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Jan 09

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Is Property investment a better investment than shares?

By MLKtech | best investment, Investment, Properties, rent | No Comments

The beginning of a new year and another perennial article is published in today’s paper asking the age old question “Is property Investment a better investment than shares?”

The answer, of course, is ‘yes’, even when the study methodology makes it as difficult as it possibly can for property to exceed shares!
(Please contact us at info@limepropertysolutions.com.au. for further information or the chance to discuss this and other issues in the comfort of your own home.)
The largest problem in trying to compare growth and return in investment property to the share market is always the methodology used in the study. The article printed in today’s news “Rent or Buy. The evidence is in” (read article here) is at best confusing although the result is perfectly clear – property is the better investment!

The article is not really about investment at all. As the title suggests, it is asking the question “Are you better off renting or better off buying your own home?” Most people would have enough common sense to know that you are actually better off owning your own home (as the study also finds!) but the confusion arises when the comparison is made between investing all the funds you don’t spend on buying your home into the share market thus, in my mind, making the comparison one of investing in property to investing in the share market. This is NOT the case in the methodology scenario described. Why you ask? Because a well set up investment property for someone earning around $100,000 per year would possibly deliver an additional few thousand dollars per year in positive cash flow – it would not be a cost and certainly not a significant cost.

When we examine the idea of ‘rentinvest’ (see earlier blogs for more details) where we continue to rent but also buy a property investment, then the article really makes no sense at all in the real world. We do not think your own owner-occupier home is a real investment – it is just something we must have to live in. The only way to measure share investment against property investment is to compare apples to apples; that is make sure we are comparing an investment property return against a share market return.
However, whichever way we look at it, property investment makes a great deal of sense!

(If you want to know more about property investment that can be cash positive after tax from day one, contact us now at info@limepropertysolutions.com.au.)

Dec 20

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Turn $15,000 into a staggering $10 million through property investment

By Hugh Frame | best investment, Investment, Properties, Property Research, Property Solutions, Real Estate | No Comments

$15,000 into a staggering $10 million through property investment

Scott and Mina O’Neill, aged 28 and 29, own 25 properties worth more than $10 million across the country
The married couple purchased their first home together in 2010 in Sutherland, south of Sydney
They have built their property portfolio by rentvesting, renting their own home and investing in others

A young couple in Sydney’s south have turned $15,000 into a staggering $10 million through property investment.

It’s a great Christmas story and one any young couple should be thinking of repeating starting in 2017!

(Please contact us at info@limepropertysolutions.com.au for further information or the chance to discuss this and other issues in the comfort of your own home.)

Scott and Mina’s story can be found here http://dailym.ai/2gNPBDS

It’s a story many other young couples could share and one many have shared, turning a relatively small savings account into a multi-million dollar portfolio. Their story is almost a perfect duplicate of the information to be found in the Lime property Solutions free eBook which you can download free from here: www.limepropertysolutions.com.au

To turn $15,000 into a staggering $10 million through property investment, the O’Neill’s have used the strategies Lime teaches and recommends, particularly with understanding markets and market timing. They have, in a relatively short period of time, built a portfolio of 25 investment properties while they continued to rent their own home. Lime Property Solutions can explain a few things to clients which would make their portfolio even less risky and almost certainly better performing than what the O’Neill’s advocate. For example, a better understanding of yield and return can make a portfolio much better performing over a relatively short time-span.

If you want to know more about how you can build a multi-million dollar portfolio through property investment, write to: info@limepropertysolutions.com.au.

This couple manage to make their millions through rentvesting.

Rentvesting refers to purchasing an investment property but continue renting. You could turn $15,000 into a staggering $10 million through property investment!

Nov 21

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What should you be looking for in a new investment property?

By Hugh Frame | best investment, Investment, Properties, Property Research, Real Estate, rent, Research | No Comments

What should you be looking for in your new investment property?

It makes sense to understand changing demographics because what you buy today as a ‘good’ investment property may not be so good in 10 or 20 years when you decide it’s time to sell, so what should you be looking for in a new investment property?

An investment property that works today may not be as desirable as a home for our population of tomorrow so it’s important to keep track of changing demographics and buy an investment that is most likely to appeal to tomorrow’s owner occupier market.

Just a couple of decades ago, the average Australian household had around five people living in it. Just five or six years ago, the average home had just over 3 persons per household. This has increased slightly as more and more older children decide to stay at home for much longer. The big family for most Australians is a thing of the past, in the 2012 census it was stated that most households within a small radius of the centre of most of our cities had less than two persons per household!

The growing demographics of home owners and renters, the growth group for new households comes from:

Young professionals
Young couples
Empty nesters
Retirees
Single parent families

It would seem that with older children staying at home longer, as well as the above growth demographics, it’s important to consider their needs for a good investment property.

(Please contact us at info@limepropertysolutions.com.au for further information or the chance to discuss this and other issues in the comfort of your own home.

There is a move towards the city centre with these groups and the need for well-designed units and townhouses with a bathroom each is becoming an essential for shared living, whither with a relative or a friend. Good-sized bedrooms are also an essential with room to entertain.

Nearly 60 per cent of those aged 15-29 are still living with their parents across the 35 wealthy member nations of the Organisation for Economic Cooperation and Development. In Italy, Slovenia and Greece more than three quarters of that age cohort have not yet flown the coop. Australia’s proportion has reached 54 per cent. Read more https://goo.gl/B3U0kW

This is a trend that is unlikely to change for some years, particularly as house and unit prices continue to rise. Make sure you buy an investment property that will work for you in the future, do the research now before you buy. So what should you be looking for in a new investment property? Consider the future demographics that may eventually want to purchase your investment property.

(Please contact us at info@limepropertysolutions.com.au for further information and the chance to discuss this and other selection criteria issues in the comfort of your own home.

Nov 15

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Is a unit a better investment than house and land?

By Hugh Frame | best investment, Investment, Properties, Property Research | No Comments

Is a unit a better investment than house and land?

Is a unit a better investment than house and land, one of the most common questions we are asked by property investors? It’s amazing the number of Real estate homilies that are so completely inaccurate yet so many people are prepared to believe them.

(Please contact us at info@limepropertysolutions.com.au for further information or the chance to discuss this and other issues in the comfort of your own home.Location will make the difference

Location will make the difference, not building type

One of the common ones is that we should only buy house and land, the old saying being that “land appreciates but buildings depreciate”. I wonder how you would get on trying to convince Hollywood star Russell Crowe of this this one. Russell has opened the doors of his Finger Wharf apartment in Woolloomooloo to select off-market buyers ahead of an official listing early next year.

His price expectations on the landmark harbour front apartment are $30 million, which would break the current national apartment record of $25 million…… And the land content of this apartment is exactly zero as it is built on a wharf above water. The original selling price when bought off the plan in 1998 was $9.8 million. Crowe made the purchase in 2003 setting a Sydney record of $14.35 million. Current neighbours include billionaire Lang Walker and broadcaster John Laws.

Affordable Housing fix is years away

By Hugh Frame | 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 info@limepropertysolutions.com.au 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 info@limepropertysolutions.com.au.

Oct 17

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Brisbane suburbs where house prices have doubled

By Hugh Frame | 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 info@limepropertysolutions.com.au 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 info@limepropertysolutions.com.au.

Oct 13

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Life changes for the property investor to understand

By Hugh Frame | 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 info@limepropertysolutions.com.au 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.

If you want to know more about how these changes can affect your property investment choices contact us at info@limepropertysolutions.com.au

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

Oct 10

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Negative gearing does NOT mean you are making a loss!

By Hugh Frame | 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!

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

Sep 30

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What Sydney Housing Bubble?

By Hugh Frame | 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.

Choosing an investment property and understanding demographics

By Hugh Frame | best investment, Economy, Investment, Properties, Property Research, Real Estate, rent | No Comments

Choosing a good investment property and understanding the demographics

Choosing an investment property and understanding demographics of a neighbourhood go hand in hand.

When we are looking at an area or suburb for investment, it is essential to have a look at the demographics of the neighbourhood to understand the age groups attracted to the area and the likely incomes and type of housing that will be the most attractive for the majority of people wanting to rent and wanting to buy as owner-occupiers in the area.

It makes sense to be buying a modern two-bedroom apartment close to the city for your investment if you know that a large percentage of the population in the area are young professional renters with a reasonably high disposable income who can afford to pay the rental your investment should achieve.

Report found Cardiff as the most segregated city in England and Wales

Likewise, in areas where we see large numbers of retirees moving to smaller single level villa developments, wanting the added security of a gated community, then perhaps that type of property may make the best investment in that type of area.

A recent report from the UK may be of some interest to Australian planners also as we see the median age of residents in our cities fall considerably as young Gen x and Gen Y renters move closer to our city centres. The article entitled “Housing crisis ‘is driving young and old apart as different generations are being forced to live apart‘ , highlights the fact that age segregation is now an planning issue in many UK cities.

The study found that:

Under-30s are stuck renting in Britain’s regenerated city centres
In a rise in ‘age segregation’ the middle-aged dominate the coastal regions
The lack of affordable housing in many areas has damaged society, says a report by the Intergenerational Foundation

Recognise any of these issues for our Australian cities? Older people congregating in smaller towns and outer suburbs has implications on where to place health services and other planning issues as well as some of the more obvious problems ‘age segregation’ may cause.

Choosing an investment property and understanding the demographics of a neighbourhood is essential in understanding the type of property likely to work best for you both for finding renters immediately and for future capital growth in having the type of property most likely to appeal to future owner-occupiers. Read more: https://goo.gl/CbaxP7

Properties

Is Property investment a better investment than shares?

Turn $15,000 into a staggering $10 million through property investment

What should you be looking for in a new investment property?

Is a unit a better investment than house and land?

Affordable Housing fix is years away

Brisbane suburbs where house prices have doubled

Life changes for the property investor to understand

Negative gearing does NOT mean you are making a loss!

What Sydney Housing Bubble?

Choosing an investment property and understanding demographics

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