So here we are. Interest rates are at record lows and we have an oversupply of off-the-plan developments in key capital cities such as Sydney, Melbourne and Brisbane. It’s a combination fraught for danger for overly ambitious and inexperienced property investors.
In recent months we’ve had media reports about several developers who were enacting sunset clauses leaving buyers high and dry. Here, developers essentially terminate purchasing contracts and hand back the 10% deposit on a technicality which is at their discretion.
We’ve all read about the get rich quick stories where property investors build a large portfolio in a short period of time by using equity in one property to purchase another one and so on.
On the surface it all looks pretty good but often there’s not enough equity in the overall portfolio to keep it afloat if any undesirable outcomes occur such as an increase in interest rates, long tenant vacancy periods or a drop in market values
With the end of the financial year fast approaching it’s a good time to sit back and analyse your financial position. Investors should be questioning their property portfolio to make sure it’s performing at its best. Regardless of how many properties you own you need to treat them all like a business and undertake regular reviews. Ideally these reviews should be done every six months but no less than annually.
I heard this important question a long time ago. It really had some cut through with me and I have been sharing it with people ever since.
In my experience most people would rather look rich. They prefer to travel overseas, drive flashy cars, eat out at fancy restaurants, wear designer clothes… and then bitch and complain about how hard it is to get into the property market. Now there’s no question that it’s hard to get in but it’s always been hard to enter the market.
Before you buy a residential investment property part of your research should always be in considering who is going to rent your new investment property. If you match the property to the target tenants you’re less likely to have vacancies or need to discount the rent to get someone in. Ask yourself, who is the most likely type of tenant to rent properties in this area, what features do they want and how much can they afford to pay? Do they require parking or not?
Some suburbs have better potential for capital growth than others. So when I'm buying an investment property, I'm always looking for suburbs with “upside”.
By upside I mean factors that will lead to above average capital growth. I look for something that's going to make properties in that suburb become more desirable, and thus more valuable, in the next five to 10 years.
Proposed changes recently announced by the Federal Treasurer will see anyone under the age of 49 this year not able to retire until they are 70. And the reality is that over the next twenty years or so the goal posts could be moved out even further.
I don’t know about you but I don’t plan on ever fully retiring as long as I am enjoying what I do. But I do want to have the choice to retire or partially retire much earlier than 70 if I’d like to.
It’s good news for Australian home buyers and investors who are looking to secure their own financial future, with the Federal Government announcing an inquiry into its foreign residential real estate investment policy.
After six years of talking and writing about the implications of this policy including writing to the PM in January I’m delighted to see it being formally reviewed.
I'm not against foreign investment and I'm not against the property market increasing in value. What I don't agree with is the current 'Foreign Investment Policy Settings' in regards to property acquisition by non residents or non Australian citizens.
The two main concerns I have with the current policy are that it's inflationary and that it will create a generation of renters which will result in other knock on social issues down the track.
