Latest Articles

Secure a better tenant and get your property rented sooner

Posted by Andrew Jackson on 2 September, 2017 9:20 am
So the suburb you’ve invested in now has five other properties for rent just as your property is being completed. They are all being advertised for the same rental amount and you run the risk of your property being vacant for 6 weeks until a suitable tenant is found. How can you get your property rented sooner?

If your property is worth $450 per week rent and it’s vacant for six weeks, it has essentially cost you $2,700 in lost rent. Here’s a couple of simple strategies to make sure this doesn’t happen to you:

  1. Drop the rent by $20 per week and look to get it rented sooner. If the property rents straight away, on a six month lease it has cost you $520 but has got you a tenant sooner.
  2. Offer a discount for paying in advance. This works particularly well for tenants who have their rent sponsored by their employers.
  3. Look to value-add by offering a lawn-mowing and gardening service for the first six months. This will usually only cost around $20 per week, ensures the property grounds are well maintained and could very well become an arrangement your tenant wants to continue with (and pay for themselves) after the six months has ended.

Regardless of which option you choose, or if you have another option in mind, don’t simply be satisfied with joining the list of vacant properties. Work with your property manager to do something to make yours stand out from the crowd and get your property rented sooner.

If you’ve got more questions, then please visit our FAQ’s page or contact us here.

Share on Facebook


Do you have an investment strategy?

Posted by Grant Orr on 9 June, 2017 1:31 pm

I am often asked two questions:

1). Do you only look for properties in the NT? The short answer is no.  The APP team look at property cycles around the country and have no single area, suburb, city or development. We actually look for sustainable growth.

2). Secondly I am asked about Strategies. This is a little more difficult to answer. What is your long-term strategy? Do you have one?

The first step you need to take if you are looking at setting a positive path for your future is to develop a strategy. Or you can use the one that has been developed by APP. You need to trust in your strategy, and stick to it. Property is long term; we purchase and hold. If you find the right property, would you sell it or watch it grow?

Success requires many things. You need to be informed and have a solid understanding of what you are doing, but equally important is the need to be disciplined and patient. If you want to understand our process and how it can be duplicated to work for you, come to a workshop or give me a call to have a chat.

But ask yourself: Do I have a strategy? What is my strategy? After all, it is your future.

Share on Facebook


What will the 2017 Budget mean to me, an Investor?

Posted by Peter Spencer on 16 May, 2017 11:43 am

I want to be a Property Investor. What will the 2017 Budget mean to me?

That’s an excellent question.

The following is a brief summary of what the main points are that may affect current and would-be Australian Resident Property Investors—keeping in mind that at this stage these are only proposals that will have to be passed by both the House of Representatives and the Senate, of which the government does not hold a majority.

What’s NOT affected:

Any existing investment properties purchased, ie. contract exchange date, prior to 9 May 2017 is not affected. Nor are commercial, industrial and other non-residential properties.

Negative gearing isn’t tabled to change, nor has the Capital Gains Tax 50% discount. (This is proposed to actually increase to 60% if you elect to invest in qualifying affordable housing).

Capital Works deductions, ie. depreciation of your building over 40 years, has not been affected. This deduction in itself has always been a great reason why you would choose to purchase a brand new property as an investment, especially a new build, as you get the maximum benefits each and every year, for 40 of them.

It might change, but it’s not all bad news:

Probably the biggie here is that Plant and Equipment depreciation deductions will be limited to new purchases only. Therefore, if you purchase a property that is NOT new the existing plant and equipment will be reflected in the cost base for capital gains tax, rather than deductible each tax year. To gain the best tax deductions you would be best to purchase a brand new build and as the first owner, enjoy full depreciation of all plant and equipment. You will need a Quantity Surveyor’s report to make your claims.

Existing property investors may consider it prudent to hang on to their current properties to continue claiming depreciation on the plant and equipment, as their next investment may not enjoy the same deductions if they purchase a less than new property. Brand new properties will always provide the best tax deductions, especially if this new budget is passed.

Travel Expenses to inspect, maintain and collect rent will no longer be deductible for properties held interstate. Property Management fees are still fully tax deductible, so ensure you engage one to do the work for you.

First Home Buyers can make voluntary contributions into their superannuation up to $15,000 a year, and capped at $30,000 in total. These contributions, plus earnings can then be drawn down to use as a deposit on their first home. Think of it as a super-charged savings account.

In addition, First Home Buyers can still take advantage of the First Home Buyers Grant, which can be used to purchase your first investment property instead of your first principal place of residence. So you can invest first if you wish.

As mentioned already, these are only proposals at this stage, so watch this space if/when it becomes real.

 Share on Facebook


Investing: It’s all in the numbers…

Posted by Andrew Jackson on 2 May, 2017 10:04 am

Some clients can be funny with numbers. 

I have a friend who won’t drive a car if the number plate adds up to 13, while another refused a block of land because it didn’t have an 8 in the lot number.

Superstitions aside, the real numbers investors should be concerned with are far more important. Here’s just a few to be thinking about.

  1. The amount of weeks that your property is rented per year. The more weeks your property is rented the better the rental yield. Vacant properties only cost you money so lease it as quickly as possible.
  2. Six-monthly or twelve-monthly leases. Every time your lease renews, your property manager is likely to charge a lease renewal fee, so twelve-monthly leases will essentially halve this cost.
  3. A depreciation schedule, completed by a qualified quantity surveyor, could be the best money you’ll ever spend on your investment property. It will usually provide you with some big numbers to apply to your tax return for every year you hold your investment property, especially if it’s a newly built one.
  4. Every two years, sit down with your mortgage broker and ask them to do two things for you. Firstly, review the valuation of your property to consider what equity has been built during this time, and secondly to review the interest rate you are paying on your investment loan. The combination of equity growth and a reduction in your interest rate could very well provide you with an option to reinvest into another property.

Share on Facebook.


Depreciation: how will you benefit at tax time?

Posted by Peter Spencer on 21 February, 2017 2:05 pm

The tax benefit most investors miss out on.

Everyone knows that one of the key ways to maximise investment returns is to be smart about your tax. Getting the most out of your deductions can be the difference between so-so returns and reaching the lifestyle you want. So why do so many people miss out on a fantastic source of deductions? It’s not interest on your mortgage and it’s not maintenance or repairs. In fact, it’s so intangible that you won’t see it unless you know it’s there. We’re talking about depreciation; the loss of value of your items.

A simple analogy that most people will be familiar with is the purchasing of a new car. Whatever the price you pay at a dealer, once it leaves the driveway you know its value has decreased. Suddenly, it’s a second-hand car and you can’t sell it for the same price you just paid for it. The same goes for a new house, fittings and fixtures. The difference is that if you’re using these items as a source of income, then you can claim this loss of value against your tax liability. So why do so many people miss out on this? The simple answer is they’re just not aware it exists.

Get the right advice.

To understand your entitlements, you need to draw up a tax depreciation schedule. This outlines what items are depreciating in value and at what rate, in line with the appropriate tax rules and regulations. If this all sounds like unfamiliar territory, then it’s recommended that you engage a registered Quantity Surveyor. As one of only a few professions recognised by the Australian Tax Office to have the appropriate skills to estimate construction and building costs for depreciation, you can be assured they’ll get the most accurate record of your entitlements. This one-off cost of as little as $400 can provide ongoing savings that far outweigh your initial outlay.

The depreciation schedule should include the following items;

  • A detailed forty year forecast table illustrating all depreciable plant and equipment items together with the capital works deductions.
  • The difference in claims using both the prime cost and diminishing value methods of depreciation.
  • A comparative table of the two methods of depreciation.

In a similar vein, you should ensure that your accountant is familiar with property investment. The correct accountant can assist you to set-up tax effective financial structures, allowing you to reach your investment and lifestyle goals faster. An accountant with a real passion for property is a great sign that they’ll be able to get the most out of your investment.

Now is the time to act.

Don’t leave it another year and miss out on deductions that can help boost your portfolio. Set yourself up for next year’s tax time now, and get yourself a tax depreciation schedule. If you want any more information, then come and see us at Australian Property Panel. We believe that having the right team behind you makes all the difference in the world. That’s why we make it out job to not only provide you the information you need, but to link you with the right people to see that your investments work for you, bringing you closer to the lifestyle that you desire.

Share on FacebookShare on Facebook

 


There’s never been a better time to get into property

Posted by Brad Dolahenty on 9 February, 2017 10:51 am

We’ve seen a lot of highs and lows in the property market during our time. One thing we’ve come to realise is that when you take a long-term view, there’s no bad time. That being said, some times are better than others.

For instance, right now we’re seeing record low interest rates for borrowing, with the RBA keeping the cash rate at 1.50% during its January meeting. To put this in perspective, the average rate since 1990 is around 4.8%.

To some this may not seem like much, but here’s some quick maths. Let’s say the bank is currently offering an interest rate of 4%. With the average RBA rate higher by 3.3%, then this relates to a bank rate of 7.3%, not including any increases by the banks greater than the RBA rate. If you take out a $400,000 mortgage paying interest only, then this difference is $13,900 a year. This is a saving not to be sneezed at!

Long Term VS Short Term

If it’s so good, why isn’t everyone buying property?

The counter arguments to buying now revolve around two separate issues; house prices and future interest rate rises. At their heart, these boil down to long term vs short term investing. For building a property portfolio, we at APP are always looking at the long term. That means we consider where you want to be in ten, fifteen, twenty years’ time and work towards achieving these goals.

First off let’s address the housing price argument. No matter when you buy, someone will always say that houses are too expensive. Such and such suburb has had its jump, the bubble has popped, no-one can afford higher prices. These are all short term thinking. When you look long term, housing prices are always increasing. If you’re holding a property, then short term fluctuations don’t matter. How often do you hear someone say they wished they bought a house ten years ago? Don’t wait and become that person. With the right advice you can always find properties with long term growth.

The second argument is that interest rates are only going to increase. This one has merit, as it’s hard to imagine interest rates staying at record lows for the rest of eternity. However, the only way this is going to affect you is if you overextend your finances. With careful planning, you can avoid future interest rate shock. And if you are thinking of investing in property in the future, why not keep that extra $14k in your pocket for the next couple of years.

Take advantage now.

So what should you be doing now? If you haven’t already, you should take the time to consider your financial future. The earlier that you start yourself on the right path, the earlier you can achieve your desired lifestyle. At Australian Property Panel, we give you access to experts covering every facet of property investment. We provide you with the information you need to build a multi-property portfolio. Don’t miss out on this great opportunity to start yourself on the road to financial success and come along to one of our free workshops to get started now.

Share on Facebook Share on Facebook


You want me to spend more on my investment property than what my own home is worth??!

Posted by Andrew Jackson on 17 January, 2017 1:36 pm

Imagine being close to owning your home worth $400,000 and now you’re looking to start your property investment portfolio.

In your head you’re thinking a nice little flat or older townhouse worth around $300,000. But you’ve been recommended to consider building an investment property worth $500,000. The immediate response is often an emotional one: “I don’t want my tenants to have a better home than my own!”.

Lose the emotion

The reality is however, as a true investor, you need to separate the emotion and make a business decision on what will provide the best return.  I’ve spoken with plenty of investors who chose the older flat as their first investment, and found that this type of property comes with its own separate stresses. Increased maintenance, little or no depreciation, poorer quality tenants to name just a few.

What’s the alternative?

By constructing a brand new property as your first investment, you will maximise the depreciation of the property and therefore maximise the tax effective nature of the investment. New properties will also deliver little to no maintenance and if there is a maintenance issue, its often covered by the builder’s or product warranty. Building new makes sense. It’s a better business decision.

Share on Facebook Share on Facebook


Property Investing

Property Investing: You’re now an Investor and a Landlord

Posted by Emma Herbert on 8 November, 2016 2:23 pm

When it comes to property investing, there are many things to consider. Something that is often initially overlooked is the fact that as an investor, you’re also becoming a landlord. You’ll want to be renting out that new property to be servicing your mortgage and that in itself leads to a whole new kettle of fish for you to consider BEFORE purchasing that first investment.

Now, before you start thinking we’re advocating managing your own properties, slow down. It doesn’t matter whether you look after the day to day running of the property yourself or engage a property manager, these are issues to think about before you even sign the contract.

The Key Investor/Landlord Considerations

New VS Old

Many investors start with the idea of purchasing a cheaper investment property which generally equates to an older property. This may be driven from an emotional standpoint of “I don’t want my tenants to have a better home than me” or simply a financial one. Either way, this can lead to increased maintenance costs, limited depreciation opportunities (more on this below) and, last but not least, lower quality tenants. You want tenants that will look after your property, so choose a property that will attract the right sorts. The cost of tenants not paying rent or having to be evicted can exceed their bonds, leaving you out of pocket and rueing your earlier decisions.

How much is enough?

Rents are a difficult thing to balance. Everyone realises that if rent is too low your investment will quickly become a liability. Something often overlooked is that higher rents can lead to vacancies which actually do more harm than good in the long term. For instance, with the current weak rental market, holding an existing tenant is pure gold. Even a rental hike of $10 per week could cause them to look elsewhere, forcing you to chase new tenants. If you’re renting at $400 per week and it’s vacant for only two, that’s $800 lost for a gain of only $520 over a year. Yep, the math doesn’t lie. So use your head, use your contacts, use any information available to you to find the right balance.

Depreciation

If you don’t know what depreciation is, then you’re in for a treat. Even if you do, knowing and maximising are two separate things. Depreciation in its simplest form is a way to reduce your tax based on the reducing value of items within your property. This is most pertinent in brand new homes, where it’s filled with brand new things, each of which has dropped in value as soon as it left the showroom floor. Hiring a quantity surveyor to identify these items could just be the best money you ever spend, as the deductions continue for a number of years, providing long term benefits.

Use your Property Manager

If you’re not running rentals as a business yourself, then you probably don’t have time to deal with an investment portfolio of tenants and will have engaged a property manager. That’s great, especially when you start to utilise them to the max. A good property manager can and will incorporate your bills and rates into the service, at no extra charge. They’ll pay these straight from the rent, keeping excellent records that you (or your accountant) will be most thankful for come tax time. Remember, they’re more than just rent collectors.

As you can see, there’s so much more to investing than just buying a bargain. That’s why it’s important to get the right advice. At Australian Property Panel, we’re here to help, stepping you through the process from start to finish. And finish is not just the purchase of a property, but the creation of a property portfolio for you to enjoy the life you want. So why not come along to one of our free seminars, or simply get in touch with one of our friendly advisers now.

Share on FacebookShare on Facebook


Owning an Investment Property can be cheaper than you think

Posted by Andrew Jackson on 16 September, 2016 3:27 pm

Owning an investment property can be far more affordable than you think, particularly when you claim all of the tax deductions available. To explain how claiming these deductions can assist, let’s examine two average Australian taxpayers:

Bill who feels he can’t afford an investment property and Kate who owns one investment property. The Australian Taxation Office allows income producing property owners to claim a number of deductions for expenses involved in holding a property. These would include property management fees, rates, interest, repairs and maintenance. Investors are also entitled to a non-cash deduction for the wear and tear on the structure of the building and the fixtures and fittings within the property over time. This deduction is known as property depreciation.

Kate VS Bill.

Kate earns the same salary as Bill, however she has purchased a three bedroom rental property for $600,000 just over one year ago. Her property is rented at $545 per week, a total rental income of $28,340 per annum. The income earned from Kate’s investment property is also taxable, therefore her total combined income equals $113,340.

Kate is also able to claim deductions for expenses involved in holding the property, such as management fees, insurance, rates, interest, repairs and maintenance. These expenses for a typical three bedroom property would amount to around $39,067. Kate also obtained a tax depreciation schedule from BMT which showed she could claim an extra $14,200 in depreciation deductions in the first nancial year.

The results are in…

From the picture you can see Bill takes home $63,293 income after paying $20,707 in taxes. Kate earns the same take home wage however her income-producing property entitles her to claim $53,267 in deductible expenses including depreciation. This further reduces her taxable income to just $59,073 making her income tax payable $11,814. By maximising the property deductions and claiming depreciation, Kate’s property is costing $35 per week to own after tax.

Share on FacebookShare on Facebook


The Value of Knowledge

Posted by Grant Orr on 9 August, 2016 12:36 am

No matter what circumstances information is valuable, worthwhile and normally accessible.

Ensuring you are gaining “Value” from the information you have been given is generally measured or indicated through receiving more than the effort you put in. Within the residential investment property market it could also mean obtaining “confidence in your future”.

Information can be measured in terms of what it can actually do for you. You can purchase books to gain knowledge but it is unlikely you can be educated from the shelf. Great information which educates you and gives you sound knowledge is intangible and should be individual to you, that is, the solutions should be designed to fit your needs and outcomes.

Knowledge can be difficult to appreciate or determine its true value or worth before you actually receive it; the long term strategies of property investment may take
a while. This then tends to result in a leap of faith, in some opinions, yet if you look at it logically, if the information is based on a criteria and logical approach is it that much of a leap? If there is a recipe for a more financially secure future, you’d probably be first in line to pay for it, particularly in times when the market could be volatile.

The confidence of someone who obtains knowledge versus someone who hasn’t can highlight the difference between the financial assets or property portfolio held and presents clear anecdotal evidence of how educated clients view their current and future financial positions.

Purchasing property is one of the largest and most expensive investments generally made. No one has a crystal ball and to ensure that as much risk is mitigated as possible it should be thoroughly researched, analysed and critically evaluated.

The questions we most often hear from people about their financial future are:

  1. Will I have enough money in the future to do what I want?
  2. Am I investing in the right place?
  3. Can I reduce my tax?
  4. What are my options when things change?
  5. How can I keep an eye on my investment property?

There are always different challenges, not only in building a property portfolio but in life itself. Being prepared for those challenges, understanding them and having a core base to support you along the way assists in giving you peace of mind, even if it is through knowing you have support when required.

When we wrap it all up, what outcomes do we aim to achieve or would you expect?

  • Emotional Value – enable you to make a well informed decision about your future
  • Financial Value – through Capital Growth, Rental Returns and Tax Reductions
  • Practical Value – making it simple, following through and saving time
  • Intrinsic Value – facilitating and project managing through skills and knowledge

There is only one thing we can generally predict “You do nothing you will achieve nothing”.

Share on FacebookShare on Facebook