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best investment

Nov 02
0

Banks are destroying your land titles

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Banks are destroying your land titles   

Last week we had a couple of days hold up with a refinance matter with one of our clients; the reason was that the banks are destroying your land titles and there may be some hicups in going digital!

It is reported today in the business section of the Sydney Morning Herald –

read more here https://goo.gl/FzUOk2

(Please contact us at [email protected] for further information or the chance to discuss this and other issues in the comfort of your own home)

title-deeds

The old Title deeds will disappear as banks are destroying our land titles

All of the old paper certificates of title have been converted to electronic as part of a national push for conveyancing to go on a new PEXA system. It was not a big surprise to learn that PEXA is owned by state governments, the ANZ, CBA, NAB, Westpac, Macquarie Bank and private equity.

What was a surprise to me is the fact that all my title deeds, being held by a couple of the big banks have probably now been destroyed and no one bothered to inform me that this was being done to my title deeds. I can, we are assured, request a paper print out now from the electronic records.

What is not a surprise is that, moving forward, all future sales of properties whose titles are held by the bank will need to be transacted, at least in part, electronically and of course, the fees for the service will increase.

We have been dependant on the old Torrens title system since around the middle of the 19th century and some property lawyers are questioning this move by the big Banks as they fear it may compromise the security of the system.

While it is not yet fully implemented in NSW, it is now ‘working’ in Victoria where The Law Institute of Victoria has been an outspoken critic of the electronic system. They are arguing it is increasing costs for transactions and undermines those holding titles for security against other assets, as well as adding complexity and legal uncertainty to a what was once a simple, safe system.

One thing is for sure, you will be hearing a lot more about PEXA which is likely to become another new acronym with which we will all be familiar in the future.

The chief executive of PEXA said paper titles were cumbersome to use. “People keep losing them, including banks,” so maybe in the long term it will prove more efficient as well as more expensive!

If you want to know more about this or discuss buying new property investment contact: [email protected].

Oct 26
0

Affordable Housing fix is years away

By | best investment, Economy, Investment, News, Properties, Property Research, Real Estate, stamp duty | No Comments

Affordable Housing fix is years away

Don’t you get fed up reading about the latest ideas on affordable housing? Now we read again something we all know, the affordable housing fix is years away!

The latest government inquiry, costing thousands of dollars again has been abandoned and placed in the ‘too hard’ basket yet again, good and not surprising news to the property investor but not so good news for the first home buyers in our major capital cities.

(Please contact us at [email protected] for further information or the chance to discuss this and other issues in the comfort of your own home)

It’s reported today, “Treasurer Scott Morrison’s speech on housing affordability might look like an improvement on his predecessor’s “get a job, a job that pays well” advice. It’s not. In practical terms, it’s nothing at all.”

It’s reported as one of the government’s favourite sort of problem, “one they can flick responsibility for onto the states and spend some years “thinking” about it without actually doing anything constructive.”

So the problem is all about supply, or is it state land use regulations, or is it tax policy and something to do with the cost of supplying expensive social housing? Maybe it’s all about changing our capital gains tax rules or getting rid of negative gearing or just moderating the rules on new land releases? It might also help to charge developers more for appropriate infrastructure around new releases or developments, (struggling to understand this one?) or just a simple case of easing the huge amounts of stamp duty payable on the purchase of a property?

Of course, the answer may just be reviewing the first home owners grants, introduced in 2000 to assist with the additional costs in building caused by the introduction of the GST or maybe it’s just about lowering interest rates even further and keeping them low?

Now you know what some of the issues are you should have some idea of how easy this is to rectify! For a fuller explanation, you might like to try and understand this article: https://goo.gl/pE6vAR

I really think it is fair comment to assume that property investors have little to fear in the future about what government can or will do to make owning a property more affordable. The one thing that is very true and understandable about the issue is that affordable Housing fix is years away, if ever.

If you want to know more about how to make money out of the ever increasing price of property, contact us at [email protected].

Oct 24
0

Empty bedrooms? Put your money where your mouth is!

By | best investment, Economy, Financial, Investment, News, Property Research, Real Estate, Research | No Comments

Empty bedrooms? Put your money where your mouth is!

Apparently Sydney now has 20 years of future housing stock in empty bedrooms? Put your money where your mouth is NSW if you want to utilize more of this ‘space”.

Houses roofs

Downsizing is too costly for many older Australians

The first point of this new argument must be defining who has these ‘extra bedrooms”?   While some bedrooms in the homes of empty nesters may be empty some nights of the week, many do not have empty bedrooms gathering dust.  After years of being cramped with children, it’s a later life treat to own enough space for a study or an area to pursue a hobby. These rooms can also be used as exercise rooms to keep ageing bodies trim. Most are also grandparents who require bedrooms for visiting children and grandchildren; they are perhaps underused but certainly not empty.

(Please contact us at [email protected] for further information or the chance to discuss this and other issues in the comfort of your own home)

 It’s also time to review the massive disincentives placed on older Australians to downsize. Many empty nesters will never consider downsizing because the appropriate type of housing is just not being built. Sure, we are constantly being warned about the forthcoming glut of apartments in most of our east-coast city markets, but many older Australians are not prepared to give up their gardens or a small private area where they can allow their ‘fur-children’ some space to run around outside the home. A smaller garden is often an attractive proposition but no garden at all is a deal-breaker. We need more villas and town homes in the established suburbs where the majority of these older Australians currently live.

 

The financial penalties for retirees downsizing can be enormous. Just imagine, an older retired couple in a slightly above average (larger) home worth $1.5 million. The home sale, including marketing and legal costs will cost them around $30,000. They buy a smaller town house at around $900,000 and they say goodbye to another $40,000 in stamp duty, another $2000 on legal fees and probably around $10,000 in removal expenses and buying some new furniture that ‘fits” their new surroundings. Basically, they would need to budget around $100,000 of their, (in most cases) diminishing wealth just to move.

 

Having made the move, they find that they have an additional $400,000 in the bank. This may be enough to stop many of their senior benefits, including pension payments. The argument, of course, is that they don’t need any government funding now but this misses the point that older Australians do love their children and grandchildren and they see it as an essential legacy to leave an inheritance to their family.

 

It will always be difficult to persuade older people to move out of their family home to free up empty bedrooms for the younger generations but as long as our governments insist on penalising such a move, the bedrooms will stay “empty”. Read more https://goo.gl/jBePqx

If you want to know more about appropriate house type investment contact us at [email protected].

Oct 18
0

Forecasts for Housing Price growth

By | best investment, Economy, Investment, News, property cycle, Research | No Comments

Forecasts for Housing Price growth
We seem to be by bombarded by various forecasts for Housing price growth, or maybe I should say, in some cases, housing crashes or bubbles bursting.
If you are feeling in a particularly negative mood, or perhaps you are a first home buyer waiting for the market to crash in order that you can buy, then its best to try and get a hold of the many international companies, looking at the Australian housing market from the outside, to find the doom and gloom price crash scenarios. Just last week, Deloitte Access, (not for the first time) tipped property to be the ‘worst investment’ over the next few years; I’m sure they’d love to get it right just once!
If you are interested in hearing a more positive forecast for real estate prices, you can usually depend on the Real Estate Industry itself, particularly some of the better known, (not necessarily more accurate!) organisations like Domain or Hotspotting “ guru” Terry Ryder, who infamously wrote that there was ‘no mining boom’ a few years ago and high prices, high rents and growth would continue in some of our mining boom towns!
(Please contact us at [email protected] for further information or the chance to discuss this and other issues in the comfort of your own home)
Probably, by far, the most dependable forecasts we have are those done by BIS Shrapnel on behalf of QBE, the most recent being the Australian Housing Outlook Report 2016-2019. This report is published in October each year and the latest has just recently been released.
While the press report on this release loves the opportunity to use phrases and words like “The Boom is over” and “Prices Plummet”, the experienced property investor will find absolutely nothing out of the ordinary or unexpected in the report. In summary, Sydney has hit the top of its growth cycle and we may see a small correction in the price of units and an even smaller correction, if at all, in house prices; exactly what happened after the 1988 and the 1993 Sydney ‘booms’ but maybe not as much as the small corrections of the last two booms – just don’t expect any price growth over the next 3 years. The forecasts for Melbourne are very similar although we may see a slightly larger correction in unit prices and a small correction in house prices.
Brisbane is forecast to see a drop in unit prices due to the very high level of unit development in the CBD and fringe but house price growth will continue, making the Brisbane house market the strongest growth market in Australia over the next 3 years.
Take away the emotive language of this daily mail article and the truth behind it shouldn’t hurt any property investor in our east coast cities too much and, in fact, should see Brisbane house investors continue to smile! Read more https://goo.gl/a6XArr
If you want to know more about the QBE Forecasts for Housing Price growth or find out more about growth suburbs contact us at [email protected].

Oct 17
0

Brisbane suburbs where house prices have doubled

By | best investment, chinese investment, Investment, Properties, property cycle, Property Research | No Comments

Brisbane suburbs where house prices have doubled
It’s interesting to read about the number of Brisbane suburbs where house prices have doubled over the last 10 years.
(Please contact us at [email protected] for further information or the chance to discuss this and other issues in the comfort of your own home)
The news always seems to be centred on the Sydney market with the occasional comment on what is happening in Melbourne. We read about property investors (and maybe a few home owners) almost buying out a brand new release in Macquarie Park in Sydney at the weekend but one story you will find very difficult to find is about Sydney suburbs that have doubled in value over the last 10 years – there are none. It’s a slightly different story in Melbourne where we do have a few suburbs that have doubled in value in the last ten years but we read and hear so little about Brisbane.

Well, according to Domain Group Data, here are the suburbs in Brisbane that have more or less doubled in value over the last 10 years:-

• South Brisbane*
• Newmarket*
• Wishart* (*have more than doubled in value, according to Domain Group data)\
• Macgregor
• Cannon Hill
• Northgate
• Sunnybank
Apparently the growth is not all about people paying more to get into a suburb. Simon Pressley said, “While someone in South Brisbane may have bought for $500,000 and now their home is worth $1 million, they might have spent $800,000 on the home.”
Sunnybank has attracted a very large number of residents from a Chinese background and like many of the well-populated Chinese Australian areas in Sydney, prices have just grown and grown.
Probably not surprisingly, seven of the top ten of the biggest growth suburbs are located within five-kilometres from the CBD.
According to Andrew Wilson from Domain, most of the growth had occurred in the past three years. Similar to the claims being made about the growth in Melbourne and Sydney, low interest rates over the past few years are being attributed to the cause of much of this growth.
It is interesting to note that BIS Shrapnel’s annual housing report released last week is still predicting house price growth to be stronger in Brisbane than in any other capital city over the next few years, so look out for more additions to the list of Brisbane suburbs where house prices have doubled over the last 10 years. Read more here: https://goo.gl/4ChtqG
If you want to know more growth suburbs in Brisbane and how they may affect your property investment choices contact us at [email protected].

Oct 13
0

Life changes for the property investor to understand

By | best investment, Investment, Properties, Property Solutions, Research | No Comments

Life changes for the property investor to understand

Today we are reading about how the housing boom is changing the way Australians live, quite important life changes for the property investor to understand for successful investment.

(Please contact us at [email protected] for further information or the chance to discuss this and other issues in the comfort of your own home)

It hasn’t been a “long boom” as the writer describes it in the article link below but we certainly have seen significant price growth in our two largest cities, which not surprisingly, has some effect on the way we live and our behavioural changes.

Most of these changes would be very predictable we spent the time to think about them, but the primary question for the property investor should be how important it may be to understand the impact these demographic/life changes have on the demands of certain types of property?

  • The most obvious change is that we are finding that young adults to live in the family home for longer than in the past. We also have what has been described as the “boomerang generation” – the chicks leave the home only to return when they have to face the economic realities of not living with mum and dad. This trend is now showing up clearly in Australia’s demographic data.
  • Closely related with the above, is the fact that home ownership rates among those between 25 and 45 years has fallen markedly during the past two decades. If that decline is not reversed, the proportion of life-long renters in Australia will grow.
  • There has been a huge shift towards high- density living in our big cities. I’d comment that it is incorrect to assume that this is because of the price of well-located urban land increasing relative to incomes. I’d suggest it has a lot more to do with the choice the young in particular are making for the city and city-fringe lifestyle as well as the increasing number of older Australians who are downsizing into more manageable city units.  It is interesting to note that 51 per cent of all dwelling approvals in Australia were for multi-unit houses and 62% in Sydney!  Unsurprisingly, the number of small cottages with a yard is in decline.
  • House price movements have a “clear and consistent” influence on how much some people work. The economists recon there is a tendency for older females in particular to use any unexpected wealth gains from house prices to retire early.
  • High property values also affect the work choices made by younger women and men. Those between 20 and 40 years who own property cut back their hours of work, on average, following strong gains in housing wealth. At that formative stage of the family life-cycle many young couples use housing wealth gains to help manage the juggle between work and family.
  • There is another pretty predictable change – as prices rise, homeowners take on more debt.

You can read more about this here: http://www.smh.com.au/comment/how-the-housing-boom-has-changed-the-way-australians-live-20161011-grzoe1

If you want to know more about how these changes can affect your property investment choices contact us at [email protected]

Or even better, why not give us a call at LIME and we’ll be happy to discuss with you.

Oct 10
0

Negative gearing does NOT mean you are making a loss!

By | best investment, finance, Financial, Investment, Negative Gearing, Properties, Property Research, Uncategorized | No Comments

Negative gearing does NOT mean you are making a loss!

George Cochrane in this week’s money section in the SMH tells us that negative gearing means we are making a loss – what rubbish! – Negative gearing does not mean you are making a loss! Obviously on paper, a tax loss must be showing before we can claim the ‘loss’ against our tax, but very often the astute property investor is making this ‘loss’ through permitted depreciation only, it is not an actual loss in cash but it ‘transfers’ to money in the pocket after tax. By most definitions, money in the pocket is PROFIT not loss!

mortgage rates

Negative gearing does not mean you are making a loss. Property can be positively geared after tax

Let’s look at a hypothetical apartment bought in one of Sydney’s fringe around 3 years ago. It doesn’t really matter how many bedrooms it has or in which suburb, but for the sake of the exercise, we’ll assume it was bought brand new!

It cost $600,000 and the investor borrowed another $20,000 on top of the purchase price to help pay the stamp duty and legal costs, so $620,000 is owed and borrowed at an interest rate of 4.3%.

$620,0X 4.3% =                                               $26,660.00 per annum interest

Annual rates =                                                 $2000.00

Annual Body Corp =                                        $4000.00

Annual Management fee Inc insurance =      $2000.00

Total costs out           =                                                  $34,660

Less rent @ $570 per week =                                    $29,640

TOTAL ACTUAL ANNUAL LOSS =                          $5020.00

As well as the cash loss of $5020, we then have to add the first year depreciation on a new apartment. A very conservative figure for this depreciation would be $16,000.

Now we add together the actual loss and the depreciation loss ($5020 + $16,000) giving a total tax loss of $21,020 in the first year. You multiply this figure by your actual tax rate to give a very good idea of what you will be reimbursed by the ATO so assuming you are paying tax at the following rates (excluding the additional Medicare levy which can also be claimed) then we have:-

30% tax bracket          –            rebate of 30% x 21,020 = $6306

37% tax bracket          –           rebate of 37% x 21020 = $7,777.40

45% tax bracket          –           rebate of 45% x 21020 = $9459

In EVERY case the tax rebate is greater than the actual cost of holding the property. In Every Case, the owner of the investment is in a stronger cash flow position because they bought the property. THEN we look at the close to 25% – 30% market growth in apartments in Sydney over the last 3 years giving capital growth profit on the $600,000 of (600,000 x 25%) = $150,000 profit before CGT!

In summary, over 3 years on a 37% tax bracket you would be around $23,000 better off in your daily cash and around $150,000 better off in asset!

So keep this in mind if you read the following article which explains that negative gearing means you are making a loss! Negative gearing does NOT mean you are making a loss! Read more here: https://goo.gl/iJX5Ow

Oct 05
0

Guide to buying property with your partner

By | best investment, finance, Financial, Investment, Property Solutions, Real Estate | No Comments

Guide to buying property with your partner

Today we have two very good articles which offer a guide to buying property with your partner and many other financial issues that are so often overlooked or completely ignored when two people decide to live together.

I have lost count of the number of couples I have worked with who tell me they are buying an investment property but ‘it has nothing to do with my partner, we keep our financial lives completely separate”.

It’s Spring again and love is in the air so it’s maybe a great time to sit down with your significant other and sort out some problems you may face if you decide to go your separate ways at some point in the future. Probably the two most important issues to recognise are:

  1. If you have been living together for two years or more, then under Australian law you will be treated in the same way as a married couple.
  2. Understanding point 1 above, you should try to steer clear of potential sexually transmitted debt.

Moving in together with a partner can triggers unexpected tax and financial consequences that are not all bad as there can also be unexpected financial gains from living together. Read here: https://goo.gl/ktYEYg

Relationship Australia research has found that disagreements over money are a stronger predictor of divorce than other commonly cited causes of marital disagreements.

Among other things, the 2015 online survey by Relationships Australia found 7 out of 10 couples said money causes tension in their relationships

A lot of people think that a pre-nuptial agreement is something that can only be done before an actual wedding but it makes a lot of sense to organise a pre-nuptial agreement before you move in with somebody. While it may be easy to keep separate bank accounts, what about the money your partner owes to the Bank? Half could easily become yours! Or what about your superannuation or even the inheritance from your parents that went towards paying off the house you both own or maybe its sitting in your long-term deposit or share portfolio; it may only be half yours!

There are other issues that can immediately affect you for good or for bad and they are all worth checking out. Make sure you do your guide to buying property with your partner. Here is a small list but further information on how they affect you can be found on the above link and below..

  • Medicare levy surcharge
  • Private health insurance rebate
  • Businesses and structures

Find out more at: https://goo.gl/pxcLUO

Sep 30
0

What Sydney Housing Bubble?

By | best investment, Economy, Investment, mortgage rates, News, Properties, Real Estate | No Comments

What Sydney Housing Bubble?

Another international story about “The Bubble” – what Sydney housing bubble? Should be he title!  It seems that every month or so we read of overseas ‘experts’ (and very occasionally some local ‘expert economist”) telling us here in Sydney that doom is on the horizon for house prices in Sydney. Instead of peering over price growth charts in their far-away offices on the other side of the world, maybe they should just try finding a property to buy or rent in our great city before predicting yet another housing price crash!

Highlights from the recent UBS Global Real Estate Index Report place Sydney as the fourth-biggest housing bubble in the world. A bubble is something that is about to burst so this suggests that our young in Sydney actually will have no problem at all in entering the housing market as prices tumble when the bubble bursts. How many people do you know who actually believe this is close to coming true?

Bubbles burst when a city ends up with a major over-supply, populations decline and/or when loan repayments become impossible. With all the warnings of bubbles bursting in Sydney over the lifetime of anyone reading this article, it has never happened! Sure, towards the end of a boom period, we have seen prices correct by a few percentage points but no-one alive can ever tell you about the time the Sydney Real Estate market bubble burst.

If you actually believe this overseas take on the Sydney market, then you must also believe the following is about to occur:-

  • Sydney’s building boom is about to leave us with a massive oversupply of new stock
  • Sydney’s population boom is about to come to a screeching halt
  • Sydney is about to be hit with a very large unemploymnet problem
  • Interest rates are about to increase dramatically leaving home owners unable to pay their mortage

If you are concerned about interest rate hikes, read this: http://dailym.ai/2dno9k3 – they are likely to remain low for decades! As for the likelyhood of the other factors – forget it!

 

It would be great for our younger generation trying to make their first step on the housing ladder  if there was the slightest element of hope in our non-existant bubble bursting- what Sydney Housing Bubble – and maybe the topic makes for a little light banter around the BBQ but I’m convinced anyone who knows this great city also knows the story of the bubble bursting is just pie in the sky.

Read more: https://goo.gl/fAhbYi

Sep 26
0

Parents who help to buy investment property at no cost!

By | best investment, Financial, Home Loans, Market, Mortgage, Property Research | No Comments

Parents who help to buy investment property at no cost!

More and more we are coming across parents who help to buy investment property at no cost. If it’s not a first property investment, then sometimes it is a first home buyer getting that extra assistance from mum and dad – and it costs the parents nothing!

The big risk the parents do take is that the children are not trustworthy or that something happens in the children’s work and they are unable to support a mortgage with a lower income. However, most risk can be covered by insurance.

So how does this all work? Simply, the parents become the guarantor for the loan. A guarantor undertakes to pay another person’s loan should they be unable to. Most lenders give home-buyers who do not have a big enough deposit the option to have someone guarantee the loan. With some available loans, the deposit for a new property is held against the value of the guarantor’s home meaning that NO cash deposit is necessary and NO mortgage insurance is payable as the new property is secured against the parent’s home.

If advice was sought before entering into such a contract, it would probably be suggested that the borrowers ensure full risk coverage through appropriate insurances. Today, this could even cover the risk of a borrower being made redundant. Exposure for the guarantor can also be limited and in many cases after $50,000- $60,000 is paid-off the mortgage, or the property grows by that value, the guarantors can be removed by the lender as the guarantor of the loan.

The guarantors (mum and dad) are putting their home at some risk for the sake of their children. What they are giving their children is absolute trust in that they will do the right thing and stick to the terms and conditions of their loan. Mum and dad are not actually putting their hands in their pockets and giving funds to help the children up on to the first rung of the property ladder. It’s a great way for parents who help to buy investment property at no cost to them. Lime Property Solutions can place you with brokers who can fully assist in the loan process. Read more: http://www.smh.com.au/money/-grlrgz.html

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