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The RBA’s decision to leave interest rates on hold earlier this month is unlikely to have any negative effect on the property market. Interest rates have already fallen to a point where investors are being enticed to act and when investors come out so do the property marketers ready to sell.
But when you’re leafing through the glossy brochures and touring the display suites, remember that today’s financial benefits could be tomorrow’s financial headaches. These benefits are nothing new to the market as they are rolled out each time investors get active. Here are the most common ones to look out for:
Depreciation benefits
Buildings and their contents depreciate (decrease) in value, whilst land appreciates (increases). When you buy a new property, the tax office will enable you to defray part of the purchase price by allowing you to claim depreciation on certain items. This can be helpful in increasing your cash flow, particularly during the early years when the property is likely to be negatively geared.
However, the downside is that most of the depreciation you can claim comes from fittings and fixtures like the oven, air conditioner, blinds and carpets, which fully depreciate in five to 10 years. Furthermore, depending on the way you calculate your depreciation allowance, the amount you can claim may decrease each year. This means it will cost you more to hold the property as each year goes by.
Claiming depreciation can also have a hidden tax consequence because it will also increase the amount of capital gains tax you pay when you sell. I’m not saying you shouldn’t claim depreciation – but you should be aware that it may have financial consequences later down the track.
Stamp duty savings 
When you buy property off the plan in Victoria, you will only be liable to pay stamp duty on the property’s value on the date of purchase. If construction is partially completed, you’ll only pay stamp duty on that portion of the building, plus the land value. If construction hasn’t begun, you’ll only pay stamp duty on the land value.
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Don’t let short-term benefits hold too much sway when you’re choosing an investment property.
</blockquote>
Whilst this can help considerably when you first buy a property, it’s only a one-off saving that won’t help you after the loan has settled and you have to make repayments. What’s more, when you come to sell the property, potential buyers won’t have the same benefit of a stamp duty reduction, so there’s less incentive for them to buy it.
Rental guarantees 
When you buy a property brand new or off the plan, the developer will often undertake to provide a guaranteed level of rent each week for the first year or two that you hold the property. This kind of guarantee generally applies even when the property isn’t tenanted, because the developer picks up the tab.
Although it is reassuring to have certainty of rental income during the early stages of holding an investment property, there are two significant downsides. First, you’ll pay a premium to secure the rental guarantee; the developer will build it in to the sale price. Second, in accepting a guaranteed rent level, you’re insulated from market forces. Once the guarantee expires, the amount of rent your property can command will depend on a range of factors including supply and demand.
As newer properties come on to the market and tenants have a wider choice of places to live, the market rent for your property could fall. This is a particular risk in areas like the CBD and Docklands where there’s likely to be a substantial amount of new construction during 2009 and 2010 as developers scramble to keep up with demand from investors returning to the market.
Remember also that when you’re no longer protected by the rental guarantee, you’ll have to have sufficient cash flow to hold the property during periods when your property is not tenanted.
In summary, don’t let short-term benefits hold too much sway when you’re choosing an investment property. Focus instead on the long-term factors that will influence capital growth and rental demand: land values, demographic trends and the balance of supply versus demand. If these factors don’t add up, move on to another property.
You can visit Mark's website <a href="https://www.ipropertyplan.com.au/">iProperty Plan</a>.
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Buying an investment property? Be aware of short-lived benefits

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We live in a crazy world where we are encouraged to invest and fund our own retirement but are not provided with adequate information or legislative protection to assist us to do so.
People who are looking to enter the property market are forced to rely on patchy information, as disclosure of sale results is not mandatory and access to past sales is hidden from view. In addition consumer protection laws for property investors are almost non-existent. As the wheels of the property market begin to turn this is the reality property investors face.
Currently there is no obligation for real estate agents or vendors to disclose sale results to the public. For years the industry has hidden behind privacy concerns but consider this, even a property sold via a public auction can be undisclosed. If you are watching the auction you would know the result but because of privacy concerns the vendor can elect to hide the result. Have you ever heard of anything so ludicrous!  
<blockquote>
Lack of regulation enables practitioners to sell investors a product or concept, under the guise of providing advice without taking into account an individual’s personal or financial circumstances.
</blockquote>
On any weekend as many as 10% - 20% of all auction results are not disclosed. Imagine if the board of BHP was to keep that much information hidden from the market place. There would be up roar and rightly so!
Further the historical growth of an individual asset is a key piece of information anyone buying property needs to know to make an informed decision. However what the property last sold for is usually very hard for the average punter to find. Again imagine if you were looking to purchase some BHP shares but had no access to historical values. It would be very difficult to work out fair market value.
But it gets worse for property investors. Legislation administered by the Australian Securities and Investment Commission (ASIC) provides protection for investors in shares, managed funds and super. Financial planners are required to consider each client’s personal and financial situation, investment knowledge and risk tolerance before giving recommendations on strategies or products. They must also provide a rationale for the recommendations, and disclose fees and commissions they will receive if the client acts on their advice.
Investors in direct property, however, receive no such protection from the nation’s investment watchdog. This is a glaring anomaly given that, according to the Tax Office, around 1.5 million Australians declare rental income for investment properties.
The ASIC Act’s rationale for excluding direct property from the definition of what constitutes a ‘financial product’ is that — unlike shares, super and managed funds, where investors entrust day-to-day control to a third party to generate a return — direct property investors retain direct control of decisions and returns.
The fact that direct property investors retain control of their assets doesn’t mean they are any more likely to make sound investment decisions. On the contrary, the absence of a third party increases the need for inclusion in ASIC’s safety net.
Lack of regulation enables practitioners to sell investors a product or concept, under the guise of providing advice without taking into account an individual’s personal or financial circumstances.
The regulator’s attitude to direct property as an asset class is clearly out of step with the way it’s being utilised as an investment in the wider community. It’s time the legislation was amended to recognise direct property as a financial product and give property investors the same level of protection and access to information as those holding other asset classes.
The time is ripe for the nation’s corporate watchdog to step up to the plate. When investors turn their attention to property, they’ll be in a better position to make informed investment choices and less prone to the fallout from lousy investment advice.
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Full disclosure and property investor protection

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When you’re investing in any asset class, there’s no such thing as a sure bet — and residential property is no different. Whilst there’s potential for capital growth, there’s a flipside of a potential stagnation or decline in market value.
You can reduce these risks by implementing a simple strategy—diversifying your property portfolio. You can do this in two ways. First, buy properties in a range of locations; that is, different suburbs within a city, and/or different states.
Buying all your investment properties in the same suburb or neighbourhood means you’re intensifying your exposure to potential changes outside your control. For example, if you buy all your properties in an area where shifting ground increase the prevalence of major cracking, you could be up for tens of thousands in repair bills, more than once.
<blockquote>
By diversifying your portfolio and choosing good quality properties, you can minimise the risks.
</blockquote>
Further if you buy all the properties in a location that later loses popularity (such as a ‘boom’ town based on a single industry which later goes bust) reduced demand from buyers could affect the resale value of all your assets. If you buy all your properties in an area which later plays host to a freeway that creates considerable nearby traffic noise, you’ll bear an increased risk that not one, but all your properties will stagnate or fall in value.
By diversifying across areas within a city, you can minimise the risk of substantial cash outlays and capital stagnation or loss. If one property takes a hammering, the pain won’t be as bad when your other properties are holding their own.
The second diversification strategy involves buying across different price ranges. This will provide more flexibility when the time comes to sell and free up equity; for example, when you’re nearing retirement and want to top up your super fund.
Let’s say you have $1 million to spend. You can purchase a single asset with the whole amount, or two assets worth, say, $650,000 and $350,000 each. If you buy two assets, you need only sell one to free up cash; enabling you to keep the other and continue to amass a source of equity and income outside super.
This strategy can also spread your tax burden. If you bought one property worth $1 million and sold it for a profit, you’d be liable for capital gains tax (CGT) on the whole profit at once. If you bought two properties and sold them in separate financial years, you could spread your CGT liability over two years.
Because houses are generally more expensive than units or townhouses, diversifying your portfolio across different prices ranges means buying across all three property styles. Having said this, diversifying doesn’t mean compromising on the quality of your investment assets. When it comes to residential property, quality is definitely more important than quantity.
You can’t control changes in the local environment, infrastructure or demographics. But by diversifying your portfolio and choosing good quality properties, you can minimise the risks associated with these factors and come through the worst of storms relatively unscathed.
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Diversifying your property portfolio

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The property market is a living and breathing entity. Although it moves slowly it is always evolving and the following tale illustrates how three different apartments have fared in recent years.
The apartments are all two bedrooms and were purchased in the last six years. This is important, as they have all been held through the 2007 share market boom, the global financial crisis, the property boom of 2009/10 and the property market adjustment of the last couple of years.
Apartment one - <a href="https://www.realestate.com.au/property-apartment-vic-docklands-111987091" target="_blank">1506/100 Harbour Esplanade, Docklands</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2014/03/25/docklands%20march%2025%20one.jpg" alt=""> 
Purchased: November, 2006 for $460,000
Sold: November, 2012 for $460,000
Annual compound growth rate: 0%
Why?
One of the great marketing tools bandied about the market is to imply strong population growth is an indicator of future capital growth. But this point fails to heed the laws of supply and demand.
Many people think population growth is a key indicator of demand. If the population is growing, there must be huge demand and in isolation, that is correct. However I view population growth as a better indicator of supply. If there is strong population growth there must be a lot of available property for people to move into.
Docklands still has an issue with oversupply. Since 2001 its population has been growing by almost 22%. This growth rate is skewed given the population in 2001 was less than 700 however it has still been growing by 6.5% over the last five years. This is well above the 1.5% annual population growth of Victoria.
Over the years the Docklands precinct has been an easy target as it performance as an investment has been so disastrous. Many people suggest it must turn the corner soon and the next 10 years will be much better than the last 10. However consider this, according to the 2011 census one in five docklands properties is unoccupied.
Apartment two - <a href="https://www.realestate.com.au/property-apartment-vic-hawthorn-111057247" target="_blank">109/92 Kinkora Road, Hawthorn</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2014/03/25/hawthorn%20march%2025%20one.jpg" alt=""> 
Purchased: June, 2005 for $445,000
Under offer: November, 2012 for $470,000
Annual compound growth rate: 0.86%
Why?
Developers continually fight an uphill battle as they struggle to match rising labour and material costs to produce a product that they can sell and make a profit. The most effective way they do this it to cram as many apartments they possible can onto each block of land. To do this they usually compromise the size of each apartment. The first causality is the kitchen and it gets squeezed into the lounge room. Most people would prefer a separate kitchen.
<img src="https://www.urban.com.au/images/2014/03/25/armstrong%20arch%2025%20one.gif" alt=""> 
The other way to make a profit is to sell the property for as mush as possible. As a result, pure market forces do not determine the asking price, it is calculated by the cost to build each apartment and a profit margin.
When the investor bought this property they could have purchased apartment for less and made more money!
Apartment three - <a href="https://www.realestate.com.au/property-apartment-vic-hawthorn-112150903" target="_blank">1/69 Morang Road, Hawthorn</a>
 <img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2014/03/25/hawthorn%20march%2025%20two.jpg" alt="">
Purchased: July, 2007 for $405,000
To be auctioned 1st Dec 2012: Expected sale price: $550,000 plus
Annual compound growth rate: 6.91%
Why?
Hawthorns population has been growing by just over 1% per annum over the last 10 years. The low level of population growth is not due to people not wanting to live there as Hawthorn is a highly desirable location. Population growth is held back because of the lack of supply due to unfavourable town planning laws for developers and the lack of development opportunities. This lack of supply puts upward pressure on prices.
Furthermore, the apartment was built more than 40 years ago when labour was much cheaper and developers could make a profit by only building six units on the block. They did not have to sacrifice floor space and as a result the property is more desirable and in strong demand. When it was purchased there was no developer premium paid as it was sold at auction and market forces determined the price.
<img src="https://www.urban.com.au/images/2014/03/25/armstrong%20march%2025%20two.gif" alt=""> 
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A tale of three apartments: Why population growth does not equal capital growth

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Kerry Packer once said ‘Cash is king’.  That was easy for him to say after Alan Bond had just given him $1 billion.
For the majority of us who do not have the luxury of a Bond we need to invest our money so we can accumulate the cash at some future date.
As property investors begin to return to the market many will be enticed by the lure of cash tax benefits such as depreciation and stamp duty savings.
While these benefits are an important consideration in your overall investment strategy, they should never be the driving factor in asset selection. This is because they are short-term tax benefits that have very little impact on the future performance of the investment.
<blockquote>
Yes it maybe is true that cash is king for those that have it, but for the rest of us the long-term viability of the investment is ‘King’
</blockquote>
Stamp duty savings are a one off benefit at the time of purchasing off the plan. At the same time most of the depreciation allowance an investors receives is used up in the first five to 10 years.
Investors need to be wary that these tax benefits are often used as marketing tools to sell property but because they are only short-term the investor will not be able to use the same marketing tools when it comes time to sell their investment.
When selecting investment property it is important to focus on the long term economic drivers that will underpin its performance and will continue to be there in years to come. These factors include the underlying land value, supply relative to demand and the evolving demographic trends. 
While there is nothing wrong with investing for tax benefits investors need to consider the overall investment. In other words if in the end the investment does not make any money or even worse looses money were the tax benefits alone worthwhile.
My understanding of investing is to invest to make money at some date in the future. The benefits should come at the end not at the start.
Yes it maybe is true that cash is king for those that have it, but for the rest of us the long-term viability of the investment is ‘King’. Everything else is just a bonus.
As property investors return to the market they would be wise not loose sight of that fact.
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Is cash really 'king'? Knowing if your investment stacks up

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I’ve said it time and again that the residential investment property is a long-term proposition. The property market takes around seven to 10 years to move through a full cycle, from low capital growth/high rental yield to high growth/low yield and back again. 
Despite this, many property investors choose locations and property styles with little potential to survive and thrive throughout market fluctuations. Some investors choose locations that lack the long-term underlying demand to drive capital growth, while others choose property styles that don’t reflect trends in the way people want to live. 
In other words, the property investment decisions that look good today may not prove so attractive in five, 10 or 20 years’ time. It’s essential to understand the nature of long-term economic and demographic trends, then select assets accordingly. 
Interest rates rise and fall, but in the long term, dwindling oil reserves and rising petrol prices will be a key economic trend influencing the property market. In the coming years, rising prices at the pump will make outer-suburban living and commuting less feasible and less appealing. This will curtail the urban sprawl and increase demand among home buyers for property in the middle suburbs close to public transport corridors, shops and schools. 
At the same time, rising property prices in the inner and middle suburbs will put home ownership beyond the reach of more Australians, or at the very least, delay it significantly. Figures from the Bureau of Statistics tell us that the proportion of households renting from private landlords in Melbourne has increased from 22.8% in 2001 to 27.2% in 2011. Almost 32% of Sydney’s property market is inhabited by tenants. 
The increase in tenant demand is not unique to Australian cities. Major global cities such as London and New York have 50% or more of their property tenanted. I am not suggesting we are a London or New York just yet, but we are following a similar path, and there’s every reason to expect that this trend will continue.
Because many tenants want to maintain the trappings of an urban lifestyle, the trend away from home ownership will increase demand for rental properties within walking or short driving distance from trams, trains, shops, cafes and entertainment precincts. For those who can afford to buy, these areas will also be their preferred choice. This two-pronged demand from home buyers and investors will further boost capital growth prospects in the inner and middle suburbs. 
Delaying having children is another trend set to influence the residential market well into the future. The median age for parents is 28.9 for women and 33.1 for men, and women currently have an average of 1.9 children, compared with 2.8 in 1981. 
This trend has resulted in the average number of people per house almost halving over the last 100 years from 4.5 in people to 2.6. In addition, single-person households have jumped from 22.9% to 24.4% over the last 10 years. 
The shrinking size of the family unit means that demand for low-maintenance, compact dwellings will increase, while demand for the conventional sprawling home on a quarter-acre outer-suburban block will soften. 
When you look at all these trends in their entirety, it’s clear that pockets of the middle suburbs close to public transport, shops and schools will provide feasible long-term opportunities for residential property investment, particularly for investors who have been priced out of the tightly held inner suburbs.
This article first appeared on Property Observer in November 2012.
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Current trends can point to the best places to invest in the future

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It’s a common misconception amongst property investors: “never sell your property”. Although residential property investment requires a long-term outlook to ride out market fluctuations and maximise the effects of compound capital growth, even the best quality investment asset has a use-by date.  
The whole point of investing is to improve your quality of life. At some stage, you’re likely to reach the point where selling a property is the only way to help achieve further investment or lifestyle goals. Here, we look at four situations in which it may be appropriate to sell.  
1. Making room to move. If you have a growing family, you may need to renovate or extend the family home. If you take out a loan to meet these expenses, you’ll pay the full amount of interest, because expenses associated with the family home are not tax deductible. By contrast, if you sell your investment property, you can use the proceeds to pay for the home improvements outright.
When you’ve completed the renovations, focus on paying down the remaining debt on your home so that you’ll be well positioned to buy another investment property later down the track.
2. Hanging up your hat. If you’re nearing retirement and you have an investment property that you’ve held for many years, it may be worth selling it and transferring the equity into a more tax effective structure. When you’re working, your aim is to generate income through a wage or salary and purchase assets that will create capital growth.
Once you retire, however, it’s the job of your investment assets to generate the income for you. To maximise the available income, you need to minimise the tax payable. If you sell your investment property and put the proceeds into a superannuation account, the income generated will be tax-free when you draw on it in years to come.  
3. Ditching an underperforming asset. Regardless of your stage of life, there’s little point in holding on to an investment property if it’s not performing to an acceptable standard. It’s important to review your property’s capital growth performance each year, relative to the wider market. If it fails to outstrip the median increase for a couple of years running, chances are this situation won’t change anytime soon. It may be better to sell the asset and move on to something more productive.
 4. Getting away from it all. Many people who are reaching the peak of their careers like to escape to the coast or country on weekends and recharge the batteries. If you’ve held an investment property for 10 years or more and it has achieved significant capital growth, it may be appropriate to sell the property and use the proceeds to buy a holiday home outright. Generally speaking, properties in holiday areas have a more volatile capital growth pattern, and should not be regarded as prime financial investment prospects. They’re really an investment in lifestyle.
Remember the decision to sell an investment property should never be undertaken lightly. Regardless of your personal and financial situation, seek independent personalised advice before you make a decision.  
Mark Armstrong is a director of <a href="https://www.ipropertyplan.com.au/">iProperty Plan</a>, which provides independent analysis and tailored advice to investors and home buyers.
Note: This article was originally published on Property Observer in November 2013.
                                                    
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Four signs that it's time to sell up

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Investors always seem to want just a little bit more and as house prices move, many investors will start to think of ways to maximise their returns.  
One of the strategies that will raise its head is property flipping. That is buying a residential investment property, renovating it, then selling it to make a profit. It’s a common strategy, but unless you plan carefully it may not bring the kind of return you were hoping for.  
When you buy a residential property, the state government asks you to pay stamp duty worth around 5% of the purchase price.  
If you’ve borrowed to purchase the property and undertake the renovations, you are paying interest on the loan without receiving any rental income during the renovation period to offset the loan repayments.  
When you sell the property, you’ll lose 2-3% of the sale price in the commission you pay the real estate agent, plus another 1% in advertising costs.  
In short, not only are you paying interest on an investment loan out of your own pocket, but you are losing close to 10% of the property’s value merely by entering and leaving the market.  
And, when you actively add value to a property, you are taking a gamble that the sale price will equal the price of the renovations plus your profit margin. Most property grows in value over time, but not all sectors of the market grow at the same rate.  
If there isn’t sufficient demand for your style and location of property, you may not make enough money to cover the entry and exit costs, outstanding loan balance and renovation costs, let alone make a profit. If you do make money on the transaction and you sell the property, you will also be liable for capital gains tax. It’s like taking two steps forward and one back.  
I am not saying that buying to renovate and sell is a poor strategy in itself. It can be highly successful, but only if the capital growth outstrips the buying, holding and selling costs. Even in locations where capital growth is strongest, this may take several years. And capital growth compounds, so the longer you hold the asset, the greater the amount of growth. If you sell the property as soon as the renovations are complete, you may not have allowed enough time for capital growth to take full effect — substantially reducing your potential profit.  
In other words, the substantial entry, exit and holding costs mean residential property should not be traded like shares, but held for the long-term (at least seven to 10 years) to ensure the capital growth justifies all the expenses you’ve incurred along the way.  
If a real estate agent is advertising a property as perfect for adding value, ask yourself whose interests they are promoting — yours or theirs? Remember, they stand to make a commission on selling the property for the previous owner, followed quickly by another commission on selling the property for you after it has been renovated.  
If you still believe that buying to renovate and selling quickly is the right strategy for you, make sure you calculate all the likely holding and transaction costs.  
Then, research the local market to determine the property’s likely selling price. Look at other properties in the area that have been renovated to the same standards as yours and sold in the last three months.  
It’s also important to factor in the cost of your time. How much you would have earned from your normal job if you weren’t at the property supervising or undertaking the renovations? And what about your leisure time? How much time will you spend away from your family and friends?  
For example, if the project is going to take up six months of your evenings and weekends when you would otherwise have spending time with loved ones, will the expected financial profit make that lost time worthwhile?  
If the holding, transaction and time costs add up to more than the property’s likely sale price, you may need to reconsider whether it’s worthwhile undertaking the project.    
Mark Armstrong is a director of <a href="https://www.ipropertyplan.com.au/">iProperty Plan</a>, which provides independent analysis and tailored advice to investors and home buyers.
       
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Property flipping: Is it really worth your time, effort and, most importantly, your money?

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Investor demand continued to grow in the latter stages of 2013 with the value of loans for investors jumping by 8.2% in October. That equates to $10.3 billion, the highest level on record. This increase is resulting in strength in the property market and will entice more investors back to the market. Investors traditionally want to ensure they get the timing right and do not want to be left behind. This means most investors will make their move once they are sure other investors are active.  
As investors continue their comeback to the market in 2014, it is important not to get too carried away and enter with a level head. Whether you’re a first-timer or seasoned campaigner, successful property investment is based on certain timeless principles.  
Here are six of the best:  
<ol start="1">
<li>
Horses for courses. Despite much of what you read and hear, no two properties work the same way. Commercial property is primarily income-producing, whilst residential property primarily generates capital growth. Some properties need substantial renovation to improve their resale value, whilst others have inherently high land values that do the job for you. Some properties (like B&amp;Bs) demand a lot of time and hands-on involvement, whilst others can be managed by a third party, enabling you to ‘set and forget’.
All these differences mean that the property which is right for you may not be the property which is right for someone else. Before you enter the market, it’s essential to consider your personal and financial circumstances and goals, your stage of life and the level of involvement you’re prepared to have.
</li>
</ol>
<ol start="2">
<li>
Strategise first, buy later. Decide what type of property is appropriate for your situation. Do you have a large enough working income to support the costs of owning an investment property? If so, a residential property that can provide capital growth may be the best bet. Do you need income to replace your wage or salary? In this case, a commercial property or commercial property trust may be more suitable.
Next, determine which entity is going to own it. There are several forms of ownership: individual, partnership, company, trust or self-managed superannuation fund. The tax office treats each form of ownership differently, so seek advice from your solicitor or accountant before you buy. If you have to change the form of ownership down the track, you could be up for thousands in additional stamp duty and/or capital gains tax.
</li>
</ol>
 
<ol start="3">
<li>
Get your finances in order. No matter which type of property you buy, the substantial entry and exit costs mean you must consider it a long-term proposition. It’s not just a case of having the funds to buy the property, but being able to fund the holding costs for at least seven to 10 years. Think ahead to possible changes in your circumstances (such as starting a family, becoming self-employed or retiring) that could affect you ability to hold the asset for the long term.
If you’re buying a new or near-new property and relying on claiming depreciation benefits to maximise your cashflow, remember that most depreciation occurs in the first five years. Once you’ve used up your depreciation allowance, you could be out of pocket unless you can find another source of income to fund the holding costs.
</li>
</ol>
<ol start="4">
<li>
BYO research. When you’re researching the local market, be wary of free advice. If someone is purporting to ‘advise’ you but being paid by the vendor, they’ll be accountable to the vendor, not to you.
Instead, do your own research by looking at reputable statistics from objective agencies, attending auctions in person and tracking auction results. If you need back-up, seek advice from professionals who don’t have a vested financial interest in steering you towards a certain course of action.
</li>
</ol>
<ol start="5">
<li>
Know your limit. You’re buying an investment property, not a home to live in. You don’t have to love it – or even like it. Leave your emotions at the front gate, set a limit based on your research and stick to it. If the bidding goes over your limit, drop out of the race. It’s one thing to buy well, but buying at all costs simply isn’t smart investing.
</li>
</ol>
<ol start="6">
<li>
Regular reviews. Cast a critical eye over your financing arrangements and property portfolio once a year to decide whether they’re still doing the required job. The finance market changes constantly, so you may be able to get a better deal with a different product, package or lender. Are your properties generating rental income and/or capital growth higher than the wider market? If they’re lagging behind Melbourne-wide or local median rental and property values, it may be time to consider selling.
</li>
</ol>
Mark Armstrong is a director of <a href="https://www.ipropertyplan.com.au/">iProperty Plan</a>, which provides independent analysis and tailored advice to investors and home buyers.
 
 
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Six things you need to know about investing in property

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The federal government’s National Rental Affordability Scheme (NRAS) is being used as a marketing tool to sell property. The scheme was introduced in 2008 and is designed to help meet the social need for affordable rental housing by encouraging investment in residential property through attractive tax incentives.
The scheme provides a substantial financial incentive of a minimum of $9,524 tax free per house annually to investors, who rent approved houses at 20% or more below current market rates to eligible tenants.
However, NRAS is not an investment scheme per se, it is a housing scheme. It aims to provide affordable accommodation and underpins the government’s drive to privatise public housing.
My concern with the scheme is the regulated choice investors have. Asset selection is limited to new approved developments in areas where there is a need for affordable housing. It aims to supply 50,000 new dwellings and because these are in defined areas where approval is granted there is a risk of clusters of NRAS properties throughout the market. This has the potential to cause oversupply issues down the track.
Further, these developments tend to be in areas where land is available at low cost, which is generally the case when there is limited demand in the area.  However, a key characteristic for capital growth is a high land value and limited supply.
The popularity of NRAS properties is growing as financial planners find ways to market the incentives and make money through their referrals and recommendations. Investors need to be aware that large kickbacks, of 5% to 10% of the purchase price, are being paid to the advisor who is making the recommendation to purchase, and that these kick-backs are simply built into the purchase price of the investment.
I have come across a number of people promoting these schemes and the alarm bells have been ringing. In one example an investor was offered a unit backed by the scheme for $356,000. On paper the investment cash flows looked great but when subjected to greater scrutiny, the property was found to have a market value of closer to $300,000.
Investment schemes that are heavily marketed off the back of cash incentives and tax benefits are nothing new. In recent times we have seen a number of investments that have been sold with a focus on upfront benefits, only to be a disaster down the track.
In the early 2000s a wave of off the plan properties were sold around the country. The lure of stamp duty savings and depreciation benefits were used to attract buyers. Fast forward five years and many of these properties have been re-sold at a loss. In one example a <a target="_blank" href="/news">Docklands</a> property was purchased in 2001 for $582,000, only to be sold in 2006 for $455,000.
Further, the investment time bombs are not limited to the property market. In 2008 many investors got stung investing in agribusiness managed investment schemes such as Timbercorp and Great Sothern. Once again these investments were sold with the enticement of upfront tax deductions. However, when the dust settled, the Australian Securities and Investments Commission (ASIC) was reported to have identified issues with inadequate disclosure of information to potential investors and poor performance of the investments. Once again these investments were sold through financial planning channels where commissions of around 10% were paid.
It is important to point out I am not criticizing the NRAS scheme itself, however investors need to understand the true motivations of the scheme. They should be wary of the marketing machine that uses the scheme to make an investment product look good.
Upfront cash benefits are great but they must be viewed as a bonus. The quality of an asset should be assessed in isolation of any incentives.  If the investment asset does not grow in value, or worse has the potential to lose money, then why bother? In some cases keeping your money and just going on a nice holiday is a better option.
Mark Armstrong and Xavier Perronnet are directors of <a href="https://www.ipropertyplan.com.au/">iProperty Plan</a>, which provides independent analysis and tailored advice to investors and home buyers.
<hr>
RELATED ARTICLES:
I'd rather stick a fork in my eye than buy NRAS: Todd Hunter 
<a target="_blank" href="https://www.propertyobserver.com.au/trends/my-response-to-nras-naysayers-adrian-jenkins/2013091264998?utm_source=po&amp;utm_medium=aida&amp;utm_campaign=news">My response to NRAS naysayers: Adrian Jenkins</a>
Readers respond in defence of NRAS
<hr>
Note: The byline for this article has been updated since publication to reflect the co-authorship.
This article was originally published on Property Observer in October 2012.
 
 
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The NRAS nightmare: It's a housing scheme, not one for investors

<a href="https://www.apartments.com.au/developments/broadbeach-qld-4218">Broadbeach</a> offers plenty of reasons to live vertically, but moving from a substantial family home into an apartment can expose the compromises of high-density living. Privacy, room for guests and usable living space tend to matter more when an apartment is intended as a permanent home rather than an occasional coastal base.

A typical residential floor at <a href="https://www.apartments.com.au/new-apartments/the-eveleigh-broadbeach-7-9-surf-parade-broadbeach-qld-4218">The Eveleigh</a>, on Surf Parade,&nbsp;contains just four apartments. The 94-residence development by <a href="https://www.apartments.com.au/developers/hirsch-faigen">Hirsch &amp; Faigen</a> is predominantly made up of expansive three-bedroom homes, with a limited collection of half-floor penthouses above.

Across the apartment floors, <a href="https://www.apartments.com.au/architects/rothelowman">Rothelowman</a> has used the relatively limited number of residences to give each home greater access to natural light and outlook. Living spaces extend towards full-height glazing, while a series of bay windows frame selected views across the Pacific Ocean, city and hinterland rather than treating the building edge as a continuous wall of glass.

&nbsp;

[smartcode_project:default project_id=149670 project_image_fid=360965]

“The apartment floors deliver a collection of homes that embrace controlled outlook via a series of bay windows deliberately framing moments of view,” Rothelowman Director Kim Lowman said.

From outside, those projecting forms contribute to the tower’s faceted profile. Strong horizontal and vertical elements establish its proportions, while the changing position of the sun alters the light, shadow and reflection across the façade throughout the day.

The same attention moves inside the apartments, where the material palette combines warm timber, natural stone, metallic detailing and softer curved forms. Kitchens sit within the main living zone, with stone island benches, integrated joinery and European appliances, before the living areas extend towards the glazing and the outlook.

&nbsp;

[smartcode_project:default project_id=149670 project_image_fid=360981]

Three genuine bedrooms provide room to accommodate family and guests, while two secure car spaces and storage address some of the practical considerations that can become more noticeable when moving from a larger home. Feedback from the display suite has centred on the warmth and restraint of the interiors, with buyers commenting that the residences feel like homes rather than conventional coastal apartments.

A limited collection of half-floor penthouses occupies the upper levels, increasing the scale of the living spaces and adding private balconies and elevated finishes. From this position, the outlook extends between the ocean and hinterland.

Outside the private residences, The Eveleigh separates its shared spaces between the podium and rooftop. The podium is centred on wellness, with subtropical landscaping surrounding a swimming pool and pool terrace, yoga garden, private gymnasium, sauna and hot and cold plunge facilities. Landscaped retreats and pavilions provide additional places to sit away from the main recreation areas.

&nbsp;

[smartcode_project:default project_id=149670 project_image_fid=360966]

Higher in the building, a rooftop pavilion and private dining suite sit alongside resident lounge, barbecue and outdoor dining areas, opening towards panoramic views across the ocean, city and hinterland.

“Buyers are no longer just looking for an apartment, but a lifestyle where they can relax, reset, and enjoy a balanced way of living,” Hirsch &amp; Faigen Director of Sales Matt George said.

Interest to date has come from established owner-occupiers and interstate lifestyle purchasers, including buyers planning a future move to the Gold Coast. Many are coming from larger homes and want to reduce ongoing maintenance without giving up space for family and guests, privacy, two car spaces or the ability to entertain at home.

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[smartcode_project:default project_id=149670 project_image_fid=360969]

Much of that daily life can also take place beyond the building without requiring a drive. Kurrawa Beach and Pratten Park are an easy walk from Surf Parade, while Pacific Fair, Oracle Boulevard, The Oasis, restaurants, cafés, entertainment and public transport are also within walking distance.

The Eveleigh is Hirsch &amp; Faigen's fourth Gold Coast development since entering the market in 2021, following The Hemingway at Palm Beach, The Emerson at Kirra and Yves at Mermaid Beach. Each of the preceding projects sold out before completion.

“Broadbeach had been on our radar throughout our time operating on the Gold Coast,” the developer said. “Following our projects in Palm Beach, Kirra and Mermaid Beach, Broadbeach represented the natural next step for the business.”

The Surf Parade site brought together proximity to the beach, protected coastal outlooks and walkability to dining, shopping and recreation. Hirsch &amp; Faigen also identified the street as an emerging premium residential address, with enough separation from Broadbeach's busier destinations to retain a quieter environment at home.

The Eveleigh is now under construction by Maxcon, with completion forecast for mid-2028. Three-bedroom residences are currently available from $2.87 million.

[smartcode_project_cta:default project_id=149670]

Joel Robinson

The Eveleigh brings house-like apartments to Broadbeach

A long-stalled Campbelltown development site is back in play, with new plans for 139 apartments set to supersede a mixed-use scheme approved almost a decade ago but never built.

The new proposal for 28 Cordeaux Street would deliver 116 market and 23 affordable apartments in a part 14-storey building, bringing a substantial new project into a Campbelltown market where new apartment supply remains limited.

Plans have been filed over the 3,092 sqm corner site at Moore-Oxley Street, around 600 metres from Campbelltown Railway Station and the city-centre retail core.

The site already carries a mixed-use residential approval dating to 2016. Doroch Architects has now been engaged on a larger replacement scheme, which is progressing as a State Significant Development Application following a Housing Delivery Authority determination in August 2025.

The apartment mix comprises 39 one-bedroom, 72 two-bedroom and 28 three-bedroom residences. Two-bedroom apartments make up just over half of the project, while three-bedroom homes account for 20 per cent.

<img alt="First look: New 139-apartment plans revive long-stalled Campbelltown city centre site" data-entity-type="file" data-entity-uuid="136dd5b9-3791-4da6-9e31-76f533f5b4de" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Campbelltown%20da2.png?VersionId=LgOSy9nwf5u.MGswBBwaGGxuX8QpHSl_" />

Of the 139 apartments, 23 will be delivered as affordable housing under the in-fill affordable housing provisions of the Housing SEPP. The affordable component represents 15 per cent of the residential gross floor area and will be managed by a registered Community Housing Provider.

Doroch has sought to break the scale of the building into two distinct elements, with a masonry podium of around four storeys establishing the street edge before the residential tower steps back above.

The corner position has shaped that approach. Cordeaux Street faces toward the commercial and civic centre, while Moore-Oxley Street leads into the lower-scale residential neighbourhood to the south, and the design verification report describes the site as "bridging the commercial core to the north and established residential areas to the south."

The podium will be expressed predominantly in face brick, while the upper levels shift to brushed and grooved concrete cladding with darker metal detailing. Recessed sections, deep balcony edges and landscaping break down the upper form, with an approximately 11.8-metre setback to the northern boundary addressing the adjoining St Peters Anglican School.

<img alt="First look: New 139-apartment plans revive long-stalled Campbelltown city centre site" data-entity-type="file" data-entity-uuid="c8b3d2d3-c561-4bfc-a5d9-a68c0c10dac1" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Campbelltown%20da1.png?VersionId=AeAEyJU02Gk2k5noUj2StziCvdQ7fW4B" />

Campbelltown has been starved of new residential developments in the last decade.

The only other notable development set to come to market this year is ALAND's Queen Square, a mixed-use precinct on over two hectares that will comprise apartments above a vibrant ground-level retail and hospitality dining precinct.

First look: New 139-apartment plans revive long-stalled Campbelltown city centre site

First Look: Sherlock Construction pitches apartments for low-rise Deception Bay

Queensland builder-developer MAYD has revealed the first look at its major North Kirra beachfront development, lodging amended plans that reduce the number of apartments and increase the proportion of larger residences.

The project is planned across a substantial 4,742 sqm amalgamated site spanning seven lots at <a href="https://www.apartments.com.au/new-apartments/2-6-pacific-parade-bilinga-qld-4225">2-6 Pacific Parade</a> and 27-33 Golden Four Drive in Bilin​ga, directly opposite Nor​th Kirra Beach.

<a href="https://www.apartments.com.au/developers/mayd-group">MAYD</a> secured the site for $32.5 million in 2025, in what was one of the Gold Coast's largest property transactions of the year.

The development will be delivered across two stages, with the first stage carrying an estimated gross realisation value of around $360 million.

The latest amendments seek to reduce the overall apartment count and shift the project further toward the owner-occupier market, with larger residences designed for buyers wanting considerably more space than traditionally offered in a beachfront apartment.

The residential mix will include townhomes, oversized two-bedroom apartments, substantial three-bedroom residences and four-bedroom homes.

MAYD has appointed Cera Stribley to lead the architecture and interiors, with the Melbourne-based design practice drawing on the beachfront setting through a series of ocean-facing terraces and heavily landscaped balconies.

Strong horizontal forms and curved balconies will define the exterior, with subtropical landscaping integrated throughout the building to soften the built form and increase the connection between the residences and the beachfront.

The project will also include an extensive collection of resident wellness and lifestyle facilities, continuing the broader shift across the Gold Coast's luxury apartment market toward larger homes supported by resort-style amenity.

<img alt="MAYD" data-entity-type="file" data-entity-uuid="d1bcbb05-e659-4b47-8bd4-1e595315e2ad" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-27%20at%202.05.03%E2%80%AFPM.png?VersionId=jj0XEud1X1DuLt7_KyElhjMdZGOXmLHP" />

MAYD Founder Todd Mould said North Kirra was increasingly appealing to buyers attracted to the more established, lower-density character of the southern Gold Coast.

"North Kirra presents one of the most compelling luxury residential opportunities currently emerging in Australia, combining absolute beachfront with the character and authenticity that buyers are increasingly seeking, and the same sense of tight-knit community that defined Burleigh and Currumbin perhaps 10 or 15 years ago," Mould said.

"With Gold Coast Airport on its doorstep, it also offers a level of accessibility that broadens its appeal across almost every market demographic."

The project comes as the southern Gold Coast continues to attract an increasing share of high-end apartment development and buyer activity.

Kirra in particular has emerged as one of the region's more tightly held beachfront markets, with its relatively low-density character, established surf and hospitality scene and proximity to Gold Coast Airport differentiating it from the higher-density markets further north.

Mould said those characteristics had informed the approach MAYD and Cera Stribley had taken to the project.

"We've worked closely with Cera Stribley to create a vision that is deeply connected to its surroundings," he said.

"Inspired by the coastline itself, the architecture has been shaped around space, privacy and resort-style living, creating a collection of homes that reflects the next generation of luxury on the southern Gold Coast."

MOTIV Managing Director Carly Cottam, who has been appointed to market the project, said buyer attention had continued to move south along the Gold Coast.

"Purchasers who may once have defaulted to Broadbeach, Main Beach or Surfers Paradise are increasingly recognising the value of a genuine beachfront location that offers lower density, strong amenity and a more established sense of community," Cottam said.

"Kirra has a powerful combination of growing demand and genuine scarcity. Beachfront supply is inherently constrained, the area remains relatively low density, and buyers are increasingly placing a premium on locations that feel established, uncrowded and authentic rather than heavily developed."

Cottam said the proximity to Gold Coast Airport was also proving increasingly important for interstate and second-home buyers.

"Being minutes from Gold Coast Airport makes it particularly compelling for interstate buyers, frequent travellers and second-home purchasers who can access an authentic coastal lifestyle almost immediately after stepping off a flight."

The acquisition takes MAYD's active development portfolio to more than $500 million, with the North Kirra project representing one of its largest undertakings to date.

MAYD is targeting an early 2027 launch.

First look at MAYD's North Kirra mixed-use precinct

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Castle Hill, the longtime hub of the Hills District, has been one of the major beneficiaries of Sydney's Metro expansion, with improved connectivity helping drive continued population growth, development and buyer demand across the Hills District.

But despite that growth, the suburb has seen relatively few major new apartment projects brought to market over the past 18 months.

Hills District developer Reve Group is looking to fill that gap with <a href="https://www.apartments.com.au/new-apartments/nova-r-ve-castle-hill-2-garthowen-crescent-castle-hill-nsw-2154">Nova Rêve</a>, a major new mixed-use precinct on the corner of Garthowen Crescent and Old Castle Hill Road, a short walk from Castle Hill Metro Station and Castle Towers.

[smartcode_project:default project_id=152737 project_image_fid=377679]

The project will comprise three residential towers alongside a hotel, restaurants, cafes and a skybar, more than 1,600 sqm of ground-floor retail and almost an acre of landscaped gardens.

It represents the largest project undertaken by Reve Group, the development arm of the Kassis family, which has been building across the Hills District for more than 30 years through Kassis Homes.

[smartcode_project:default project_id=152737 project_image_fid=377675]

Nova Rêve also represents a significant step up from the family's first apartment development, Grand Rêve, which was delivered nearby on Garthowen Crescent.

Grand Rêve introduced larger, house-like apartment layouts and premium inclusions including Wolf and Sub-Zero appliances to the Castle Hill market.

Nova Rêve takes that approach to a precinct scale, combining the residential component with hospitality, retail and substantial public and resident landscaping.

[smartcode_project:default project_id=152737 project_image_fid=377685]

Reve Group Managing Director Sam Kassis said the project reflected the family's three decades of building in the Hills, which has evolved from trophy homes on quarter-acre blocks to larger-scale apartment development.

"Grand Rêve was our first apartment project here and it showed us what this pocket of Castle Hill could be. Nova Rêve is the refinement of that idea: not just apartments, but a place the whole suburb can use," Kassis said.

A key part of that approach is the hotel, which has been designed to operate as an amenity for the wider Castle Hill community rather than solely hotel guests.

It will include restaurants, cafes, skybars and all-day dining, alongside conference and event facilities catering to business functions, community groups and private events.

At ground level, more than 1,600 sqm of shops and cafes will open onto the surrounding streets and landscaped areas.

Almost an acre of gardens designed by Land and Form Studios will run through the precinct, incorporating pathways, seating, barbecue areas and children's play spaces.

[smartcode_project:default project_id=152737 project_image_fid=377680]

Reve Group's Romio Georges said creating an active ground plane had been central to the planning of Nova Rêve.

"There are gardens with pathways, barbecues, seating and play areas, shops and cafes opening onto the street, and a hotel with restaurants and a skybar that anyone in Castle Hill can walk into," Georges said.

The project's elevated position on one of Sydney's highest ridgelines will also provide apartments with outlooks toward the Sydney skyline, surrounding parkland and the Blue Mountains.

More than 80 per cent of the apartments will occupy corner positions, with Turner responsible for both the architecture and interiors.

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[smartcode_project_cta:default project_id=152737]

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Mark Armstrong

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