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Mortgage brokers can be a vital resource and close partner to your inner circle. There are a lot of people you'll need to recruit in building your team as an investor. Some of these people charge for their services, including:
<ul>
<li>Solicitors</li>
<li>Tax depreciation assessors </li>
<li>Third-party mortgage document creators (Not usually used by big banks, usually a service you have to pay for when smaller lenders, credit unions, and non-traditional financiers are used) </li>
<li>Accountants </li>
<li>Financial advisers and planners (this is a grey area; some charge upfront fees, others work for “free” to you and instead earn commissions from the products they recommend to you – and they are legally obligated to be upfront about these)</li>
<li>Valuers</li>
<li>Quantity surveyors</li>
</ul>
Others do not, instead taking a commission at some point from another third party, including:
<ul>
<li>Mortgage brokers</li>
<li>Buyers’ agents</li>
<li>Property development companies (those who sell off the plan, etc.)</li>
</ul>
Considering last week’s RBA interest rate cuts and rates being a hot topic, I thought it would be appropriate to focus on mortgage brokers and run through some of the pros and cons I've experienced in my investment life. They are important because they can really open doors and make properties you once thought were not viable suddenly within reach. 
Pros:
<ul>
<li>Pre-qualification without you actually needing to apply for a single loan. One slightly scary thing to keep in mind is that every time you apply for a mortgage product with any institution and are refused finance (for whatever reason) it leaves a stain on your credit history/check. Once or twice is fine, but collect too many of them and it makes you look very bad, making your chances and getting future finance more restricted. Mortgage brokers will run software that pulls data in real time, across hundreds of lenders (at their current rates and special deals) and runs this data against your personal situation data. What does it spit out? Well, it culls the lenders who will a) even consider lending you the money you want/need b) tell you what the maximum borrowing capacity actually is and c) tell you the lenders you have the highest chance of being successful in a formal application with.</li>
<li>In line with the above, brokers will indeed save you money. By putting you into the best possible product at the best rate and product, you'll usually be better off in terms of rates repayments, as a result. </li>
<li>They will save you time, will (usually) come out to see you instead of you see them. This might sound small, but as you get underway with your due diligence, this is a big help, and frees up your time to do other due diligence checklist items you'll no doubt need to conduct. </li>
<li>While they do not know everything about every product, they do have expert knowledge on some of the more popular products and real qualitative feedback from other clients on how these products have performed. Their insight is unbiased and raw, which is great because individual lenders will (by their nature) sell you the dream of how their product is best in market!</li>
<li>Expanding on the above, brokers must always be upfront and honest about the way they make their income. Yes, they work for free to you, but someone has to pay, right? Well, brokers receive a kickback, or commission, from whatever lender you end up with, and they are upfront in telling you what this is (you'll see it line-itemed in any eventual product you sign up for). </li>
</ul>
Cons:
<ul>
<li>They do not have a firm grasp of your full situation. Probably my biggest challenge in being a professional property investor myself is juggling my team (the list of people mentioned above). While I only recruit professionals whose quality of service and work pleases me, it is very hard to get them working together with each other (which sometimes you need to do!). A good broker will understand your other relationships and will engage with them to help confirm and qualify data.</li>
<li>I know I mentioned above that they will save you money (and they will, on the interest rate of the product, which is the paramount money-saving you need), but they aren't always armed with all of the costs you'll need to pay upfront. Remember, brokers are not experts in every single mortgage product out there, by every single provider out there. If they were, they'd need to be able to rattle off facts and figures on literally thousands of products. Instead, the lenders themselves are the experts on their own products. So the con of this is that mortgage brokers will get you into a great product, but not always know upfront the full start-up costs involved (additional fees and charges beyond those in the products fact sheet may be incurred).</li>
<li>While they must be transparent in highlighting the way they work in regard to commission they get from lenders, what is unknown to their customers is the level of commission and incentives given by differing lenders (both official and unofficial incentives, that is). Let me explain. If lender 'A' offers a 1% kickback of the mortgage product value as a commission, yet lender 'B' offers a 1.5% kickback, the mortgage broker, while always tasked with recommending the product that is right for your situation, will still be influenced by the bigger commission products sold to them. Additionally, the influence of prizes, lunches, gifts etc. by the lenders (“unofficial” incentives) may possibly influence/corrupt their recommendations to you. This is why when shopping for a good broker, you must check references and ideally will find one from whom a friend/colleague/relative has had positive experience. </li>
<li>Because brokers won't always want to engage your other team players (accountants, solicitors, etc.), they tend to treat each investment property of yours uniquely (unless of course you're buying more than one property at a time, but most investors just do one per year or so). The problem with this is that after the first property or two, they tend to become focused on just finding lenders that will still say yes to you, and not always consider what ramifications product 'X' may indeed have on the rest of your existing portfolio. But to their credit, this should not be the responsibility of a broker – instead just remember that it's your responsibility to consider the effect that each layer of your portfolio cake has, and its weighting, on the layers below it. </li>
</ul>
So mortgage brokers may not be for everyone, or for every situation, for that matter. You need to do what is right for you, and sometimes that means going direct to a source of finance. At minimal though, you should consider a consultation with a mortgage broker to assess what their value proposition to you may be.
In my experience I've worked with and without brokers.  There is no right answer, but when you find one who is willing to treat you as a long-term customer and help you expand your portfolio in the right way, then you know you've found the best broker possible for you. And the best way to get a feeling for this is to listen to the questions they ask of you. Are they obsessed only with the “current” purchase you're making? Or are they asking you lots of questions, at consultation, about how you want to grow your portfolio? Perhaps questions about your next purchase, ball-park spend rates, whether you're looking to owner-occupy a property for any amount of time. Good brokers ask these kinds of questions because they know the value of a long-term client relationship. Bad brokers can't see past the deal they are talking you through there and then.
Cameron McEvoy is a property investor and maintains a blog, <a href="https://propertyspectator.blogspot.com.au/" target="_blank">Property Spectator.</a>
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cmcevoy-Go82SmsJA9

The pros and cons of using a mortgage broker

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In my day job I work in a media agency. Lately it has been exciting to exchange stories of property experiences, it investment or otherwise, with my colleagues. Often we learn from each other and share some tips and tricks with one another all in the interest of, well, passing some time at the water cooler. And from my perspective it is great to get a feel for what others in the community who unlike myself don’t ‘live and breathe’ property, are thinking and doing. I welcome these conversations because they allow me to step outside of my own investment headspace and get a fresh or new perspective on things.
Today I was given one such new perspective, or should I say “opportunity”, in the property investment world. Mind you, it's hardly new, but new to me.
An Australian colleague who has been based in our Singapore office for the last few years has spent the last 12 months doing research and due diligence on the Balinese holiday villa market. She is looking to acquire land and build two luxury villas on it, turning them into high-rental-return investments – with the bonus of achieving great long-term capital growth prospects. What my colleague is actually seeking in doing this is what locals in Bali are calling the lucrative “Western dollar”. This market is specifically the luxury holidaymakers who want a bit more than a Jetstar pre-packaged crowded resort-style holiday. This market wants something more elusive, peaceful and off the beaten track, but still in reasonable proximity to all the attractions, and still in five-star luxury. And they are willing to pay for it.
Bali, although having been a tourism favourite for Australians for a very long time, is more recently undergoing somewhat of a gentrification process. And not just gentrification in the property investment meaning of the word, but in regard to the evolution of both its tourism industry, as well as its domestic supply-and-demand ratios for native Indonesian rental market within the Bali island itself. And this is a good thing.
The island is in more recent years now starting to attract the Western dollar beyond just the Australian and New Zealand travellers who historically have dominated the market. The island is increasingly more attractive to US, Canadian, UK, and European holidaymakers too, and this is important to note because in order to make such an investment viable, there must be signs of strong and increasingly growing demand for holiday accommodation. And of demand, there is plenty.
Property-wise, I've read a number of recent white papers on the Balinese property market (versus the broader Indonesian market separately) indicating steady capital growth over the past 10 years. The island is much more politically stable now than previous years, and is actually higher on the “desirability” list for internal migration for Indonesians due to this greater stability. The island’s comparable stability compared with larder cities Jakarta, Bandung, and Medan has resulted in a high migration internally to not just Denpasar on Bali island, but also the villages and towns around it. This is important because demand for housing by Indonesia’s domestic market, coupled with increased demand for tourist accommodation, has seen a steady increase in land and property values in this provincial island.
This information has inspired me to write today and invite the community to share their experience, or even basic knowledge and understanding of, the Bali property investment market. Are the returns as favourable as they seem? Can a development go ahead while being based in Australia? And how much time “on the ground” is needed from investors? Also, what are some of the bigger risks involved? Some bloggers have reported poor construction quality and poor site selection as being some of the greatest risks. Is this true?
Cameron McEvoy is a property investor and maintains a blog, <a target="_blank" href="https://propertyspectator.blogspot.com.au/">Property Spectator.</a>
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Property investment opportunities in Bali

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In my view there are three stages for property investors: research and due diligence, then the offer and purchase process, and last of all the ongoing management and capital maximisation of the investment property. What I find interesting, and what I am writing about today, is how different people place varying hours of their time into these stages, and how this can be a cause for concern for the less informed among us. So let's look at each of these stages and get a feel for what is involved in them:
Research and due diligence. This is where you must first identify your objectives. By this I mean you ask yourself the “big” questions about your broader life objectives, such as:
<ul>
<li>What are my long-term life goals? How much money do I need to retire on? </li>
<li>What kind of investment risk profile do I have? </li>
<li>Is property investment for me? Do I have the time, dedication, and longevity of commitment to stick to it? </li>
</ul>
And then hone in to get to the “little” questions, about the specifics of what you're looking for in an investment property, such as:
<ul>
<li>Apartment, townhouse, or house? Off the plan, or pre-existing?</li>
<li>Do I want to live near my investment to keep an eye on it? Or am I OK for it to be interstate or international? </li>
<li>Do I want a “set-and-forget” approach, or something more hands on and high demand (but with greater potential for capital gain)? </li>
</ul>
With the above assessed you then need to commence market research (assessing suburbs and property types and measuring them against hard metrics, trends, data, etc), due diligence (lots of time spent here, crunching numbers, working out long-term holding costs, capital trends and so on). Once this is done you will then be armed with all your spreadsheets and formulae to hit the pavement and inspect. You actually won't need to inspect that many properties, because you'll already have done all the research leading you up to know exactly what you want.
The difference and net effect of this is like comparing two children who each have saved up pocket money for a chocolate bar. The first doesn't know what he wants and goes into the shop and is inundated with too much choice. He rapidly and nervously picks a random sweet, not knowing if he'll like it or not, simply because there were a mass of other kids buying out all different kinds of candy bars and he didn't want to miss out. He ends up with a Snickers bar, only to open it, take a bite, and realises he is in fact allergic to peanuts. The other child has already figured all that out; she knows exactly what she is allergic to, what tastes good, and what will satisfy her taste. She also knows that the bar she likes is very popular. When the shop opens at 9am, she charges in with all the other kids but takes a fraction of the time, buys the candy bar she'd preselected when she was already at home, and enjoys every bite.
2) Making an offer and purchasing. This is where would-be buyers go through the offer process, negotiate the deal, have their investment property “team” (Mortgage broker, lender, solicitor/conveyancer, accountant, financial planner, tax depreciator, strata officer, and most importantly, mentor) on hand, ready to hit the “green-means-go!” button once the offer is accepted.
3) Ongoing property management and capital maximisation There are many things that will keep you busy when it comes to this area, with each one of these requiring a chapter to cover them better. So I'll just list the main ones:
<ul>
<li>Finding a reputable managing agent</li>
<li>Tenants moving out and sourcing quality new ones</li>
<li>Attendance of strata meetings, building maintenance, and occasional council disputes</li>
<li>Improvements, renovations, maintenance, repairs</li>
<li>Tax depreciation and annual tax and income management</li>
</ul>
Getting the most out of your investment property is vital. This is because the return you see from your property can vary hugely, due to a list of unforseen changes to your life. For example, your personal income changes. Few working Australians actually earn the precise same amount of income each year. This needs to be taken into consideration in your overall tax assessment. And what if you don't work or study for a year? Lose your job? Or get a big $50,000 salary increase? This alone will change the dynamic of your investments' potential to net you solid returns.
Notice how little I wrote about stage two, compared with the other two stages? This should tell you something about the amount of time you invest in each stage. When I acquire properties I tend to spend my time investment (remember “time is money” in any investment or business undertaking) in the other stages, so my time schedule looks more like this:
<img src="/images/stories/mcevoymay281.jpg">
Versus less informed investors whose time distribution looks more like this:
<img src="/images/stories/mcevoymay282.jpg">
As you can see, the “buying” stage should actually be the least time-consuming part of the overall investment process! Sounds weird to say it, right?
So, while some investment property gurus are fast to tout the “you make your profit when you buy, not sell” mantra as a rationale to dedicating so much time to buying process, what they actually mean is that the profit is made in the research revelations leading up to the purchase of your property. Prior research/due diligence should take up the bulk of your time, followed by ongoing management, which can take 10, 20, 30, or even 40 years if your strategy is a more long-term “buy-and-hold” one. Certainly something to keep in mind when preparing to purchase.
Watch this space; next time I'll put the ”offer acceptance and purchase” process under microscope and list most of the hoops you'll need to jump through, one by one, when purchasing the property itself. This might help to relax you and take some of the stress away that we all face when going through the buying stage.
Cameron McEvoy is a property investor and maintains a blog, <a href="https://propertyspectator.blogspot.com.au/" target="_blank">Property Spectator.</a>
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Buying is just a small part of residential property investment

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I recently wrote about the concept of being a ‘renter-investor’, <a href="https://www.propertyobserver.com.au/landlords/the-pros-and-cons-of-buying-your-first-property-as-an-investment-and-continuing-to-rent/2012031153777" target="_blank">where I reviewed some of the positives and negatives associated with it</a>: 
The more research I conduct, the more I see this trend emerging as an increasingly popular investment strategy. But what of those who go half-way there, as in: owning and occupying their principal place of residence (PPOR) and then renting one or even two of the bedrooms in that dwelling? 
It is certainly a trend that is picking up steam. <a href="https://www.apimagazine.com.au/api-online/news/2012/05/renting-out-rooms-a-popular-option" target="_blank">In fact, a recent poll conducted by PRDnationwide</a> concluded that 14% of respondents already had at least one person renting a room in their PPOR, with one in three home owners considering the idea of renting a room out as a revenue driver.
In fact, a simple Australia-wide search on Gumtree.com.au today reveals over 10,173 listings Australia of users advertising a room to rent in their homes. Sure, a portion of these ads are for those who are renting themselves, and effectively sub-letting. 
I guess what I’m getting to is this: I am currently (and have been for almost two years) a renter-investor, finding the strategy suitable to my lifestyle as well as to my balance sheets in my holding cost analysis Excel spreadsheets. But, having exchanged contracts two weeks ago on a PPOR for myself (yes, I’ve decided I need a permanent place to hang my hat), I am actually less than four weeks away from settlement, and my mind is ticking over to the possibility of renting the second bedroom of this residence. 
But with this notion comes so many additional questions. What of the tax issues apparent with this arrangement? And what of the practicalities? What are your rights (and the rights of your tenant) in a circumstance where you let a room, with no formal lease for which the tenant is to comply to?
I do not have all the answers, but I am keen to raise the questions and get the feedback of the investment community.
1)      Tax issues This is something I’m not sure of. In theory, any income you are earning from a property must be declared to the ATO. But what effect does this have on the “tax-free haven” nature of your principal place of residence? There are those who have suggested that by wording the tenant not as a “tenant”, but as a “lodger” or “boarder” this creates a grey area in which the “intended use” of the property is unclear, however I am not certain this is the best way to play it. I’ve had people I know recommend to pocket the weekly board/rent in cash and not declare it, and because the tenant is not on a formal lease, a formal “investment property revenue” should not be declared to the ATO. I’m keen to hear from the community their thoughts on such a notion. 
2)      Practicalities This is an area in which I bring much more experience. Having house/flat shared for the better part of the last 10 years, both in larger four-person plus share houses, down to two-bedroom apartments with just one flatmate, I can attest to the importance of good tenant selection. You need to consider the practicalities of the space that you will inhabit with one (or more, if relevant) flatmates. Small apartments can be tricky, and you may feel you are living on top of one another. Personality clashes are common, and can help be avoided by proper screening of your flatmate. Remember the gruelling process you have to go through to successfully ‘win’ a rental housing application? Well, agencies do this to ensure they are accepting only the best, most trustworthy future tenants, into a property. You should demand the same from your applicants. Sit them down after an inspection of the room for a more formal interview. Ensure you ask all the right questions (Google this for suggestions; there are many you can ask). 
3)      Tenant (and your!) rights I must be honest; over the years I’ve been lucky with flatmates. Usually they are ‘friends of friends’ (coming with references and trust), or even better, friends of my own. But when interviewing complete strangers, establish a “way we live together” list before they move in. Also, it is your place and you could ask for a bond/deposit. Legally you’d be best to lodge this with the Department of Fair Trading, but this is your call. Make clear the rules of the house, expectations, and especially duration of stay. This will ease any potential clashes or misunderstandings further down the track. 
4)      Industrialisation of the flatmate ‘industry’. The advent of sites like Flatmate Finder is an indication that house/flat sharing is an increasingly popular trend. In fact, niche audiences within this category are now being catered to, thanks to specific niche flatmate-finding sites now gaining popularity. There are sites dedicated to mature/older flatmate seekers, gay and lesbian, and even pet-owning/sensitive flatmate seekers!
While renting a room in your own place may not be a strategy that is for all; it’s one to consider, as it may help with the cashflow of whatever your current living arrangement may be. For investors, it is always going to be about that bottom line. And if you can claw back even a few hundred dollars per month by renting a room, imagine what future growth opportunities you could unlock by pouring that money back into an investment stream of your own.
Cameron McEvoy is a property investor and maintains a blog, <a target="_blank" href="https://propertyspectator.blogspot.com.au/">Property Spectator.</a>
 
 
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The rising trend of renting out part of your home as an investment

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The phrase “residential property investment” means, to most people, simply looking at a house or an apartment as an investment decision. As they say, “Your home is your greatest investment”, which is true, but the truth is that residential property investment is an all-encompassing phrase, referring to an ever-growing list of investment strategies, with the common link being that all strategies have the objective of growing financial wealth to secure one’s future.
Today I thought it best to run you through some of the major strategies out there, and some emerging ones that are growing in popularity.
1)      Home ownership While owning your own home is the most basic of property investment, it is a strategy that most property owners employ, and go no further with. And this is perfectly fine; providing that you are employing other tactics along the way during your life to ensure you are building a nest egg beyond just the home you live in. While your home will no doubt appreciate in value over 30 or 40 years, singularly, the ownership of just this asset will not secure your retirement, you’ll need more than this. Unless, of course, your home happens to be a palatial Miami mansion and you then comfortable to sell up and downsize to a studio apartment during your retirement (a scenario that few would find themselves in, I’m sure!).
2)      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 then later in life you cash out most of the portfolio (sell say 90%), using the after-tax profits to buy your home to retire in (outright) and also have a tidy nest egg of money put aside to enjoy your retirement years with. 
3)      Buy, renovate and sell (aka ‘flipping’) Not a strategy  for the inexperienced or those who do not like/cannot handle fast-paced madness, buying an unrenovated property, then quickly renovating and selling for a much higher price before quickly moving on to the next one is not for the faint-hearted. The failure rates are quite high, in the respect that many who set out on their first ‘flip’ property never attempt their second. Some have made lucratively successful careers out of this, such as Renovating For Profit founder Cherie Barber. To succeed long-term with this strategy, you pretty-much have to give up your day job and make this your full-time job. The problem for most people is they envisage a lifestyle where you get to pick out cool fixtures and fittings and personalise a property the way you like it. The reality is the complete opposite; you instead become a site project manager and make decisions based on the bottom line and not personal taste. 
4)      Renovate and hold This one mixes the above two strategies together (sort of) and works well for those happy to be quite transitional themselves, and not have a fixed residential address for many years at a time. Basically, you continue to grow a portfolio of properties held; but the kinds of properties you acquire are ones that need work. These could be basic cosmetic work, or full-on structural-and-cosmetic projects. Either way, you either move into it and renovate while living there for six to 12 months, or you project manage it until completion over three months or so, but instead of selling, you hold the property and rent it out for a much higher rental return than it originally offered. Over time you may grow a portfolio of renovated properties that provide excellent rental return. 
5)      Managed funds and/or property super funds This kind of investment is the most passive, minimal risk, and minimal, well, work! But it is also very separate kind of investment strategy. This approach relies heavily on trusting a financial institution to invest your money in property shares and portfolios, to produce financial growth for you. Whilst the gains are nowhere near as lucrative as the wealth you could manufacture by running your own strategies; they are also less risky, cumbersome, and use minimal time. A good strategy to use as a tactic in unison with other investment approaches. It is not one I’d use singularly on its own. 
6)      Group family buying This is less a property investment strategy as it is more a strategy to create greater efficiencies when it comes to home ownership. We must actually give thanks to the modern multicultural landscape of Australian society, because without multiculturalism, Australia may have never become privy to this strategy. This is a common strategy in some Mediterranean, Asian, and South American countries, and one that many Western societies is fast adopting and learning from. The strategy essentially focuses around weddings. Both families come together to contribute funds towards the newlywed couple’s first home purchase. Usually, those contributing go beyond just the immediate family relatives. Yes, cousins, second cousins, close family friends, great aunts, etc all pool contributions together. The idea is you get 30 to 40 contributors all giving say $1,000 each, and the new couple have their home deposit ready to go. The couple also work to save their own deposit, which means that some couples purchase their first home on just a 60% or 70% mortgage. The idea works on a “pay-it-forward”/karma approach; in that the contributors know that when it’s their time to purchase a home; all others in the network will share their little kick-start back to them too. To work effectively, this strategy does require a lot of trust within families and their extended family connections. 
7)      Co-investment with friends/relatives Different to group family buying, in this strategy a partnership of two, or perhaps three/four, people band together in order to achieve their investment objectives. This strategy can be great for those on low incomes, limited resources, and those with limited time, to work on a project together and see a gain. Positives then, are that much less start-up capital is required to invest, plus you have a second opinion all the time, which can help protect against making poor investment decisions (but not always!). Co-investors also have the benefit of being able to share skill-sets, connections/contacts, and experience, to strengthen their plans. Cautions for this strategy though are plentiful: with difference of opinion, personality clashes, and long-term strategy shifting being the biggest challenges with this approach. Additionally, the legal complexities often make contracts/solicitors’ fees skyrocket; as all exit-scenarios need to be considered, and an iron-clad contract detailing the agreed outcome based on every possible scenario must be composed by lawyers. Additional stress can ensue when family or partners are involved. Should things go sour, the relationship can suffer. This can occur with friend-based co-investors also; but if you can find your rhythm early on, this can be an effective strategy. 
8)      Full-time property development. And by this I mean, for example, building an entire block of units, from scratch. It probably goes without saying that this strategy is one that only those with high cash stocks are even able to contemplate. Often times, more mature investors who have been building portfolios over many years may build themselves up to this kind of venture. Usually by this point, they have picked up skills, contacts, and capital along the years, to make a larger-scale development even feasible. Even despite all of this, the complexity of full property development can make fools of even the most experienced and savvy investors. Not for the faint of heart. 
I’ve no doubt there are additional strategies out there that Australians are using in their property pursuits (and I’m keen to hear from you, more on them!). Overall, though, one must always remember that there is no hard and fast rule or strategy to property investment. Some people choose just one of the above strategies and roll with it; whilst others form a strategy that mixes several of the above as tactics along the way. Regardless, it is important to consider all of the options available to you when starting out, and to know that you can only do this; once your objectives and ambitions are laid out. 
And that right there, folks, is the first and best step in your strategy: to define in great detail your objectives and desired outcomes. Without this (and to quote hard rock singer Chris Cornell) it is like building a house of cards on a hill of sand.
Cameron McEvoy is a property investor and maintains a blog, <a target="_blank" href="https://propertyspectator.blogspot.com.au/">Property Spectator.</a>
 
 
 
 
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Eight strategies for residential property investment

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Recently, Larry Schlesinger provided <a target="_blank" href="https://www.propertyobserver.com.au/residential/house-prices-to-bottom-out-in-2012-and-start-rising-from-2013-nab/2012041354255">commentary on the property market trending towards a “bottoming out” in 2012 and a “modest rise” in 2013 onwards</a>, based on a 300 respondent-strong survey commissioned by the NAB Bank.
Following this, I conducted my own survey of market sentiment in regards to 2012 through to 2013. I was able to collect 50 responses, and the outcomes were quite revealing.
The respondents include a variety of industry experts (estate agents, mortgage brokers, advisors, professional investors), along with non-investors (those interested but yet to take the plunge, and those who may not be interested in property investment but are renters or landlords themselves). There were just seven questions asked, with multiple answer choices for selection, as well as the option to answer with their own comments.
1) How would you describe the outlook for the remainder of 2012?
- 50% felt the market was 'Trending badly, with 41% agreeing it was 'A bit wobbly, but will improve'
- Less than 5% felt it was 'Doom and gloom'. Others responded with their own comments, stating it was a 'buyers’ market' and that it was 'stagnant, but on the way towards upswing'.
2) And what about 2013? 
- 67% agreed the market would 'improve a little bit', with 30% stating it would 'stay about the same as it is now'
3) Some believe the AU market is 'flat'. If so, are some types/sizes of cities more flat than others? 
- 18% felt major metro cities were most flat (i.e., Sydney, Melbourne, Brisbane), with 32% feeling mid-size metro cities were most flat (i.e., Perth, Adelaide, Gold Coast)
- Only 9% felt that 50,000 to 500,000 size cities were most flat (i.e., Canberra, Darwin, Hobart), with 27% feeling regional towns of less than 50,000 were most flat (e.g., Tamworth, Dubbo, Kalgoorlie).
- 22% believed that all markets, regardless how big or how small, were completely flat.
I then asked the audience how they came to these opinions – so, what kind of media or information had they consumed to draw these conclusions? The results were quite interesting and really supported the notion that mass media, trusted colleagues, and specific due diligence were better regarded than specialist media!
1) What outside influences helped to inform your opinion? 
-A whopping 54% said mainstream media (generic news/current affairs, radio, metro newspapers like SMH/Age/West Australian, etc) influenced their opinions about the state of the property market, a frighteningly high statistic!
-29% preferred specialist media sources specific to property investment (specific radio/TV programs to this, specialist magazines and books, specialist published websites)
- A massive 54% relied on the trusted word of informed acquaintances (family members with experience, mortgage brokers/accountants/advisers, academics)
- Just 8% trusted blog-based commentary, and 4% listened to 'untrusted' associates (any comments heard in passing, from any source/stranger)
2) If any of these information sources mentioned the market was 'picking up again' or 'showing signs of improvement', which would you trust most? 
- The response to this was very even; with the biggest group (33%) mentioning news feeds on sites like RealEstate.com.au and Domain.com.au as the most trusted, followed by trusted informed acquaintances (29%), specialist media outlets (29%), and mainstream media outlets (29%)
- 13% also trusted macroeconomic reports in mainstream media (so, the 'economy' improving and positive talk about our 'currency getting stronger'). This is interesting because in my view, the property market runs independently to variables such as these.
- Interestingly, many comments were also added, mentioning wage growth rates, interest rate changes and other economic factors as being the biggest indicators of the real estate market changing.
Lastly I asked some questions regarding the community's interest in purchasing either an investment property or a home to live in, either this year or 2013. Here are the responses to both:
Whether or not you currently own property of any kind; would you consider buying an investment property or a home to live in, this year or next? 
- 'Yes, certainly' - 25% (investment property), 42% (home)
- 'Most likely' - 21% (investment property), 13% (home)
- 'Maybe, maybe not' - 29% (investment property), 13% (home)
- 'Probably not' - 8% (investment property), 25% (home)
- 'Certainly not' - 17% (investment property), 8% (home)
So, what does the community make of all this sentiment?
If I could add my two bits' worth; I'd suggest the market feels that despite flat growth and some areas trending badly, there is still a strong desire to enter the property market, not only as a home owner but also keenly as an investor, this year and moving into 2013. From a media perspective, I'm also concerned at the high volume of respondents placing their reliance in mainstream/generic media sources and not specialist media and the blog community around them.
I'd be keen to hear the thoughts of others regarding these subjects.
Lastly, I was recently a participant in a Swinburne University study recently on <a target="_blank" href="https://www.propertyobserver.com.au/landlords/the-pros-and-cons-of-buying-your-first-property-as-an-investment-and-continuing-to-rent/2012031153777">"renter investors".</a> If you would be interested in participating in a 30-minute interview, please email <a target="_self" href="mailto:4121139@student.swin.edu.au">Ailsa McPherson</a>.
Cameron McEvoy is a property investor and maintains a blog, <a target="_blank" href="https://propertyspectator.blogspot.com.au/">Property Spectator.</a>
 
 
 
 
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Real estate industry experts say the market is flat but want to get into it anyway

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Having recently cracked the ripe old age of 30, it got me to thinking about two things:
1) The fact that I'm getting older, wiser, but somehow worse at being able to handle my drinks!
2) My superannuation account growth.
Today I'll address the second one (the first one probably belongs on some kind of other blog in cyberspace!).
Superannuation is intended to provide us all with our own little nest egg as we finish up working full time later on in life and approach retirement age. When it was first introduced, the Australian populace was lulled into a sense of complacency. The initial sentiment was one of “Ah, fantastic – my employer will kick in 9% every year, and when I hit 65, I’ll be able to sit back, relax, and live comfortably for the rest of my life”.
However, in recent years, people have wised up and realised that 9% kicked in by an employer per year, based on a statistical median salary income (assuming you are working full time for the 47 years between ages 18 and 65, and earning a statistical average income of $65,000 per year – for every year of your working life!), will not last long, upon turning 65. Sure, there are always questions of “But how much money do you really need to live on?” etc. But if you’re like me and have bold life ambitions for your retirement (Touring Antarctica, for example, or helping out in developing countries for months at a time, providing for your children/grandchildren, or even flying into space), you’ll need to give that growing nest egg some serious growth hormones. And by the way, things like flying into space may sound far-fetched, but so you know, all of these are on my bucket list.
Most Australians already know this about superannuation. Most people also know or have heard of self-managed super funds (SMSFs), and understand that finally they can start to take control of where that 9% a year goes, and how it is invested. However, upon recent advice of my accountant (and some trolling of research pieces via good old Google) I discovered a little hitch in the road. And it’s one especially relevant for younger investors. The reality is this: You can’t feasibly invest in property until you reach a “critical mass” in your super account of about $60,000 to $70,000.
if we take an example of an under-30-year-old hoping to unlock her super for property investment; let’s assume she starts on a salary of $35,000 at 18, and this salary grows annually at 4% a year (in line with inflation), all the way up to $53,888.89 at age 29, this means at 9% a year along the way, the near-30 year old’s employer(s) have contributed just $46,331.27 to the fund. Keep in mind this assumes the very unlikely situation that the person has not taken any time off for 12 years! No studying, no part time, no extended stays overseas, etc.

Sure, the funds are being invested and re-invested every year, but they are also being eaten away by fees. So let’s assume that the fund is a good one, and is returning 6% per year, minus just 1% of this for fees etc, so we’ll call it 5% per year. At age 29, this fund would come to approximately $63,804.36.

So, on average salary and assuming non-stop full time work, you’re likely to be about 29 or older before you reach critical mass to self-manage your super fund to a point where property becomes an option.

Pretty sobering, huh?

I am by no means attempting to discredit the institution of superannuation; it was born with the best of intentions. Instead, I’m just trying to paint a realistic picture that yes, even though everyone nowadays knows that they won’t have enough when they retire, and they also know that they can now self-manage their funds, the reality is that you cannot do this from a “younger” age. It’s an older person’s game.

Sure, there are other ways to boost your super to get it to critical-mass level, early on (additional contributions; some of which are incentivised by the federal government to encourage citizens to boost their super, i.e. ‘dollar for dollar’ schemes), salary sacrifice, or requesting your employer deduct a couple more per cent-worth of your salary to your fun, but to really take control, this takes, well, time.

So where do we go from here, then?

Well, developing other investments in life along the way (with your actual income revenue, that is), is the first step. Yes, I’m a property advocate, but your investment does not have to be exclusively property. Still, as you are growing your nest egg with other investment strategies, it could be wise to consider a property funded by your SMSF, at the age of 30 or so, as part of your strategy. Think about it. At 30, you take out a 20- to 30-year mortgage, use your employer’s contribution of 9% annually to help pay it down and cover the running costs, then at the end of the mortgage (retirement age) you cash in, and that little $300,000 to $400,000 property you bought all those years ago would be fully paid off, you sell for ideally triple or quadruple what you paid, and even after fees/taxes are taken out, you’ll have a much healthier nest egg of around $600,000 to 900,000, much better than the $274,000 or so that you would probably end up with if you let the powers that be manage your super for you.

And considering Ashton Kutcher paid Richard Branson about $150,000 to go into space recently, that figure might just be enough for one to live on, and get them into space, too. 

 Cameron McEvoy is a property investor and maintains a blog, <a href="https://propertyspectator.blogspot.com.au/" target="_blank">Property Spectator.</a>
 
 
 
 
 
 
       
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Why buying property with super is hard for young and low-income investors

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 Although we are several months shy of tax time, I was prompted by some readers to break down tax depreciation, a quite unique tax-advantageous component of property investment, in layman’s terms. By this I refer to the tax allowances for degradation of investment property contents, used to produce income/wealth, for the investor. 
Before you read further I must stress that an investment property is one that you do not live in yourself. It is not your “home”. While some people refer to the home they live in as their greatest “investment” (and indeed it is a great investment!), in the eyes of the Australian Tax Office, this is not an investment property. The biggest (and only) tax allowance you get on your home is the capital gains tax exemption that applies when you sell your home. And no, you cannot own more than one “home” at any one time. You must sell one home, tax-free, before buying another home. 
So back on to depreciation allowances for investment properties – what do I mean by this? 
Well, let’s say you bought an investment property, say it is a brand-new apartment, and say you intend to hold this investment property for 20 years. In the unit, there are the basic walls, cement floors/foundations, ceilings, windows, etc. But then there are other items that deteriorate over time and can require refurbishment and/or replacement over the years. Floor coverings like carpets, perhaps curtains, even stove cook tops, some light fixtures, shower heads and so on. 
Sure, the brand-spanking-new range hood looks great in the apartment now, and your first three or four years of tenants love it, but as the years go on, these items suffer wear and tear that make them less and less valuable. The weaker state of these basic items becomes, over time, detrimental to your potential to continue to lease the property to the best tenant at the best possible rental return. In other words: wear and tear seriously affects your ability to make a profit. 
To compensate for this, the ATO says (very much in a nutshell!) “At the end of every financial year, you can claim some of the weakening value of each item as a tax deduction to help improve your bottom line.” Figuring out how much of a tax allowance you can get for your investment property is not something easily doable by yourself. You are best off to recruit the services of a tax depreciation company. There are many out there, and are all pretty much the same, though do your research and source testimonials on the ones you shortlist before appointing them. The ATO frowns upon those who attempt to conduct a depreciation report themselves, and red flags are raised. In fact (and I’d have to check my sources), it may even be mandatory that a third-party report is required, in order to lodge any tax allowances for depreciable items. 
So when does this need to occur, and what is depreciable, and by how much? The good news is you can purchase a property at any time in the financial year, and so long as you get the report written and lodged with your income tax return, you qualify for any of the tax allowances from the portion of the financial year that you owned the investment property. In fact, the ATO allows back-dating by up to two years, so if you bought a property say 08 months ago, and are panicked, fear not! But if you bought say five years ago, only the last two years’ of depreciation are claimable. 
In regards to what is depreciable and by how much, most items have some depreciable value. To assess this, the depreciator you appoint will need to gain access to the property to conduct an inspection (usually less than 15 minutes is needed). This person determines the “current” value of every item (so, stove, window sills, floor coverings, light fixtures, fences, walls, etc). They then calculate how much “value” each of those items will lose every year, and they will road map this out, per-item, for usually up to 30 to 40 years. So yes, the report can be heavy reading! The good news is you’ll pay for this report just once, and then use the findings contained within for the life of your ownership of the property. Each end of financial year, you submit the same report to your accountant when you do your tax return, and that year’s “allotment” is included in the tax assessment calculation. 
It goes without saying that the figure for say year three, will be much higher than year 27. This is due to the gradual degrading value of items. Think of it like buying a showroom-new car. Buying a new car is better than buying one second-hand, and they look and run the best, however they lose their biggest chunk of value the moment it is driven out of the showroom. Say you spend $30,000 on the brand-new car, but after year one, it is only worth $25,000. But then in year two, it may only lose another $2,000 of value – not another $5,000 of value. Year three may be $1,000, and perhaps it may average out at $500 a year every year after. The same thing applies with depreciable items in property. 
So more often than not, properties that are one to five years old have the most depreciable potential. So, that brand-new stove in the example I mentioned earlier; it may have a year one value of $1,600. The loss in year one could mean for a tax allowance of $180 for that year, but by year 30, this allowance might be only $5. But when you add up all items on the list (in addition to the stove there might be another fifty line-items), it all adds up, and it especially adds up big time, during years one to five. 
For this reason, some investors only consider properties that are aged up to five years old due to their depreciation potential. But it is worth mentioning this is certainly not a strategy that suits everyone, and especially may not suit young investors. Oftentimes, mature investors who are on six- and seven-figure annual salaries see property investment as a way to help offset much of the tax they pay and seek out properties that maximise this. 
For those of us on more modest incomes, this huge tax allowance may not offset the negatives of buying a brand-new property (paying inflated up-front costs, plus also being at risk of increasingly poor-quality construction). Sure, a property may give you no problems in the first few years, but then it may become a money-pit for you thereafter, whereas someone who purchases a 50-year old red-brick apartment block may actually have fewer problems with it. And sure, it would have much lower depreciable value from year one of your ownership of it, yes, but it may cost you less in repairs than some newer buildings. 
While there is no hard and fast rule or strategy to apply, my personal strategy is not exclusive to any type (or age) of dwelling, though I tend to seek properties in the five- to 10-year vintage, mostly because they serve many purposes: 
1)      Usually (but not always) if there aren’t any structural problems by year five, there probably won’t be. Modern constructions tend to show their wear early and up-front, or not at all. 
2)      Years five to 10, depreciation-wise, still provide excellent tax concessions. 
3)      You don’t overpay for the property (you don’t pay the marketing-costs-inflated “brand-new” price, nor do you pay the years two- to three-year “honeymoon” price).
Back to you home owners that I mentioned earlier on. If your strategy is to buy a property to live in but with multiple bedrooms and you intend to rent bedrooms two and three out as an investment component of your home, you will always be entitled to apportioned tax deductions (things like interest on mortgage repayments etc), but at the same time you’ll be up for an apportioned figure of capital gains tax when you ultimately sell your home one day. A tax depreciation report could still be worth investing in, but you’d need to seek specialist advice in this scenario. If you only intend on living in your home for a few years before turning it into a 100% investment property, certainly get the report, but wait until you vacate to actually buy it. 
My overall advice to the community is that when looking at potential investment properties: consider tax depreciation capability when short listing your top three or four. Ask yourself, is the building less than five years old? If it is older, that's OK (even if it is in fact 50 years old). If it is older, does it have a new/recent kitchen? Bathroom? Maybe new fencing, roof tiles, renovations? Extensions? Outdoor paving? These items could have higher tax-depreciable qualities than you first realise. Whenever you do purchase your investment property, be sure to pay the $500 to $1,000 one-time cost to have the report constructed, and do it about 14 days before end of tax year (otherwise if you leave it too late, the results may not come until after the tax year has ended). 
I know I haven’t mentioned just how much you can get back each year, and with good reason: it will be different for everyone, because there are so many variables at play. But I will say this; most people find that they not only re-coup the cost of the report in year one, but they also get a nice return on top within the first year. Plus you get your allotment each year for the next 28 or so years of ownership. So that alone is worth it.
Cameron McEvoy is a property investor and maintains a blog, <a href="https://propertyspectator.blogspot.com.au/" target="_blank">Property Spectator.</a>
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The benefits of depreciation, or how wear and tear can be to your advantage

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“It’s on! 7 O’Block weeknights!’ is what is being shouted at us everywhere in the media lately – bus shelters, TV ads, radio, magazines, online banners, etc, all working in unison to present to Australia the rollercoaster adventure that is DIY renovation, in the form of a competitive reality TV program. Yes folks, The Block, the hugely successful Nine Network TV series, now in its 10th year, <a href="https://www.propertyobserver.com.au/renovating/father-daughter-and-mother-son-teams-in-channel-9-s-upcoming-the-block-2012/2012032954015">is back</a>, and as always, “bigger than ever”. As a full-time media industry professional myself, though, it prompted me to have a think about how much the mainstream media presents property investment and renovation-for-profit strategies as entertainment. So I felt it necessary to share with the community the reality of these “reality” shows as being what they are: very, well, unrealistic!
Let me first start by affirming one thing: I really enjoy The Block and shows similar to it; they are great entertainment programs, and I do enjoy the thrill of watching them. You know, identifying my favourite (and of course, least favourite!) contenders in the beginning, then following them through the series and seeing how far they get. As a professional property investor, however, I treat these shows as just that: entertainment. Professional investors understand that these shows glamorise the industry, and we know that the industry reality is nothing like what these shows present to us.
To be honest I really believe that most of the Australian public understand this as well. Yet there are still some perceptions that property investment is “not as hard as they make it out to be”, and this is the most concerning part. Not because I think that these people will fail if they try, I just think that when they hit that first wall or that first (of many) “no” answers, they’ll give up, because “on TV they didn’t have these kind of problems; I must be doing it wrong”.  It is the opportunist in me that thinks sometimes, “If I had the cash and more TV industry clout, I’d propose my own idea for a property investment show to the studios!”
But then I think that my show would probably not be very entertaining, and it is entertainment that sells. It is sensationalist headlines that get viewers. No, my show would be pretty boring actually. It would just involve scene after scene of someone sitting at an office desk using Google for many days, weeks, months on end, and maybe also a notepad, calculator, and a phone call or two (just to spice things up). Because, that’s what you’re doing 90% of the time as an investor: number-crunching, cost analysis, Google searches for information, and calls, calls, calls and emails, emails, emails. The other 10% is the stuff that they show on the televisions shows – the shopping around, inspecting places, maybe buying some curtain fabric and granite benchtops and touring apartments and houses. Sounds like fun, huh? Well, by the way, it’s not likely that these property tours would include the terraces of Toorak, or the penthouses of Potts Point. It’s more likely you’d be looking at the old apartments of Arncliffe, and the duplexes of Dandenong. Not exactly captivating TV viewing, is it?
Comparatively more sinister than the entertainment format though, is the sensationalist mainstream media. You know the most guilty of guilty suspects to which I refer to here: Today Tonight, A Current Affair, and (increasingly more recently) the 7pm show on Network Ten. These programs are all about presenting the flavour of the month when it comes to property, and yes, that generally involves taking whatever alarmist/sensationalist news headline they can find, then knocking up the “drama” of it a couple more notches, and presenting that point of view as “investigative journalism”. 
I’d actually feel more comfortable if these pre-made (and often shelved until they require a “time-filler: on a light news day) sensationalist stories quoted zero credible sources/statistics/accrued trending data. That way, I’d feel hopeful that the greater Australian population wouldn’t buy into these “property stories”. But unfortunately, they usually end up finding just one perspective/source (which often is merely one individual’s conversational opinion with no hard data to back it up) and run with this perspective (providing it is the most extreme perspective available, that is). Usually they pick the most dramatic or condemning perspective and present that as “just how the property market is”. Worse still, these stories are interweaved and mixed with the “dodgy plumber” template; whereby there must always be a ‘bad guy’ being chased down a hallway with a shoulder-mounted camera.
So where should one turn to turn for video content about the investment property “game” that is more constructive, trustworthy, and reliable? I’ve made a list of great sources of video content that I’d recommend. Sure, some aren’t so “entertaining: (read: they drone on a bit), and others aren’t even from Australia, but I think if you like information provided in a video format, here are some great sources:

<p style="background-image: initial; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: white; background-position: initial initial; background-repeat: initial initial;">1) YouTube. Specifically, mini-series, or “vignettes” as they call them (usually a three- to five-minute snippet of video, as part of a five- to 10-part series). Some great names to Google are Australian Property Investment magazine’s Nhan Nguyen, who has a great series. Also Michael Yardney and Lousie Bedford did a series together that offers some great insights. Other names to help get you started would be Margaret Lomas (In Her Shoes series), and Catherine Cashmore and Peter Bozinoski from Property Observer.

<p style="background-image: initial; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: white; background-position: initial initial; background-repeat: initial initial;">2) Get your property industry news from online industry news niche sites. This one just makes sense. Sure, some of the biggest news websites such as NineMSN, SMH/Age, News.com.au etc have property sections, but these sections are really quite generalist and don’t cater as much to the investor mindset. Instead, go to specialist websites like Australian Property Investor magazine online, Your Investment Property magazine online, Property Observer, and even Domain.com.au and Realestate.com.au. You’ll find video content that is specific to investment context within these.

<p style="background-image: initial; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: white; background-position: initial initial; background-repeat: initial initial;">3) Blog communities are also an excellent source for opinion. Sure, they are merely conjecture and the amalgamation/debate of many individuals (most usually with quite strong opinions!), but these communities are, more often than not, made up of the kind of person who, well, if you’re an aspirational investor, would want to be and emulate. Plus, the ones worth their salt (like me) will always present things as their opinion, or their own commentary, on what is trending in the market. They will never try to claim their opinion is an elaborate intensive study (unless of course they are willing to do the due diligence of research and hard data), so their opinions can usually be well-considered if many individuals in these communities all concur on similar topics.

<p style="background-image: initial; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: white; background-position: initial initial; background-repeat: initial initial;">4) There are indeed some TV programs that are not all bad. The UK’s Property Ladder, hosted by Sarah Beeney, is excellent because it shows the due diligence that renovators apply before selecting a property, details the works and itemised costs, the selling process, and then actual profit margins and time/energy taken. Selling Houses Australia also has some great episodes, though it does conform to a more entertainment format. And last of all, regular segments in various reputable news program sources (Sky News Business has some great regular reporters with segments, as does ABC and SBS more infrequently). Even the commercial networks offer programs with some property insight sections, such as Network Ten’s The Circle.

5) Also emerging in the investment property media space are webinars. Whilst not strictly “video” driven, they are quite interactive and visual, and on the rise in Australian media property sites. Worth a look.

Regardless of whether your investment strategy is buy-and-hold, renovate-for-profit (aka “flipping” a property, then moving on to the next one), renovate-and-hold, owner-occupy-and-invest, or even <a href="https://www.propertyobserver.com.au/landlords/the-pros-and-cons-of-buying-your-first-property-as-an-investment-and-continuing-to-rent/2012031153777">rent-and-invest</a>; at the end of the day, you are an investor. And a darned capable one at that. So get out there, keep an ear to the wall and a foot in the door (so to speak, of course), and consume media made with investor in mind, not just owner-occupiers. Find strength in others around you in the community – these are your comrades. And, after a hard day’s’ work, don’t forget to switch on to your favourite renovation entertainment program to relax.

Cameron McEvoy is a property investor and maintains a blog, <a target="_blank" href="https://propertyspectator.blogspot.com.au/">Property Spectator.</a>
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No matter what it looks like on The Block, property investment is not glamorous

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Following up from my first post <a href="https://www.propertyobserver.com.au/overseas/the-pros-and-cons-of-investing-in-us-residential-property/2012021953437" target="_blank">exploring the pros and cons of US market investment</a>, I've now started to do some initial research into not only the various cities/markets but also the market factors themselves, and how they are different to Australia's.
This is also timely because just a couple of weeks ago, I had the pleasure of being invited by 2GB Radio to attend the 2GB Business Outlook Luncheon in Sydney. Speakers giving presentations to a jam-packed room included TV and Radio finance expert Ross Greenwood, market expert Peter Switzer, and mortgage expert John Symond to name but a few.
Each speaker gave his or her own presentation, referencing slides of recent research and gave top-line “crystal ball” predictions of where (he or she thinks) things are headed. Interestingly, investment in foreign markets, specifically property as an investment type, was something they each highlighted. They said this because each noted our dollar would remain strong against all major currencies until at least 2014, and might even get slightly stronger before going back down again.
So after leaving the hall feeling enthused, motivated, and like the world is my oyster, I read further. This is where the USA bit comes back into it. While there is no question in regards to other markets being ripe with opportunity (some countries within Europe present some very attractive, cashflow-positive opportunities), I remain convinced that the US could be the more accessible, easier to manage remotely and has more potential for growth for property investors looking offshore.
I created a scorecard from about 20 unique website lists of more “reputable” quality, to try and attempt to rank a top five ripe for investment. I must preface my top five by saying that I've done zero scientific, surveyed or mathematical analysis to form this. Instead, I've noted the experts' opinions on four key categories:
1) City's basic prospects for growth
2) Quality of infrastructure and other fundamentals (employment centres, schools, etc)
3) Foreclosure discounts and their succession since 2008 (cities with high median foreclosure numbers)
4) Rental return. In the US, even if your primary interest is capital gain, rental return is vitally important due to the buoyancy of currency exchange rates.
So what came out on top?
Well, my top five are:
1) Pittsburgh, Philadelphia
2) Cincinnati, Ohio
3) Columbus, Ohio
4) Minneapolis, Minnesota
5) Phoenix, Arizona
There are many more variables that I could (and probably should) have taken into account, such as the specifics related to the actual cities themselves, beyond demographic and infrastructure-based elements (for example, unemployment trends and mix of industries/job security).
The jury is still out regarding the US property market. Will it make a full recovery, or only a partial one? Or none at all? And how much lower can prices really go? And will some markets thrive while others perish? These are all valid and important questions. I believe that with extensive research and due diligence, property can be found in the US that is cashflow-positive from the outset, along with having steady capital growth prospects.
 Cameron McEvoy is a property investor and maintains a blog, <a target="_blank" href="https://propertyspectator.blogspot.com.au/">Property Spectator.</a> 
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Five good prospects for investing in the US

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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