needed. It might not seem that relevant now (even if you don't have any renovation or works plans upon purchase), but once you get it tenanted at ownership, it is very difficult for you to get future access.

2) Prevention of being gazumped Upon signing, my recommendation is that you ensure the agent agrees to label the property as being “under offer” in any online or print advertising immediately. This deters other enquiries and subsequent offers from coming in. You also reduce the risk of being gazumped (this is where someone places a higher offer than yours after you've entered into cooling-off period, and the vendor “rescinds the sale” with you in favour of the higher offer). Gazumping is frowned upon and measures have been taken in some states to prevent it occurring, however some agents still practise this – remember, they are motivated purely by the best possible selling price.

3) Due diligence checks and cooling-off extension During the cooling-off period, you are obligated to do further due diligence. Triple-checking that your finance is all in order with your lender or mortgage representative is critical. If you back out of the sale during this stage, your $875 deposit is not refundable, and the property can be listed back on the market for sale. Also, if you find yourself on day eight or nine in a position where you are still awaiting much-needed information, you can extend your cooling-off period (in most states/territories). Don't think that you can't; your solicitor will help make this happen for you, if needed. Ensure the front page of the contract featuring the “included items” are ticked as per your inspection. For example, if you saw a dishwasher in the kitchen during inspection, make sure that box is ticked. Sounds small, but you'd be surprised how many overlook these details.

[smartcode_project:default project_id=3298]

4) Full deposit payment On the last day of cooling off, you are now contractually obliged to buy the property. As such, you'll be required to pay a 10% deposit of the property to the estate agency. But you deduct the 0.25% initial holding deposit, so the amount you pay is actually 9.75%. Oftentimes agencies won't accept personal cheques so you may need to get a bank cheque made out. Be aware of how many days this may take to clear and factor this in.

5) Additional upfront payments Having done all of your due diligence already, you'll know your precise amounts for other payments that are required at this point. These will include lenders mortgage insurance (only if you must pay it, depending on your loan-to-value ratio and also if it is rolled into your mortgage product or not) and apportioned strata, council, and water costs for the calendar quarter during which you purchase (for instance, if your settlement occurs in the middle of a three-month quarter, you'll need to pay that six weeks' worth of strata/council/water apportioned to the time you've started to 'own' the property, during that quarter). Other fees like lender fees, account fees, etc, may become relevant.

6) Final payments in the week prior to settlement. Most purchases have a 42-day (six-week) standard settlement period. This time allows for all other stakeholders (solicitors, councils, government departments and other stakeholders) to work behind the scenes to ensure all details are completed prior to payment. At this time you'll need to pay any additional difference in sums, should your loan amount come to less than 90% of the value of the property. You'll be required to pay whatever this difference is, just before settlement. For example, If your loan is for 75% of the value of the home, you'll need to pay $350,000 - 0.25% - 9.75% - 75% = 15% which equals $52,500. Again, a bank cheque will be required, not a personal cheque. You need to send this with enough time for the funds to clear, otherwise settlement date will be delayed until it clears.

[smartcode_project:default project_id=26730]

7) Final inspection before settlement This should take place 24 to 48 hours before settlement date. The purpose of you inspecting the property again is to ensure it is in a reasonable condition similar to when you first exchanged contracts six weeks prior. Obvious things to look for are missing or suddenly damaged or missing items that weren't in that condition when you first inspected.  (sometimes air-conditioners, dishwashers, etc, magically “disappear” before settlement!), stains or damage on walls, etc, magically “appear”, and (more often in houses than units) rubbish may be present that was not there when you inspected. Especially with houses, check to any garages/sheds/under-house storage does not contain rubbish from previous tenants or owners. Its removal is the vendors’ responsibility, not yours. If refuse, you can delay settlement until they remove it.

8) Collection of keys on settlement day Most states don't “action” the settlement until about 2pm on the day of settlement. Confirm this with the managing agent. You don't want to assume you'll have keys at 9am when it could be halfway through the day. It makes a big difference if you've booked a new leasing agent to see the property for rental appraisal.

Cameron McEvoy is a NSW-based property investor and maintains a blog, <a href="https://propertyspectator.blogspot.com.au/" target="_blank">Property Spectator.</a>
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The eight steps a property buyer takes after an offer is accepted

For most new apartment buildings, the Owners Corporation starts life with little more than a bank account and the first quarterly strata levies.

At <a href="https://www.apartments.com.au/buildings/9-gay-street-castle-hill-9-gay-street-castle-hill-nsw-2154">9 Gay Street</a> in <a href="https://www.apartments.com.au/developments/castle-hill-nsw-2154">Castle Hill</a>, it starts with around $7 million in reserve.

It's an unusual legacy of what was once one of Sydney's highest-profile apartment remediation projects. When the development, originally known as Skyview and built by disgraced developer Top Place, came under scrutiny by then NSW Building Commissioner David Chandler, an $11 million remediation bond was negotiated to ensure any building defects could be fully rectified.

The building underwent an 18-month remediation program, during which around $4 million of that bond was spent bringing the building up to the standard it should have been in from the outset.

After extensive inspections, all active rectification orders have been lifted. What's more, around $7.2 million remains secured for the Owners Corporation for the next 15 years.

In a twist few would have predicted, what began as a significant concern for purchasers has left the building with something almost unheard of in the apartment market: a multi-million-dollar financial reserve from day one.

[smartcode_project:default project_id=147685 project_image_fid=359136]

<a href="https://www.apartments.com.au/project-marketer/equitifund-group">Equitifund</a> Executive Chairman Greg Huxley said the structure offers buyers a level of certainty that is difficult to replicate.

"The $11 million bond established for the Skyview Castle Hill development represents exceptional value, providing genuine financial security for purchasers," Huxley said.

"Unlike a standard insurance policy, this bond consists of real funds held in trust for the Owners Corporation, offering a tangible layer of protection and added peace of mind."

The apartments themselves have been designed with a focus on practical, contemporary living. Interiors feature Smeg appliances, stone benchtops, tiled living areas, carpeted bedrooms, 2.7-metre ceilings, floor-to-ceiling glazing, and ducted heating and cooling throughout.

Residents also have access to a range of shared amenities, including two rooftop barbecue areas, a swimming pool, children's playgrounds, secure building access, storage cages, and visitor parking.

The location continues to be one of the project's strongest drawcards. Castle Hill Metro Station sits virtually on the doorstep, providing direct connections across Sydney's expanding Metro network, while Castle Towers offers extensive retail, dining, entertainment, and service amenities within walking distance.

[smartcode_project:default project_id=147685 project_image_fid=359127]

The building, now named after its location at 9 Gay Street, comprises a diverse mix of one-, two-, and three-bedroom apartments starting from just under $600,000.

Equitifund National Sales Director Ben Hamblett said demand in the Hills District continues to be driven by buyers seeking convenience and connectivity.

"Interest from both owner-occupiers and investors in Castle Hill remains exceptionally strong, with buyers consistently prioritising developments in close proximity to the Metro station and Castle Towers Shopping Centre," Hamblett said.

"There is a clear trend in the market, with purchasers seeking convenient access to transport and lifestyle amenities that support a seamless, low-maintenance way of living."

On top of the long-term protection afforded by the remaining $7.2 million bond, Equitifund is offering a limited-time stamp duty rebate on selected apartments.

Eligible purchasers can also secure finance options, including a 3.99 per cent two-year variable rate, loan-to-value ratios of up to 90 per cent, and interest-only lending options through EquitiCredit.

[smartcode_project_cta:default project_id=147685]

Joel Robinson

Why this Castle Hill apartment building starts with a $7 million advantage

For much of the past few years, conversations about Australia's property market have centred on the rapid growth seen in Sydney, Brisbane, Gold Coast, and Perth. <a href="https://www.apartments.com.au/developments/melbourne-vic-3004">Melbourne</a> has followed a different trajectory.

That relative underperformance is now encouraging some buyers to reassess the city, particularly those willing to look beyond short-term market movements and focus on quality property in established locations, along with the long-term growth prospects of a city expected to overtake Sydney as Australia’s most populous.

John Bekiaris, Research &amp; Market Insights at <a href="https://www.apartments.com.au/project-marketer/equitifund-group">Projects by Equitifund</a>, said Melbourne's current position is attracting increasingly sophisticated purchasers.

"Melbourne continues to present one of Australia's strongest long-term investment stories," Bekiaris says.

"While other capital cities have experienced stronger recent growth, that relative underperformance is exactly what's attracting sophisticated counter-cyclical investors."

[smartcode_project:default project_id=1979 project_image_fid=363268]

Equitifund isn't just commenting on Melbourne's property market, it's investing in it.

The Sydney-headquartered capital partner has taken over the remaining apartments at <a href="https://www.apartments.com.au/buildings/victoriana-melbourne-20-queens-road-melbourne-vic-3004">Victoriana</a>, the recently completed glass-encased development opposite Albert Park Lake in Melbourne's tightly held St Kilda Road precinct.

Designed by <a href="https://www.apartments.com.au/architects/rothelowman">Rothelowman</a> and built by <a href="https://www.apartments.com.au/builders/hickory">Hickory</a>, Victoriana places residents between one of Melbourne's most recognised parklands and the CBD, offering oversized two and three-bedroom apartments aimed at owner-occupiers seeking a genuine alternative to a traditional family home.

The development comprises 232 completed residences alongside a suite of resident amenities, including a 25-metre indoor swimming pool, gymnasium, landscaped entertaining areas, resident lounges, EV charging, secure basement parking and a concierge-style arrival experience.

[smartcode_project:default project_id=1979 project_image_fid=363229]

The apartments have been designed with owner-occupiers firmly in mind.&nbsp;Open-plan living and dining areas flow onto generous balconies framing views across Albert Park Lake, Fawkner Park, the Royal Botanic Gardens and the Melbourne skyline.

Kitchens feature Gaggenau appliances, stone benchtops and generous preparation space. Bedrooms include built-in robes, while bathrooms feature full-height textured tiling. Hardwood flooring and ducted air conditioning complete residences designed for long-term living.

Rothelowman's architecture takes its cues from the landscape opposite the site. Sweeping horizontal glazing references the movement of Albert Park Lake, while generous balconies and expansive glazing strengthen the connection between the apartments and the surrounding parklands. The result is a building designed to deliver the scale and amenity expected of luxury apartment living, while offering the larger floorplans increasingly sought by owner-occupiers.

[smartcode_project:default project_id=1979 project_image_fid=363284]

The location is one of Victoriana's defining characteristics. Positioned on Queens Road, residents are directly opposite Albert Park Lake and within easy reach of Fawkner Park, the Royal Botanic Gardens, South Melbourne, St Kilda Road and the CBD. With few comparable development opportunities remaining in the precinct, buyers are increasingly placing value on outlooks that are unlikely to be interrupted by future construction.

Greg Huxley, Founder of Equitifund, believes those qualities become even more valuable over time.

"Premium real estate has always rewarded buyers who take a long-term view," Huxley said.

"Victoriana represents the kind of asset that's increasingly difficult to recreate today, particularly in an established location like Queens Road."

He said rising construction costs are also changing the way buyers assess completed developments.

"When you combine an irreplaceable location with thoughtful architecture and premium finishes, you create something that becomes increasingly difficult to reproduce as construction costs continue to rise."

[smartcode_project:default project_id=1979 project_image_fid=363228]

According to National Sales Director Ben Hamblett, enquiry has been driven largely by Melbourne downsizers and buyers upgrading from smaller apartments.

"Interest in Victoriana continues to build, with strong buyer focus on the larger owner-occupier residences within the development," Hamblett says.

"Enquiry is increasingly driven by local buyers who recognise the rarity of what's on offer: park-facing apartments in an established neighbourhood where new development opportunities are becoming increasingly scarce. At Victoriana, the view is not just a feature; it's an appreciating asset in its own right."

He said interstate enquiry has also strengthened as buyers reassess Melbourne's position within the national property cycle.

"Melbourne currently stands as the most compelling entry point of any major Australian capital, and discerning buyers are beginning to recognise what those who move early always understand: the best opportunities are taken before the price rise confirms them."

[smartcode_project_cta:default project_id=1979]

Why now is the time to buy in Melbourne's premium apartment market

Developers and apartment buyers have a narrowing window of opportunity before Brisbane's Olympic infrastructure pipeline begins competing directly with residential construction, pushing up costs, tightening labour supply and making new projects increasingly difficult to deliver.

While Brisbane's apartment market continues to benefit from strong population growth and limited housing supply, industry research suggests the years leading up to 2027 could prove to be the most important period for developers looking to secure builders and buyers hoping to purchase before the next wave of price increases.

A new Colliers report, Brisbane 2032 Olympic and Paralympic Games: Creating Solutions, highlights the scale of the challenge. While thousands of new homes are planned across South East Queensland, the Brisbane Olympic Athletes Village alone will deliver more than 10,500 beds during the Games before being converted into around 1,750 to 2,000 apartments. Equivalent to almost two years of typical inner-city apartment supply, the project will also absorb a significant share of the construction workforce and building materials.

The broader construction pipeline paints an even clearer picture.

Construction Skills Queensland's Horizon 2032 report forecasts Queensland's annual construction pipeline will average $69 billion over the coming years before peaking at $75 billion in 2027-28. Demand for construction workers is expected to increase by 17 per cent to almost 150,000 people, with the industry facing an annual shortfall of around 19,000 workers that could blow out to as many as 35,000 during the peak construction period.

The Olympic venues, athletes village and supporting infrastructure will account for billions of dollars worth of work across South East Queensland through to 2032, creating intense competition for labour at a time when Australia's residential construction sector is already under pressure.

[smartcode_project:default project_id=150489 project_image_fid=373834]

Colliers Queensland Residential Director Andrew Scriven said the convergence of these projects is creating a clear window of opportunity for both developers and buyers.

"From 2027 onwards, the market will shift dramatically," Scriven said.

"Labour will increasingly be locked into government-led infrastructure and Olympic projects, which means private residential developments will face higher costs and tighter margins. The developers who move now are the ones most likely to get projects off the ground."

Scriven said the same dynamic would also affect buyers, with fewer apartment projects expected to launch once construction capacity tightens.

"If you're looking to change your lifestyle over the next five years, now is your window of opportunity to buy."

[smartcode_project:default project_id=150713 project_image_fid=373827]

Developers are already positioning themselves ahead of that window.

Following the success of Monarch at Toowong, Consolidated Properties is preparing to launch two new Brisbane apartment projects in the second half of 2026. They include <a href="https://www.apartments.com.au/new-apartments/gloriette-30-bedivere-street-yeerongpilly-qld-4105">Gloriette</a> at Yeerongpilly Green, a 25-storey tower within one of Brisbane's key Olympic precincts, and <a href="https://www.apartments.com.au/new-apartments/castile-47-skyring-terrace-newstead-qld-4006">Castile</a>, a recently approved 25-storey riverfront development at 47 Skyring Terrace in Newstead.

Hutchinson Builders will deliver both projects, with early works already underway at Yeerongpilly and Newstead expected to commence later this year.

The timing comes as Brisbane's fundamentals continue to strengthen, with strong interstate migration, population growth and vacancy rates remaining below 1.5 per cent.

Colliers Queensland researcher Pragya Sharma said Greater Brisbane is forecast to require around 40,000 new apartments between 2021 and 2031.

"There's a real mismatch emerging between when housing is needed and when it will be feasible to build," Sharma said.

"As a result, the period leading up to 2027 presents a key window of opportunity for developers to secure approvals, funding and construction capacity, while buyers will have greater choice before supply constraints intensify."

Colliers research outlines a critical pre-2027 window to start residential projects before labour squeeze: now is the time to buy

Developers, buyers on watch in South East Queensland ahead of construction crunch: Colliers

It's taken less than nine months for developer Sherpa Property Group to sell out all 51 apartments in its <a href="https://www.apartments.com.au/new-apartments/flourish-oasis-palm-beach-7-9-sixth-avenue-palm-beach-qld-4221">Flourish Oasis</a> development in <a href="https://www.apartments.com.au/developments/palm-beach-qld-4221">Palm Beach</a>, over a year before its anticipated completion.

&nbsp;

Located at 7-9 Sixth Avenue, the $67 million development has resonated strongly with both local owner-occupiers and downsizers seeking high-quality apartments within walking distance of the beach, dining precincts and everyday amenities.

[smartcode_project:default project_id=151449 project_image_fid=357458]

Christie Leet, Founder of <a href="https://www.apartments.com.au/developers/sherpa-property-group">Sherpa Group</a>, said the sell-out reflected both the strength of the Palm Beach market and the success of Sherpa's community-first approach to development.

"The sell-out of Oasis is a fantastic outcome and reinforces the strong demand we're seeing for thoughtfully designed apartments in lifestyle locations," Leet said.

"From the outset, our vision was to create a development that genuinely enhanced the Palm Beach community while providing residents with exceptional homes and wellness-focused amenities.

"We've been incredibly encouraged by the level of local support throughout the campaign, 72.5 per cent of buyers are locals, with a significant proportion of purchasers choosing Oasis as their future home rather than an investment."

[smartcode_project:default project_id=151449 project_image_fid=357463]

Construction is now progressing following development approval, with trusted builder LPS Group delivering the project and completion anticipated in Q3 2027.

Oasis forms part of Sherpa Group's successful Flourish collection, which has become recognised for its focus on wellness, community and elevated coastal living.

[smartcode_project:default project_id=151449 project_image_fid=357469]

Residents will have private access to a rooftop amenity space featuring a pool, gym, sauna, steam room, hot and cold plunge pools, spa and barbecue facilities.

"The success of Oasis demonstrates that buyers continue to prioritise quality, location and lifestyle," Leet said.

"We are proud to have delivered a project that has resonated so strongly with the market and look forward to bringing Oasis to life for our future residents."

Sherpa recently launched <a href="https://www.apartments.com.au/new-apartments/flourish-soleira-palm-beach-1150-1160-gold-coast-highway-palm-beach-qld-4221">Flourish Soleira</a>, its third instalment of the Flourish brand in Palm Beach following Flourish Oasis and <a href="https://www.apartments.com.au/new-apartments/amargo-6-12-sixth-avenue-palm-beach-qld-4221">Flourish Amargo</a>.

[smartcode_project_cta:default project_id=151449]

Sherpa sells out Flourish Oasis in booming Palm Beach

Urban Property Group's <a href="https://www.apartments.com.au/new-apartments/la-vera-macquarie-park-94-talavera-road-macquarie-park-nsw-2113">La Vera</a> is leading the next phase of Macquarie Park's residential evolution, with the new apartment development set to become the first of several new apartment projects in the precinct to complete.

The 169-apartment building has now topped out ahead of its scheduled completion in the third quarter of 2026, as new residential investment continues to reshape one of Sydney's largest employment hubs into a true mixed-use precinct.

[smartcode_project:default project_id=134951 project_image_fid=368645]

Cox Architecture has designed La Vera to capture the best of its unique positioning on Talavera Road, orienting the building towards Lane Cove National Park.&nbsp;The building features a sculpted northern façade with flowing curves inspired by the surrounding landscape, while its city-facing elevation adopts a more structured architectural expression to maximise skyline views.

"The vision for the project was to conceive a building that adopted an organic and curvilinear form to the northern portion that faces the Lane Cove National Park," <a href="https://www.apartments.com.au/architects/cox-architecture">Cox Architecture</a> Director Felipe Miranda said.

"The residents that reside in the northern portion of the building benefit by having beautifully crafted curved balconies that speak to the natural context and heighten the relationship of their internal living spaces to the external balconies."

[smartcode_project:default project_id=134951 project_image_fid=358802]

La Vera offers a diverse mix of one, two, three, and four-bedroom configurations, with prices currently starting from $740,000. Buyers so far have been a mix of Sydney-based investors,&nbsp;metro commuters, owner-occupiers and downsizers from surrounding North Shore suburbs.

Both investors and owner-occupiers have been drawn to La Vera's proximity to Macquarie University, Macquarie University Hospital, Macquarie Centre and the Sydney Metro, infrastructure that supports both strong rental demand and a convenient lifestyle for residents.

The apartments feature full-height glazing, timber flooring throughout living areas, stone kitchen benchtops, SMEG appliances, floor-to-ceiling bathroom tiling and ducted air conditioning.

Residents will have access to a rooftop recreation level featuring a swimming pool, sauna, barbecue facilities and landscaped relaxation areas, complemented by additional communal space at ground level. Many apartments enjoy uninterrupted views across Lane Cove National Park, reinforcing the project's connection to its natural setting.

[smartcode_project:default project_id=134951 project_image_fid=364551]

<a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a>, a family-owned developer and builder with nearly four decades of experience, holds a 4.5-star iCIRT rating and was Australia's first developer to introduce 10-Year Latent Defects Insurance (LDI). La Vera is the first apartment development in <a href="https://www.apartments.com.au/developments/macquarie-park-nsw-2113">Macquarie Park</a> approved to offer the additional insurance protection, alongside a five-year warranty on SMEG appliances.

Urban Property Group CEO Patrick Elias said the additional protection reflects changing buyer expectations in the off the plan market.

"Consumers are a lot more weary and a lot more concerned in buying off the plan than they ever have been. Having LDI is a tool to portray the confidence that we have in our product, and a confidence we want buyers to share," Elias said.

Following completion of the building later this year, buyers will move into their apartments well before Christmas.

[smartcode_project_cta:default project_id=134951]

Cameron McEvoy

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