Are you starting from the ground up? 

It’s easy to pass on purchasing an ‘eyesore’ of a property. But do try to look beyond any cosmetic flaws and easy repairs to see the true potential in a property. The better the deal, the more potential there is for seeing a large return.

Before you jump on that ideal property, you need to have a decent understanding of the local market. If you’re looking to sell after renovating, who in the market is likely to buy? If you want to rent it out, make sure that there is a high demand for rental properties in the area.

If the market for a property you already own isn’t doing much, then now may not be the best time to renovate.

It’s disappointing, to put it mildly, to have your renovation plans halted midway because of a regulation violation. Make sure you know exactly what is and isn’t allowed before you start demolishing or extending anything on the property. Of course, you also don’t want to put yourself at personal risk.

Get to know what sort of people will be shopping in the market that includes your property. Families, university students, and older people all have very different needs. Keep these needs in mind when determining what changes you make to the property.

Seniors, for example, may prefer a very simple and compact layout while large families want lots of space with multiple bedrooms and bathrooms.

Not everyone will feel the same way about the colour scheme you love!

Stick to very clean and neutral yet warm tones when painting. Allow for lots of natural light. Opt for polished wood floors over ornate carpets. Keep the grounds simply and neatly maintained.

This will help potential renters or buyers to see the property’s true character and appeal without being turned off by decoration they may find distasteful.

Always look for ways to improve and enhance without breaking your budget. Can you transform an existing laundry into a bathroom? Change out a window for another door? Put up an extra wall to divide one large bedroom into two? Try to anticipate features that will make the property more convenient and safe for potential renters and then make changes accordingly.

Having a budget is absolutely critical when it comes to renovating. Even when you think you have plenty of funds, you’d be unpleasantly surprised at how many unexpected costs pop up. Maintain a tight budget with the goal of eventually seeing a return of twice or even three times as much as you spent.

Set aside a budget of emergency funds for some of those unplanned issues that arise.

Talk with those in the area who have recently completed a renovation of their own. Get suggestions for reliable tradesmen and features that increase property value in the current market. Ask about lessons learned and mistakes made in their renovating process.

You want to have your development applications approved and your plans and budget set in stone before you get started. Having to make changes along the way can be costly!

Look for a bargain wherever possible. Shop both in person and online. Offer cash and ask about deals and discounts. See how many small jobs you can do yourself.

A word of caution is in order, however. Don’t try to do too many DIY projects. Some tasks may not be safe if you don’t have the experience. Additionally, if you don’t do it right the first time, you may end up spending more down the line to make repairs.

Renovating your property for rent or sale can be an exciting and rewarding venture. But you need to be sure you’re in the right spot financially before you begin.

Looking to fund your next property or renovation project? Contact Emnon for a free, no obligations discussion, and make sure you get the possible finance deal from the thousands of loan products on offer.

– Dom Cassisi, Managing Director

One of the most common complaints about landlords is that he or she is slow about making repairs. You don’t want to be one of those landlords! This is your property, as it is, and the faster you take care of maintenance projects, the longer you’ll keep your property in good shape.

It also sets a good example for your tenants. You have a right to expect timely payment if you are also timely about keeping their living space well-maintained.

You can get a generic lease outline anywhere. But if you take the time to edit it to reflect your values, you can avoid a lot of headaches later on. Be very specific about your expectations for tenant behaviour, what pets are allowed and so on.

Tenants appreciate consistency. A well drawn out lease, perhaps with some advice from a lawyer, will help you to respond as consistently as possible in a variety of situations that may arise.

A good landlord doesn’t just sign a lease, toss the keys and disappear. You can set a positive tone for the business relationship by making an effort to welcome new tenants with a personal touch. 

Stock the bathroom with tissues and hand soap on moving-in day. Leave a clearly-written copy of your contact information on the refrigerator. Write a brief scheduling detailing important information like rubbish collection and nearby bus routes. Simple but heart warming touches!

You want to maintain open lines of communication with your tenants. It’s recommended to be available to take their calls right away if they have an issue.

You should exercise compassion with your tenants who deserve to have the rules relaxed on occasion.

But it’s equally important that you respect your tenants’ privacy and maintain a measure of emotional distance. It can be difficult to resolve legal and financial disputes if there is an emotional bias.

This is a business relationship, after all. You don’t need to dress in formal business attire every time you stop by the property, but you want to treat your tenants (customers) with common courtesy at all times.

Starting out with your first investment property? Talk to us about getting the best possible finance deal.

– Dom Cassisi, Managing Director

Even if you’re new at all this, that’s ok. You can still make a success of property investment. But you must have modest expectations of what you can do. Be willing to put in the time and effort to get results rather than looking for get-rich-quick schemes.

It’s impossible to know exactly how an asset will do, but you should have a clear enough idea to feel confident. If it’s too overwhelming to figure it out, leave it and move on.

Just because a property’s value has increased in the past is no guarantee that it will do so again.

The price tag on a property doesn’t always reflect what it’s capable of. Take the time to look at what the potential return could be as the property functions, not just how much you could get for it in a sale.

Under intended, normal conditions, if a property can generate a return of 10% or more, that’s a safe start. Think about what more you can do to improve that figure. Don’t let a property’s history of failure convince you that it’s a poor investment.

“My two purchases were made in 1986 and 1993. What the economy, interest rates, or the stock market might do in the years immediately following –- 1987 and 1994 -– was of no importance to me in making those investments. I can’t remember what the headlines or pundits were saying at the time. Whatever the chatter, corn would keep growing in Nebraska and students would flock to NYU.” – Warren Buffett, 2014

There’s no need to get overwhelmed in the flood of advice, speculation and opinions out there in the financial world. What matters is knowing how your property can and should deliver. Do your best to improve its returns and that’s what really matters.

When banks repossess properties, they can end up with too many on their hands to handle. Banks don’t worry about smart investing, either. They just need to keep these properties afloat until someone else can afford to pick them up.

So because a bank owns a property with a poor history doesn’t mean that property is doomed.

This is essentially what Buffett initially did. He purchased properties that had not fared well in a market crash, saw their potential, and did indeed turn them around with astronomical success.

Friends, family and other connections can be great resources when you don’t know much about a property or business. You don’t have to let a dearth of knowledge scare you away from successfully investing in property. 

Warren Buffett, in fact, has only twice visited the farm he bought in 1986. And he’s never even personally seen the NYC retail property purchased in 1993. That shows how much he actually knows about them! Buffett isn’t shy to admit that consulting others is what’s helped him make those investments a success.

Make sure you seek advice about finance for your property. Getting the right loan deal can make a huge impact on an investor’s bottom line.

Contact us at Emnon for a no obligations discussion about your property finance needs.

– Dom Cassisi, Managing Director

In comparison with other cities, the Queensland housing market is on the rise, according to a report from QBE Insurance.

A weakening economy and slowed population growth are letting Queensland’s housing market catch up.

The average market price for units are expected to go up by 3.2% in Queensland. Compare that with a predicted fall of 3.8% for Sydney.

In fact, most other Australian capital cities are expected to experience falls. 

What’s going on and what does this mean for the future of property investment over the next few years?

Experts anticipate a weak housing market for most capital cities like Sydney as we see property prices continue to drop.

There are a couple main reasons behind the trend:

– Tightened lending restrictions are forcing investors out of the market

– Oversupply of new unit developments

Without seasoned investors on the scene, the market is much more inviting to new first-time buyers who can afford only smaller properties. Owner-occupiers can finally break into the market thanks to lowered prices.

Previously, a positive feedback cycle kept driving prices up. Higher price tags meant potential buyers had to take out larger mortgages to qualify to bid. Higher bids, in turn, raised prices further.

In a way, this natural cycle of capping prices is a good thing for debt-ridden Australians.

Additionally, a supply surge of housing will drive down the prices and make property more widely available and affordable.

So that’s all the good news we look forward to by 2020.

But what if you’re looking to expand your investment property portfolio?

Being locked out of the property market can be frustrating for investors.

But the smart thing to do is to go with the flow and seek out properties in markets that are investing-friendly.

Increased unit production isn’t expected to drive down costs everywhere. This trend is buffered by a population boom in many regions. What’s more, an increasing number of people are gravitating towards the apartment lifestyle, both for buying and renting.

Dealing in the unit market is a way to keep up with current demand, but you have to be doing it in the right area.

That’s why more investors are looking to buy up interstate properties, away from the capitals that were once magnets for investment property.

Queensland is one of the few cities where apartment prices are expected to go up thanks to a steady demand. So if you have your eye on unit investment properties, Queensland could be the next place you should look.

Interested in buying a property or considering property investment? Contact us now for a no obligations discussion about the South Australian market, what it means for you and the best finance options available.

– Dom Cassisi, Managing Director

122 Hill Street, Peterborough

This cozy and secure three-bedroom number on over 1000 square metres is only $85,000. Now that’s bang for buck.

It’s just three hours from Queensland, or what Melbourne locals would call a typical commute to work!

---

Lot 1 Underwood Crescent, Coober Pedy

If you’d consider buying in Coober Pedy, you’d best start thinking “dugout”!

How good would it be to own one of the town’s famous underground homes?

Buying this property will win you a spacious and cool home everyone will love.

Beautiful sandstone, timber and tile finishes make this property an attractive one for potential tenants. You could call this property yours for as little as $150,000 and that’s not bad at all considering the valuable rental history that comes along with it.

Oh and bring your sunscreen, temperatures hit 50 degrees during summer!

---

14 Searle Street, Melrose

This charming “Keating’s Cottage” has one bedroom and plenty of potential. You get more than the home for $120,000. This deal includes stunning views of Mount Remarkable and 2000 square metres to call your own.

Listed benefits include “connected to power and water” so expect more than a little renovation work.

---

59 Daly Street, Wallaroo

For less than $140,000 you can get into the growing seaside town of Wallaroo.

Whether you’re just getting started on your property portfolio or need another neat little package to round out your collection, this house makes the perfect addition.

Compare prices in seaside towns Australia wide, you won’t do much better.

---

1 Albert Street, Quorn

You’d be a winner for sure for picking up this stone-studded gem. It’s a perfect first home for your family, but you may also be interested in investing and renting it out right away. Three bedrooms and a carport that matches the decor make this property one you shouldn’t ignore.

Quorn is three and a half hours from Queensland, which is similar to a typical peak hour trip from Sydney CBD to the western suburbs!

---

While most experts argue that the property market is getting increasingly harder to get into, there’s always options in Northeastern Australia!

And when we source the best possible finance deal, you’ll be in an even better position. Contact Emnon today to discuss your property goals.

– Dom Cassisi, Managing Director

The simple appeal here is that monthly payments on only the interest are far lower than monthly payments on both the interest and the principal. For a limited period that usually ranges from one to five years, you only pay a relatively small portion of your loan. This saves you money in the short-term.

Property investors make up the majority of those who take out interest-only loans. While their payments are solely made up of interest, they can count those as tax deductions. Throwing in payments on the principal would only reduce their tax benefits – that’s a good deal!

A skilled investor assesses property market patterns and decides the best times to buy and sell. He or she may take out an interest-only loan and use the money they save to make improvements to the property. By the time their interest-only period ends, they’re ready to sell and the property has increased in value. This ideally enables them to pay off the principal quickly and completely.

This approach also enables the investor to generate significant equity, which they could potentially use to purchase their next property.

It’s that age-old cliché of what goes around comes around. You might save a few bucks for a year or more, but that principal never goes away. Sooner or later, you will have to pay that off. At some point, not only will you have to pay off whatever principal you have left, but you’ll also have some interest tacked onto that remaining value. Your monthly repayments could skyrocket by the end of your interest-only period.

Even experienced property investors shouldn’t take interest-only loans lightly. Being prepared to pay the remaining amount doesn’t mean assuming your property value will increase exponentially over the period you are making repayments on just the interest. Your property could do just the opposite. Expect and plan for the worst.

In the end, it may be better for you to just take advantage of the current low interest rates by paying both the principal and interest right now (P & I loan). Low interest rates make it tempting to enjoy low monthly interest-only repayments, at present.

But there’s always talk that interest rates could rise soon, and that could put the squeeze on you and the huge amount of Aussies who currently invest in property with interest-only loans. So beware!

To benefit from an interest-only loan, you need to be prepared with a plan to pay back the rest of the principal when the time comes, and also a strategy if interest rates rise.

Start by talking to a finance expert. Emnon will help you crunch the numbers, and find the best loan for you (a service that comes at no cost to you!). Contact our team today to set up a free, no obligations discussion.

– Dom Cassisi, Managing Director

Investing in property is generally a reliable way to increase your wealth.

You can enjoy stability and tax breaks. Property investment could allow you to eventually generate a substantial cash flow.

Not to mention, your money goes a lot further. It’s reasonable to supply $60,000 in a deposit to buy a house for $300,000 with the help of a bank. But try investing that same $60,000 in the stock market and, well, you have a value of $60,000 in that market.

Of course, property investment is far from easy. It’s expensive to break into this market and your property can be subject to sudden changes and unexpected problems.

So why make the effort to expand your investments to include apartments?

As shifts and trends show, more and more people are searching for the ideal apartment lifestyle. Shopping centres, universities, hubs of cultural activity and more are bringing people closer together. They aren’t ready to purchase their own home and want a conservative space of their own.

It wouldn’t hurt you to be open-minded to the possibility of addressing that demand.

With a steady flow of many eager tenants to choose from, you could cater to any demographic you wished to. Additionally, apartments tend to be more affordable than regular houses. Your startup costs would be considerably smaller.

Apartments do indeed show the same potential for capital growth as houses do. You might also be surprised at just how easy it is to generate a positive cash flow simply from the rental yields and tax benefits.

One great thing about apartments is that it’s easy to adapt them to the needs and priorities of your target population. A little research can help you decide on ideal location and proximity to favoured facilities and businesses.

Now is a great time to consider getting in on the urban action where apartment living and investing is really happening.

Want to set a budget for investing in your own apartment? Talk to Emnon about financing your plans.

– Dom Cassisi, Managing Director

The right time for one investor to purchase doesn’t make it the right time for everyone. Just because your friends and neighbors are swooping in on secondary properties isn’t your sign to dive right in.

Take an honestly look at where you are at.

If you are financially secure and your ideal property is now available, then now is the perfect time for you to buy.

Just like when you purchased your first property, you need to make sure that you have the means to secure the debt against your property.

Do you have enough equity on your current home to make this happen? Have you got plenty in savings? Are you prepared to make all the needed updates and outfittings to the new property?

Think about how easy it will be for you to make the monthly repayments on a second property.

As we write this, fixed interest rates are at record lows.

What this means for you is that borrowing is now more affordable than ever. So now is definitely a good time to considering taking out a loan for a second property.

But as you’re well aware, these rates can change quickly. Make you consult with a mortgage broker to get the best possible deal.

Fixed or variable?

Will you tap into your current home equity?

How quickly do you want to pay off your loan?

Can you use your redraw account?

How will you afford the deposit?

Here too, you’d do well to seek advice before attempting to secure a loan. An expert like those here at Emnon will help you identify the best loan structure for a second property.

Particularly if you have plans to rent your property, you’ll need to consider a whole host of factors such as:

– Property size

– Location

– Age

– Condition of the property

– Potential improvements that can be made to the property and area

– Finding suitable tenants

One of the decisions you’ll be facing is whether to sell your first property before or after you buy the second one. If you sell it at all, that is. Waiting to sell usually gives you more access to resources such as equity and moving your mortgage.

For more tips on purchasing a second property or advice about your loan deal, contact our team here at Emnon.

– Dom Cassisi, Managing Director

As we discussed in a recent blog, equity is simply the difference between your home’s present market value and whatever you have left to pay off on your loan. If you could sell your house right now and use that money to pay off the mortgage, that would be the equity you have right now.

You can ask your loan provider to give you the calculated ‘pay out’ quote. This states the exact amount you have left to pay off on your loan.

Next, look into finding out the market value of your home (at Emnon, we can help you with this). You could just get a rough estimate by seeing what similar homes in your area are selling for. But to find out exactly what your equity amount is, you’ll need a specific quote from an independent evaluation of your home.

The maths involved in putting the numbers together is quite simple.

Most banks will let you access as equity an amount that’s 80 percent of your home’s value minus whatever you still owe on it.

As an example, let’s say your home is presently valued at $500,000. You still have $200,000 to pay off. 80 percent of that $500,000 value is $400,000. Take away that $200,000 you still owe, and you’re left with $200,000 in usable equity.

Accessing isn’t about claiming free money. You’ll still owe the bank for what you use. In fact, if you want to access more than what your bank generally allows, you’ll have to pay for Lender’s Mortgage Insurance.

Did you know that you can use the equity in your home to buy or finance an investment property? You could actually even use your equity as a line of credit, if you wanted to. Tapping into your equity can be helpful when it comes to making major renovations.

As you explore your equity a little further, you’ll see how it can grow with frequent mortgage payments and improvements to your home.

For more information about how much equity is in your home and your possibilities, get in touch to arrange a free, no obligation consultation with our team of experts here at Emnon.

– Dom Cassisi, Managing Director

RELATED:

What is ‘equity’ and how do I use it?

Equity is the difference between your home’s current market value and the amount left on your loan debt.

Another way to look at it is this: if you could sell your home off today and use the money to pay back the bank, that money would roughly be the amount of equity you have.

That figure of how much equity you have will change along with the fluctuating market value of your home. And you may not have as much equity as you might think. Your bank determines how much of your equity is ‘usable.’

You have to remember that tapping into your equity will increase your mortgage. It’s still the bank’s money so you will eventually have to pay it back, at some point. Don’t try to access your equity if you have no other financial fallback.

Equity can be a valuable tool. It represents a pool of funds that you have access to, when needed. Many people like to put their equity towards investing in other properties. As long as you’re balanced and diligent and plan carefully you could successfully do the same.

As mentioned above, equity can be used as security to invest in a property. Some people will also use equity for other investments, holidays or buy a new car.

One option is to access your equity is to simply remove the amount in a lump sum. This may stick you with high interest fees, however. If you choose to do this, then you need to be sure the investment justifies the fees.

Many people use their equity like a giant credit card. This way, they only have to pay the interest rate on the amount they use, just as with any other line of credit.

Your equity grows as the value of your home increases and/or as you pay off more of your loan. Making more or bigger loan payments is one way to reduce your debt. If it’s possible to set up an offset account, this would reduce the amount that you have to pay interest on.

There’s always the option of refinancing your mortgage so that it more accurately reflects your home’s current value. While this can unlock some more equity, you may still run up some fees for refinancing. You’ll need advice from an experienced mortgage broker about this.

You could try an aggressive approach that tackles your equity on both ends: pay off as much of your loan as possible and make improvements to your home that raises its value.

When you go to determine how much your home is worth, you’ll need a licenced valuer to look at it. This is because the estimated market value won’t always match the actual value. The actual value is what your bank cares about.

Renovating or improving your home during times of poor economic growth is a good way to boost its value. Just make sure that the improvements you make are both compatible with market demand and council-approved. Otherwise, they may count against you.

Equity can essentially be a wealth-building positive feedback cycle: the equity can be used to boost your home’s value. This, in turn, increases your home’s equity, and on it goes. Using the equity in your home is just one alternative to lending.

Clearly, there are a lot of ways you can use your equity.

Does your home have any that you can take advantage of?

Get some help in understanding your home’s equity and your options by contacting the leading mortgage brokers at Emnon. Contact us for a free discussion with no obligations.

– Dom Cassisi, Managing Director

RELATED:

How much equity do I have?