Welcome to my
December 2016 newsletter
Opportunities are plentiful for first home buyers, next home buyers, refinancers and property investors right now. We’re here to help you make the most of low interest rates and the excellent spring property buying conditions, so please give us a call to chat about your plans.
We’ll help you get the right home loan for your needs, with the most competitive interest rate available for you from Australia’s leading lenders. Christmas is also approaching fast and if you’re looking to buy a big ticket item for yourself or your family, we’ll be happy to help you with your finance needs for that too, so please give us a call today.
Or refer a friend - remember the great gift card offer!
Great Car Dealer Finance? Really...
One word - Subvention!
In the lead up to Christmas car dealers are keen to clear stock. With so many offers being promoted combined with the emotion of that new car feeling, clients can become confused by the choice and on occasion enter inappropriate finance arrangements. Some key areas to consider when you are offered “dealer finance”.
0% or low interest rate car finance promotions
The 0% or low interest rates are offered through a technique known as “subvention”. This allows the artificial reduction of the interest rates they promote. The car dealers finance arm will still charge their standard rate to a client but the difference between this and the promoted rate is paid by the car dealer. This comes from their margin on the sale of the vehicle. This margin is obtained by selling the vehicle for the full retail price (or more). To get the low rate, they will not allow any significant bargaining or discount on the sale price – which is normally available. We recommend negotiating the price of the car independent of the finance. Paying less for the vehicle and financing with a traditional lender will generally lead to cost savings
Are finance terms appropriate for your circumstances / tax effective?
Some products offered may lock you into a finance term which does not suit your needs in line with kilometres to be travelled, depreciation or usual vehicle turnover. The finance structure may be inappropriate and include a high balloon/residual value which results in lower monthly repayments for cash flow, but due to depreciation, you may end up owing money at the end of the term after selling the vehicle (negative equity). The finance product offered by the dealership may not be the most appropriate for tax purposes – we encourage you to seek tax advice prior to purchase
Source independent quotes
Source objective finance quotes independently of the dealership. We have access to a wide choice of lenders in the vehicle market. We can provide competitive finance quotes over appropriate structures relevant to your business and vehicle usage.
5 Ways to make settlement day stress-free
Next to your wedding day perhaps, settlement day on your first home is likely to be the most exciting and stressful day of your life.
It not only brings an end to the hard work and perseverance it takes to save your deposit and find the home of your dreams, it marks the beginning of your new life and your very own happily ever after. But how can you stop yourself from biting your nails to the quick on the day the vendor hands over the keys? Here are 5 tips to make your settlement day go smoothly.
Tip #1. Get a good conveyancing solicitor.
Property settlement is the legal process of transferring ownership of a property. In order to make it go as sweetly as possible, you should engage the services of a reputable conveyancing solicitor well ahead of time and ask them to explain the regulations and procedures required by the government in your state.
During the settlement process, your conveyancing solicitor will complete the following tasks:
Inspect the sales contract and ensure enough time has been allowed between the finance approval date and settlement date to complete the paperwork.
Prepare the documentation you need to sign – transfer of ownership, transfer of land, stamp duty application, authority to proceed, etc.
Ensure that all the paperwork is correctly completed, verified and filed by both parties.
Check that any existing debts or mortgages against the property are paid off.
Perform a title search and check everything is correct with the certificate of title for the property.
Register the transaction with all of the appropriate authorities.
Help us to co-ordinate the necessary lender property valuation required before we can get your final finance approval.
Work with us to ensure the cheques are ready on the day and the lender and other interested parties are present at the exchange.
Tip #2. Check the details in your sales contract carefully.
The sales contract you sign when you agree to purchase the property is a wealth of information and very important to settlement day. It’s a good idea to get your conveyancing solicitor to check it before you sign or put down your deposit so that you are sure it provides all of the required information.
Your sales contract should outline all of the conditions of the sale, what is included in the sale, what actions are required to complete the sale, the schedule for completing these actions and who is responsible for completing them. If you show your sales contract to your conveyancing solicitor before you sign it, you can ask questions about anything you don’t understand.
Tip #3. Get your finance in place before you sign the sales contract.
Settlement day is the big day when your mortgage comes into effect and your chosen lender pays the money to the vendor. To ensure your settlement day goes according to plan, it’s vitally important to get the timing right on this transfer of funds.
During busy periods, it can take several weeks for a home loan to be approved by some lenders. If you don’t want to limit your choices to the few lenders who are able get your loan through according to the timing on your sales contract, then it’s a good idea to talk with us and check the turn-around time a lender will need to process your loan before you sign the sales contract, so you can make sure it allows enough time.
You should also bear in mind that any other government fees, charges and duties must also be paid on settlement day. Just ask us and we’ll help you calculate these costs.
Tip #4. Get insurance and do a property inspection.
A lot can happen to a property in the time between signing the sales contract and collecting the keys. It is likely the property will be vacant during this time and to ensure there are no break-ins, thefts, storm damage or worse, you should include a clause in the sales contract allowing you to inspect the property just prior to settlement day to see for yourself that everything is still in good order.
To make sure you’re fully covered for any insurable event, it is also a good idea to take out insurance on the property when you sign the sales contract. It is not a good idea to trust the vendor to keep the property fully insured until settlement day. Insuring it yourself could save you money and trouble if something should go wrong, so don’t forget to ask us if you need help organising some cover.
Tip #5. Set your moving in date a few days after settlement day.
Delays can happen on settlement day, no matter how carefully you plan. People can miss meetings or take the day off sick, cheques can be held up, even the weather has been known to throw up unexpected obstacles to make completion impossible on the set date.
We recommend that on settlement day, you find a relaxing place to wait for the news that settlement has been successfully completed and to receive the keys. If you plan to move into your dream home a day or two later, you’ll have the time to sit back and enjoy the experience of becoming a new home owner before you need to do the heavy lifting required to actually get your stuff in there and start living happily ever after.
As your mortgage and finance broker, we’re here to help you make sure that you can complete the purchase of your new home with as little hassle and stress as possible. Ask us to help you get pre-approval on your home loan, and if you need a referral to a good conveyancer, we’ll be happy to help with that too.
8 tips for investing in interstate property!
Success in the property investment game relies on your ability to locate and purchase exactly the right property for your budget and buying strategy.
If you live and work in one of Australia’s major capital cities, you are probably finding this task increasingly difficult in your local market as both prices and competition continue to increase.
The answer may be to look further afield. Australia is made up of many different property markets which work together to provide property investors with a full range of investment choices. And diversifying your assets across interstate markets could help you to minimise your risks and maximise your capital gain and income potential. Here are eight tips for making successful interstate property investments to help you build wealth for your future.
1. Do your research.
Whether you’re investing interstate or locally, thorough research is vitally important. You need to become fully familiar with the market you buy into to be confident about your purchasing decisions and avoid expensive mistakes. Your research should cover four basic steps:
Step 1: If you are considering investing interstate, start by researching all the markets across Australia to find which of them provide areas with properties that generally meet your budget and buying strategy, then compare these with each other until you have just a few that you find attractive.
Step 2: Once you have located an interstate market that may be suitable for your investment, research it carefully to identify a general location within that market that meets both your affordability level, rental yield and capital growth objectives.
Step 3: Research the streets and properties within the area you have identified to pinpoint an opportunity to make your property purchase. If you need help formulating a buying strategy, call us for a chat.
Step 4: Research the individual property you select very carefully before you put down a deposit or go to auction. Get building and pest inspection reports together with a comprehensive condition report so you can make an accurate projection of your costs of ownership, including maintenance planning and potential depreciation tax deductions.
2. Buy with your head and not your heart.
Don’t dismiss an interstate location simply because you wouldn’t want to live there yourself. Some investors also make the mistake of choosing a property investment location because it is their favourite holiday destination or somewhere they’d potentially like to retire one day. Always remember that choosing an investment property is a business decision and you should base your decision on potential investment returns, not on personal preferences. To choose a profitable location for your property investment, always focus on the numbers and research data.
3. Visit the location.
Travelling interstate to view investment opportunities may be inconvenient, but no matter what you may hear from other investors, buying a property sight unseen could be risky. Take the time and effort to at least visit the location. You may be able to claim the travel costs as a tax deduction (but talk to your accountant first). If you can’t stay there long enough to locate, inspect and buy a property yourself, then consider interviewing a local buyer’s agent while you are on your initial visit. This will allow you to quickly engage a trustworthy representative to help you in case you can’t get back there yourself when you find the right opportunity.
4. Partner with a good property manager.
Whilst you are visiting the interstate location, it is also a good idea to identify a good property manager in the area and engage their services as well. Managing a property from interstate is not easy and may cost more than you anticipate in travel and expenses. Property management costs are usually tax deductible for most property investors, so ask your accountant if the numbers stack up to allow for a property management company to be included in your budget for the interstate property you are interested in purchasing.
5. Line up a local conveyancer.
Whilst it is possible to use your regular conveyancer or solicitor to help you purchase a property interstate, the costs may be higher than using a conveyancer that is located near to the interstate property you wish to purchase as their expenses to complete the process may be greater. Conveyancing rules, regulations and practices also differ from state to state and your usual conveyancer may be unfamiliar with these differences. Ask us if you need assistance locating an interstate conveyancer.
6. Note the different legal requirements.
Each state has different legal requirements for the purchase and transfer of properties. If you are buying interstate you should talk with a qualified conveyancer or solicitor to make yourself aware of differences in:
Property titles and transfer requirements.
Local and national planning controls.
Rules regarding the purchase of property for foreign investors (if you are from overseas and not a permanent resident).
Terms and conditions required for sales contracts.
Terms and conditions imposed on auctions.
Cooling off periods.
Permitted uses, zoning certificates and heritage overlays.
Body corporate rules and constraints.
Rental and tenancy rules and agreements.
Rules and regulations when buying off the plan.
7. Research the costs.
Stamp duties, land taxes and other government costs like transfer fees vary from state to state. Council rates can also be widely different from one location to another and you may be surprised by how much. When purchasing interstate, it pays to research these costs well ahead of time so that you can factor them into your budget and avoid funding or cash flow difficulties.
8. Talk with your mortgage broker early.
Good credit advice when investing in property is critical to your success as an investor. Getting pre-approval on a loan for a purchase in a specific location is not only a good idea for budgeting purposes, it will make you aware of any postcode or location restrictions imposed by the lender on the area you are considering. Some lenders impose these restrictions on hundreds of locations around the country to minimise their risk of loss. Where you buy can have a significant effect on how much money a lender is prepared to let you borrow, so it pays to talk to us early about your purchasing plans.
We’re here to help you get things organised if you’re planning to invest in property interstate. Just pick up the phone and give us a call to discuss your plans, we’ll be happy to help you get the ball rolling.
How to buy & setup a luxury holiday rental.
Summer is approaching fast and everyone is looking on AirB&B or Stayz.com for the perfect house to spend the holidays.
As you scroll through the listings and your eye wanders across all the gorgeous homes in Australia’s most idyllic holiday spots, you’ll also notice the breathtaking prices they command during the peak season. If you’re a property investor, you may find those high price tags make it very hard to resist the idea of investing in a luxury holiday rental property yourself. But is it really going to be a good money spinner?
Three things make a profitable holiday rental property. The right location, the right property and a luxurious fit out that brings your guests back time and time again. So what do you need to do to get set up for a high-yield holiday rental investment?
Choose the right location.
Yes, it is easy to make big dollars from a property by the sea in the height of summer, but you need to look at the total potential rental return across the entire year. Making a decent profit from a holiday rental investment requires a location that will attract holidaymakers all year round, not just in summer.
Ask yourself: what does the location have going for it as a holiday destination year round? Try and choose a location that offers people something special. Australians love the great outdoors and if your investment property is in a location of great natural beauty, it’s likely to be a winner.
A destination that is under three hour’s drive from the nearest capital city and international airport will not only attract local guests, it will attract people from interstate and maybe even overseas. If there is also a regional airport nearby, then all the better.
Choose the right property.
When choosing a property for a holiday rental investment, the first thing you need to take into consideration is the property’s accessibility to the local attractions and tourist hot spots. For example, if you’re investing in a property at a beachside location and want a maximum rental return on your investment, make sure it’s actually close to the beach and not on the other side of town near the highway entrance and the take-away food drive-thru.
Be careful to choose a property that offers a resort-style atmosphere. Avoid anything that is too suburban or ordinary in favour of a property that offers something different, like good views and wide open spaces.
Consider a property that offers plenty of room inside, with at least one sitting room separate from the kitchen living area. It should also have a separate laundry and wet area and of course, plenty of bedrooms. For a luxury holiday rental, a decent outdoor area is a must and a swimming pool will be a major attraction if you can manage it.
Set your property up to attract high paying guests.
Setting up your holiday rental property so that is practical and hard wearing is a good idea, but the trick is to do it in a way that looks luxurious, stylish and expensive so you can attract the highest paying guests. If you want to make the most profit from your investment, you need to make your place look absolutely fantastic in your online advertising photos and make sure it excites and delights your guests when they walk through the door.
Holidaymakers paying top dollar expect better levels of comfort and luxury in a holiday house rental than they do from their own homes. They will expect to find a good dishwasher, a great cooker and a large fridge in the kitchen at the very least. A modern flat screen TV and Wi-Fi is a must.
Your guests will also expect a king-or queen sized bed in the master bedroom and at least one other room with a double bed. Flexible sleeping options that will help them reduce costs by sharing with more people or another family are also a good idea.
Keep the decor simple, stylish and eye-catching – ask a local decorator for advice if necessary and try to create a look that compliments the location. Don’t be tempted to use your holiday rental property as a depository for all the old furniture the family doesn’t want. Red flags are outdated TVs, daggy curtains, garish duvet covers, cabinets with trinkets, clunky second-hand lounge suites, too many ornaments, ugly brown wood shelves, nanna-style light fittings, and horror of horrors, industrial or pub style wall-to-wall carpet.
Combining tourism and hospitality with your property investment can be a great idea if you do it right. If you’re considering buying an investment property in a holiday hot spot, let us know and we’ll help you crunch the numbers to see if it will be a good investment for you. Getting your finance right can make a big difference to your bottom line when investing in any kind property, so call us today to discuss your plans.