Category Archives: Investing

Selling in winter: everything you need to know

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Year after year, we encounter home owners who are hesitant to put their property on the market during winter due to the common misconception that the market cools down just as much as the temperature. Whilst birds may flock South for the winter, buyers do not!

With the vast majority of home owners being under the impression that the warmer months are the best time to sell your property, what we tend to see is an oversupply of property during summer and spring which means one thing: increased competition. By taking advantage of the fact there are typically less properties for sale during winter, you are inevitably going to capture a larger pool of buyers.

If you are worried that the cold weather and rainy days will keep the buyers away, fear not. A wintery day is not enough to keep serious buyers away which leads us to our next point – quality over quantity. You can be fairly certain that the prospective buyers who do attend your open for inspection on a cold, grizzly day are genuinely motivated and more likely to be in the decision making phase of their property journey.

When selling in winter, it is important that you take presentation into consideration. Creating an atmosphere which is warm, cozy and inviting is highly beneficial during the cooler months and allows you to showcase the feel of your home. Our top tips for holding an open for inspection during winter:

  1. Make up for the lack of natural light – open all window coverings and switch your light globes over to a warm tone and ensure all lights and lamps are working
  2. Turn the heating on well ahead of your inspection
  3. Set the scene and make it cozy – throw rugs, cushions and candles are great tools to create ambiance
  4. Leave spare towels near the front and back doors for those wet shoes trapesing in and out unless buyers are required to remove their footwear
  5. Provide an umbrella stand next to the front door
  6. Keep the gardens as tidy as possible, especially in relation to loose leaves
  7. Be prepared – unless weather conditions are unsafe, we never recommend cancelling an inspection. Remember our earlier point about serious buyers!
  8. Tackle any maintenance issues before putting your property on the market or as they arise, cold weather and rain are more likely to draw attention to damp odors or water damage

 

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6 tips to help you find the right real estate agent for you

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Whether it’s your family home or an investment property, making the decision to sell your house – your  most valuable asset  – is an overwhelming decision.  What comes next is just as tough. Naturally, finding the right real estate agent to enlist can be daunting.

Stress less, we have a few simple tips to help you find the right real estate agent for you.

  1. Research at least 3 agents to appraise your property and make sure you stick with your decision to meet all 3 agents before signing any agreements.

2. Before you can decide whether a local agent is the best agent, understand that what you see isn’t always what you get, perception is everything! The agent who drops the most flyers, has plenty of “home open this way” signs out on the weekend or takes over your newsfeed isn’t necessarily the ‘best’ agent. Base your research around the history of the agents you are considering. You need to look at average days on market, sales prices and sales volume in addition to verified customer reviews. Realestate.com.au, reiwa.com.au and ratemyagent.com.au are great sources for accurate information and reviews.

3. As your list begins to get smaller, it’s time to head out and about on the weekend! Attend home opens being held by the agents you are considering meeting with and assess their interactions with you and other prospective buyers. How an agent treats you in someone else’s open home is exactly how they are going to treat the potential buyers in yours (don’t mention you are there to scope the agent out)! You are looking for an agent who is energetic, engaging and educated about the property in question. The agent playing candy crush in the kitchen who casually slips you a brochure or the agent who quite literally follows you around and makes you feel uncomfortable is definitely not the agent for you.

4. During the initial appraisal meeting, these are the things you want to assess or discuss:

-Did the agent spend more time talking about themselves or finding out about your needs and your plans for the future?

-Did the agent propose an actual selling strategy or simply tell you what they believe your home is worth? In order to get the best possible price in the shortest possible time frame, there needs to be a detailed plan. Putting the property on the internet and placing a signboard out the front is not a plan.

-Did the agent propose a marketing strategy designed to proactively target your buyer demographic and get your property in front of the right people? E.g targeted social media posts, advertising overseas (where necessary), targeting investors or young families within a school catchment.

-Ask for some marketing examples from previous property campaigns to see how it appeals to you and if you would be proud to see your home presented in a similar light.

-Even if the agent is not a local agent, did the agent demonstrate knowledge of the area, local attractions and market trends?

-Did the agent provide you with case studies of past scenarios similar to your own?

-Make sure you find out if the agent is part of a team (e.g do they have a PA, sales cadet or buyers agent) and if so, find out who it is you will be dealing with primarily and who will be conducting your home opens. There is nothing wrong with being part of a team however, the last thing you want is to find an agent you love only to realise you are constantly dealing with someone else over the most important issues.

5. After the appraisals, weigh up all of the above in conjunction with how the agent made you feel. It may sound silly but this person is about to become a large part of your life for at least 3 months and you need to feel comfortable and confident.

6. The money! We can’t stress this enough – the agent who appraised your house for the highest figure or quoted the lowest fee should not necessarily be the agent you enlist. Educate yourself on the local market, look at recent comparable sales (try not to focus on what houses are currently listed for, a “for sale” price can be very different to a “sold” price) and quite often, you get what you pay for! An agent with a higher fee who has demonstrated the ability to work in your best interests and get you the best possible sale price could actually see you walk away with more money in your back pocket than the cheapest agent.

By doing your research and weighing up all of the information presented to you, you’ll be in good stead to make the best possible decision.

TOP TIPS TO GET YOUR BOND BACK

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Whether you’ve had a bad experience in the past or you’ve heard horror stories from others, it’s safe to say the prospect of losing your bond (or even a portion of it) can be fairly stressful. Stress less, we have a few simple tips to make sure you’re well prepared for your final bond inspection.

Funnily enough, making sure you get your bond back actually begins at the commencement of your tenancy. When you receive your Property Condition Report (PCR), it’s imperative you go over it with a fine tooth comb and make note of any indiscrepancies and photograph every single crack, dent, chip or other defect which may have been missed in the PCR. It’s also important you pay special attention to the gardens (unless of course you’re in an apartment or villa) and make sure their current state is well documented. It may sound tedious but it can save you in the long run.

Throughout the duration of your tenancy, make sure you report any issues as they arise. Not only can some issues be mitigated if caught early, you wouldn’t want to leave broken window coverings until you move out as things like that can be taken out of your bond.

 

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It may sound silly – but clean as you go! It’s a lot easier to remove soap scum or a little stain as things like that arise than it is after a period of build-up. Similarly, if the property you are renting does have gardens, keep on top of them! Bringing dead grass back to life or pulling months’ worth of weeds in one go is no fun.

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Understand the difference between normal wear and tear and damage to the property. We understand normal wear and tear occurs, after all, the property is being lived in but there is a difference between flaking paint and worn out carpets vs that GHD burn on the laminate benchtop and peeling paint from sticky hooks that never should have been hung.

Be prepared! If you aren’t planning on hiring a professional for a full vacate clean, give yourself adequate time prior to your vacate date to both pack and clean. If you do hire a professional, make sure you check their work before signing off. Don’t forget to book in your professional carpet clean (and pet fumigation where necessary), we also recommend you check the skirting and window coverings after your carpet has been cleaned as dust can tend to rise and settle.

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Give the walls a good clean, we recommend the Sabco Heavy Duty Eraser Pad from Bunnings. It works like a charm every single time! We also recommend making sure all electronic remotes work (air conditioning, garage door etc) and if they don’t, be sure to replace the batteries as this is generally the most common cause.

 

 

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Make sure you are up to date in your rental payments and that you return every single key and access device you were given, these are things which can be deducted from your bond.

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These handy hints should make the entire moving process less stressful and we hope they help, however, the above advice is purely a guide and naturally, individual circumstances may vary.

BEST TIME TO BUY IN FIVE YEARS

2019

What is really going on in the market? When is the best time to buy? Should you wait a little longer? The burning questions every Perth buyer has can easily be answered.

Before we delve into those questions, we sat back and thought about the market and real estate and what it really all means. In Australia, most properties are seen purely as investments. Sure, we want our homes to suit our needs but money and return on investment always seems to be the driving factor in determining where “home” will really be. When we think of a home, we think of a private place to express ourselves, we think of a sacred space, a place to make memories with our families and a place where we can truly be ourselves. Irrespective of the market, it is important to differentiate between a home and a property.

Now, let’s get on to the market! Due to the decline in housing values over the past five years, Perth properties are now more affordable whether you’re a first home buyer, a growing family or a downsizer which means this is an excellent time to buy. A mistake many buyers are at risk of making is choosing to hold off a little longer to see if prices further decline as there are absolutely no indications that this is going to be the case. If anything, a steady rise is predicted and no one wants to get their proverbial foot into the door of their new home when prices are on the up.

The latest Buy-Rent Index compiled by Curtin University and the Real Estate Institute of WA is further evidence of this.

The Buy-Rent index attempts to measure when it is more financially advantageous to buy rather than rent.

REIWA president Damian Collins said the index showed median house prices in Perth would only need to rise 2.9 per cent annually over the next 10 years for house purchases to be considered more financially viable than renting.

“This bodes very well for Perth buyers, considering the 15-year annual average house price growth rate is 5.1 per cent,” Mr Collins said.

Getting back to the upsizers and downsizers, there is a valid strategy which should certainly be considered. Buy now and secure your dream home or location with the aim of renting the property out for a few years and then move in when you’re ready. It’s a great way to get what you want whilst pocketing some extra cash.

When it comes to the main driving force behind the reviving market, growing families are leading the way due to the affordability in popular suburbs which are seen as upgrades or dream final destinations. The stigma around subject sales is certainly one which needs to be broken. If you are in a position where upgrading means you would have to sell your current home and you’re letting the fear of your potential sale price hold you back, it’s important to assess the saving and investment potential of your desired new home and analyse the benefits versus losses.

With the differential between the low, middle and high areas of the market decreasing, now is the time.

Statistics sourced from thewest.com.au

2019, the Year of Recovery

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As active players in the Perth property market, we have seen multiple signs of recovery in the latter half of 2018. We aren’t the only ones who have noticed with other credible sources including Premier Mark McGowan and Real Estate Institute of WA President Damian Collins both speaking out about the direction the Perth property market is headed.

Let’s start with some good news for Investors. Over 2018, Perth’s best quality was its rental market, said REIWA president Damian Collins. Perth’s successful rental market is expected to keep its momentum going through 2019 due to steady population growth and a slowdown in new building construction, according to REIWA data.

Mr Collins said that during 2018, the steady median rent of $350 per week, increased leasing activity, and decline in listings and vacancy rates all contributed to Perth’s rental success.

“With population growth in WA expected to remain stable and new dwelling commencements slowing, available rental stock should continue to decline. This should see competition amongst tenants increase, putting further downward pressure on the vacancy rate, which recently dropped below four per cent for the first time in four years,” Mr Collins said.

Mr Collins also noted that Perth’s median rent price has remained at $350 per week for 19 consecutive months, which is the longest period of consistent rents in Perth since REIWA began collecting rental data in 2001.

“If listings continue to decline and leasing volumes remain healthy, we should see the overall median rent price increase in 2019 for the first time since September 2014,” Mr Collins said.

Moving onto the sales market, Mr Collins said “While we expect sales activity in 2019 to largely reflect what we’ve seen this year, there is a possibility that rising consumer confidence levels, coupled with improved housing affordability, could translate into increased sales volumes in 2019. If weekly sales remain at current levels or better, Perth’s median house price could improve during the next 12 months.”

According to The Sunday Times, the State’s domestic economy expanded 1.1% in 2017-18, a considerable turnaround given the 7.1% drop during 2016-17 after four consecutive years of decline.

More good news? WA could be set to reclaim it’s AAA credit rating due to the $4.7 billion GST reform package. Premier Mark McGowan tipped a turnaround in the property market stating “It is actually a good time to buy a house, I would encourage people. Prices are low yet economic activity is picking up and so that will inevitably be followed by demand for housing.”

All signs point towards an improved Perth property market in 2019. The year is drawing to an end and Christmas is on the horizon however we are yet to see any signs of the market slowing down with an increase in available properties for sale and a significant decline in our rental vacancy rate which now sits at just 2.4%.

*All figures are accurate at the time of publication. Sources include The Sunday Times, The West Australian, REIWA and Smart Property Investment

Renting & Pets

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Recently, we had a fantastic tenant choose not to renew her lease purely because pets were not permitted in the property and the tenant couldn’t bear being separated from her dog any longer. To some this may sound shocking, however, many tenants and pet owners in general can relate.

Did you know that as a country, we Aussies have one of the highest rates of pet ownership in the entire world? According to the Australian Bureau of Statistics, 62% of Australian households include a pet. Despite this, only 5% of rental properties in Australia are advertised as being pet friendly.

How does this affect landlords? One of two things typically happen. Tenants with pets will quite often overlook a property even though it may be perfect for them based on the fact the advertisement states pets are not permitted. Alternatively, many tenants may attempt to secretly house a pet on the premises which benefits no one. Breaching the terms of your lease is never a good idea, even if the reason for doing so has four legs and is super cute!

How can you make renting with pets easier? Let’s start by acknowledging that any property is valuable to its owner and the most common reason landlords dismiss pets is due to their concern over damage to the property. When it comes making your rental application, there are a few little things you can do to improve your likelihood of being fairly considered with your pet in tow.

  1. Be reasonable – don’t go out and buy a puppy! They may be cute but we all know they are little terrors in those early stages, even with the best training and the most responsible owner.
  2. Include a picture of your pet with your application, typically a pet is less of a perceived threat when the landlord can see it for themselves.
  3. Include written references which specifically relate to your pet and their behaviour. Proving responsible pet ownership is highly advantageous.
  4. Provide as much information as possible about your pet and their habits. For example, if you take your dog to day care or ensure they receive daily exercise it is worth noting. It is also worth noting the age, breed and general behaviours of your pet.

What to consider if you are a landlord? With vacancy rates being an issue for many, it is worth noting in the property advertisement that you are open to considering pets on a case by case basis. This would increase the number of inspections and applications received. Naturally you’ll want to consider the type of pet and their behaviours as well as the tenants references, especially in relation to the affect the pet in question may or may not have had on their previous home. It is also worth keeping in mind that pet owners will pay an additional pet bond should their application be approved and in most cases, pet owners are willing to pay above the advertised price in order to secure a property which allows them to keep their pet with them.

At the end of the day it’s all about finding a happy medium and ensuring the landlords losses are paw-fectly mitigated!

INVESTMENT LENDING

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Our most recent blog post was dedicated to everything you need to know about owning an investment property, what we didn’t touch on was the lay of the land when it comes to investment lending in today’s financial climate.

To get an experts insight on the subject we sat down with our favourite Finance Specialist, Terry Gardiner of Money Quest. Terry spoke to us about the Interim Report from the Financial Services Royal Commission (you’d have to be living under rock if you’ve managed to escape hearing about the Royal Commission) which was recently released however he did note that since then, there have been many changes to investment lending which have significantly changed the investment lending landscape.

As a result, many individual banks have applied policy changes including: –

  • Variations to lending ratios for investment properties
  • Variations to interest rates applied
  • Introduction of the requirement for borrowers to ensure they commence principal reduction to investment debt, particularly if a borrower has had investment debt paying interest only for 5 years or longer
  • Essential focus on Living Expenses for all borrowers, with self-declaration

For a more in depth understanding of these changes, keep reading!

Lending Ratios

Very few lenders today will lend on a Loan to Valuation Ratio (LVR) over 90%, their preferred option today is for lending below an 80% LVR which means a deposit of 20% of the total purchase price is preferable. Lender appetite for lending up to 80% LVR is certainly stronger than lending above 80% LVR. Depending on LVR, significantly different interest rates are subsequently applied.

Interest Rates

Interest rates for investment lending with interest only (IO) repayments can be anywhere around .50% higher than rates for lending with principal and interest (P & I) repayments although it is worth noting that interest rates with P & I repayments for owner occupied (OO) lending can be a further .30% lower than the above rates. Today, it is very difficult to obtain IO borrowing for OO borrowing and significant substantiation is required with clearly defined reasons for IO repayments with an OO loan. Heavy focus is placed on the requirements of responsible lending.

Interest Only Lending

The majority of lenders today are reviewing existing lending and seek to ensure the life of a loan is maximised to 30 years from inception. However, if a borrower has had IO lending for 5 years, in many instances, they are advised lending requires P & I reduction, with repayments calculated to ensure the life of the loan does not exceed 30 years.

Living Expenses

Up until approximately 12 months ago, many lenders would apply Household Living Measurement (HEM) to living expenses to satisfy cost of living to borrowers. Today, a self-declaration is required from all borrowers, although lenders will also carefully scrutinise bank statements to confirm the self-declaration is deemed accurate. The best solution when it comes to finance is to take the time to carefully discuss any borrowing requirements with a Finance Specialist, as the information above is generic in nature and individual circumstances always differ.

For more information from Terry Gardiner, check out https://www.moneyquest.com.au/broker/terry-gardiner/

Terrence Gardiner is a Credit Representative (No. 399006) of Money Quest Australia Pty Ltd, Australian Credit Licence 487823.