What could you do with extra cash each fortnight?

Save on interest costs by paying a current mortgage off faster? Save more quickly for the next investment property deposit? Go on a holiday? There are so many possibilities…

Why not consider a Pay As You Go (PAYG) variation?

Often overlooked by investors, the PAYG system is a great way to increase fortnightly cash flow throughout the year. The PAYG method of tax collection was introduced in July 2000 to replace previous versions of the same system, such as pay as you earn (PAYE). The system gives the option of claiming back tax regularly, rather than in one lump sum at the end of the financial year. A PAYG variation means that the property owner’s employer will reduce the amount of tax withheld to reflect set deductions like depreciation on a rental property. In essence it is a way of decreasing the amount of tax paid by the investor each pay period.

It is important to note that submitting the PAYG variation does not replace a normal tax return. A tax return still needs to be filed at the end of the year to calculate the actual amount of tax liability. Your PAYG instalments for the year are credited against your assessment.

A Quantity Surveyor can provide all current and future depreciation values for investment properties in a detailed tax depreciation report. Obtaining the report immediately after the purchase of a property will allow the maximum return from a PAYG variation, as the precise figures will make the instalments accurate.

The flexibility provided to the Investor through a PAYG variation, combined with depreciation deductions identified by a Quantity Surveyor, can be of great help in managing the fortnightly cash flow of an investment property.

Let’s consider a hypothetical situation:

A typical $400,000 investment property would show an average annual loss (or deduction) of $35,000 and an average income of $20,000 for the first 5 years. The deductions include costs such as interest on a $350,000 mortgage, management fees, maintenance and property depreciation.

The total loss (income minus expenses) will result in a deduction for the owner of $15,000. In the 37% tax bracket the $15,000 deduction could generate a tax return (or credit) of $5,550. Under a PAYG variation, the investment property owner can adjust their fortnightly pay to anticipate this return, adding $213 to their pay packet each fortnight.

BMT Tax Depreciation are the only company in this industry that Portfolios recommends. BMT provide  are specialists at maximising tax deductions for investment properties. Talk to an accountant about a PAYG variation to increase fortnightly cash flow. This article is provided by BMT Tax Depreciation.

I’ve been saying it for six months now – and more and more experts are recognising growth hotspots in the Hunter Valley in NSW.

Portfolios has investment properties for sale in the Hunter Valley, and given the increased press on this area we think now is a good time to invest in this burgeoning region.

And here’s why…

In a recent article by “Your Investment Property Australia” the NSW feature in the journal had a glowing report on the current and future prospect for the Hunter Valley.

Australian Property Monitor’s Andrew Wilson says the Hunter Valley is one regional centre that is already charging ahead because of a sustained growth in demand for property due to the influx of workers in support of the booming coal mining industry.

In fact many areas of the Hunter have far outpaced Sydney over the past year, with a healthy proportion posting double-digit growth especially in the Upper Hunter where much of the new mining activity is located.

And we have also discussed in the past the hotspots within the Hunter, and the flow on effects to the region as a whole. In the article Simon Deeming from Hunter Valley Research Foundation backs this point up.

With unemployment at just 4% and a tight rental market rivalling that of Sydney, Deeming points to the huge amount of investment in mining and says that flows through to the rest of the local economy.

“The new mines are further and further up the valley, so that is really benefiting the Upper Hunter, but the infrastructure components run all over the place.” Projects such as the Hunter Valley Expressway and the ports expansion are developments that will spur growth in the Hunter for years to come.

A Close Alternative To Sydney

Another aspect of the Hunter boom is being fed from Sydney. In the article Deeming says he believes the Hunter region is already benefiting from a flow-on effect from its southern neighbour. “The softer side of the economy is exposed in Western Sydney and if you can get a job up here [in mining] rather than building houses which isn’t happening too much right now in the Western Sydney fringe, you can get paid a whole lot of money up here with a better lifestyle.”

Median home prices across the Hunter region average around $400,000, about $100,000 less that most Western Sydney suburbs.

Not Alone On The Hunter

John Anderson, senior economist at forecasting firm Macroplan, calls the Hunter the breakout area in NSW expecting price rises of 7–8%. Terry Ryder, another popular property forecaster, highlighted Newcastle as “Australia’s most under- rated market.”

This is also backed up by the API which we reported in previous articles.

The up shot is this article shows the Hunter is booming and will likely continue to do so. It is a diverse economy, well serviced and a great place to live.

Talk to Portfolios about the Hunter Valley and how you can purchase in this great market today.

Interest rates are a hot topic at the moment, and many including economists are predicting another cut in interest rates in May – everyone except the Governor of the Reserve Bank – but he will hopefully have his hand forced on this one.

So in amongst of this seeming structural shift in the Australian economy – the question remains – why does the RBA keep rates so high?

There are plenty of concerns around the Australian (and global) economy at the moment.

But first looking at the challenges making headlines, these include the decline of some sectors of retail, the increasing cost of manufacturing and of course the strong Aussie dollar that are all making things a little difficult on the home front.

The good news is often left unreported, and backing the Aussie economy is the world’s seemingly insatiable demand for resources. Mining continues to be the shining light in the Australian Economy, places such as the Hunter Valley continue to experience strong economic growth, flowing into strong capital growth and rental yield for property owners.

My prediction is that the RBA will see the disparity in the economy and listen to the economic rationalists who are calling for a rate cut to boost all areas of the Australian Economy – not just the mining sectors. I would expect a rate cut in Mar of 25 points and then for rates to hold steady for the remainder of 2012.

An interest rate cut is good news for Portfolios Property clients, making investing in Portfolios properties in towns near the mining boom an even better deal.

Cash Flow Positive and Good Capital Growth…

… and yes for property investors in 2012, but you must hurry!

Is cash flow positive property and good capital growth still possible in the Australian Property market?

In short we believe so – and the secret is Muswellbrook in the Hunter Valley.

The best news is Portfolios has premium property available right now for you.

Australian Property Investor magazine has just revealed Australia‟s top 100 suburbs that achieved the fastest growing rental rates in 2010.

Muswellbrook was identified as a top 50 location for rental growth for both houses and units, measured by changes in median advertised rents based on data from Australian Property Monitors. In 2010 the area achieved rental growth of 18.5 per cent and 11.5 per cent price growth. The region is expected to grow another 18% by 2014.

According to local agents rental growth is very strong combined with solid capital growth. These two factors in addition to the mining and railway expansion activities are all contributing to the thriving property market in Muswellbrook. There are plenty of jobs being created and people need somewhere to live.

And Muswellbrook has it all – originally established as a pastural settlement, Muswellbrook is not your typical mining town – its growth recently is on the back of the mining boom but the town has an established rural feel that will welcome any new workers.

Three and four bedroom homes are in strong demand and Portfolios has a suite of homes available for purchase off the plan that will be ready for occupancy by the middle of 2012 – ensuring you get to take advantage of the current rental and capital market. All properties will be finished to the highest standards and will be turnkey.

At a time when many markets around the country are running flat, the town of Muswellbrook NSW has emerged as having all the right ingredients. Muswellbrook’s strong economic activity is driven by its expanding coal mining and power generation industry. The NSW government has formally approved the construction of the $2 billion Baywater B Power Station.

Also, the $1.1 billion Mangola coal mine is currently under construction which will create 400 jobs and 700 indirect jobs in Muswellbrook. The town’s diverse economy also includes wine-making, horse-breeding, dairying and agriculture.

With strong rental growth and solid capital growth, the Hunter Valley town of Muswellbrook is standing out to be one of the best boom town hot spots in Australia.

I would like to invite you to get in touch with the team at Portfolios so we can discuss your strategy and show you this great opportunity in Muswellbrook.

Dont delay… these properties will sell fast.

Source – Australian Property Monitors

Property experts have identified the Hunter Region as a prime investment area with BIS Shrapnel tipping an 18% growth in house prices to 2014.

With a surge in population and a lack of rental properties the Hunter has a housing shortage that doesn’t look like being sorted out any time soon. Agents are even reporting occasions of rental wars between potential tenants.

The resources boom has been relegated to Western Australia – but has also been caught up with the abundance of coal, coal seam gas and other minerals in the area. Newcastle – the capital of the Hunter is the nations and the worlds largest coal port and is still expanding.

The Port of Newcastle last financial year exported over 108 million tonnes of coal, and is set to expand over the coming years as the demand for Hunter Valley coal seems insatiable.

Coal aside, the Port of Newcastle last financial year experienced a 25% increase in trade value with increases across all commodities (over 40 in total).

Hotspotting.com.au founder Terry Ryder, in an article on property in the Hunter, identified towns such as Muswellbrook, Maitland and Singleton as the greatest growth spots. The region is recording the largest population growths in NSW. And with continuing population growth, heavy investment in infrastructure in the region and strong jobs creation  (including mining companies insisting on local living policies) there is unlikely to be any change.

The Hunter is more than a jobs hotspot. Unlike a lot of the other resource rich regions around Australia, the Hunter Valley is easily accessible to major cities including Sydney and Newcastle.

An forget about remote outback dust, the local environment has a pleasant rural atmosphere with an even and temperate climate. The Valley is also home to Australia’s premiere wine growing region and boasts a strong tourism market, and now also a cruising destination. The Hunter Valley offers so much in work and play – no wonder Sydney siders are giving up the crowds and pollution for this idyllic location.

Portfolios is based in the Hunter and knows this market better than most. We have properties for sale in towns such as Muswellbrook and welcome the opportunity to discuss your plans and find the right investment property for you.

So what can you do?

Now is a perfect time to talk about refinancing with Portfolios.

The banks are out to slug borrowers – and with rising profits and seemingly increasing pay packets for senior executives, it is any wonder why the news doesn’t wash with Average Joe Public.

There are deals to be had. An article on smh.com.au confirms what we already know – for the astute borrower there could be savings in excess of $200 per month on standard variable home loans (based on a mortgage of $300K).

The trick is to give the smaller lenders a go.

During the first GFC borrowers began to shift to larger lenders through perceived security – whilst much of this was unfounded. Today the smaller lenders represent a safe and competitive option. They are ready and willing to do business with you.

Portfolios has a range of lenders including the big four and can show you where your portfolio will be best suited. It is more than just an interest rate including set up and break costs (the ones still lingering), other fees and ease of use of other offset facilities and linked savings accounts.

Portfolios is concerned about YOU in the deal, what you want to achieve and what works best for you. We even have a range of fantastic properties for sale to make the investment journey in property even easier.

Call Portfolios and lets see how we can save you on your current loans.

Source: http://www.smh.com.au/money/borrowing/negotiate-to-cut-your-rate-20120218-1tfc3.html

Two questions I hear on a daily basis from our clients.

Recently I had an interesting article come across my desk that addressed these two questions. So I would like to discuss what I found useful for our property investment clients.

There are two key factors in considering any investment:

• External Factors – including what we think the market might do and other external events that would affect our investment.
• Internal Factors – which really depend on the investor and their experiences.

At the end of the day investing in anything, and particularly property, is not just about the markets – it is also about the person and what is right for them.

We call this “understanding YOU in the mix” what is important to you, what works for you – forgetting market factors. At Portfolios we want people to invest in property for the long term, therefore we are strong believers in understanding the people investing in property.

And it seems the article I was reading agrees with me. The article calls it a “New Way To Invest In Property” as I unpack some of the elements I’d like to remind you that these are key principles that Portfolios builds its business on.

1. Most property strategies work – it really comes back to whether the investor is able to execute the strategy successfully.
2. Investment locations dont remain favourable forever – quite often when people choose a location based on historically high growth they may be picking at the end of a cycle. All locations will will out perform and under perform the market during cycles.
3. Locations that look bad now may be the next boom suburb. There are countless accounts of locations that have been known to be less desirable that have then gone on to outperform the more desirable locations both in rental return and capital gain.
4. Beware of median location price guide. For example, older suburbs will quite often have a median price that is higher than a realistic median price due to property improvements and subdivision, whilst in newer suburbs may trend lower reflecting that land and buildings are getting smaller.
5. Holding property long term is not the best return on investment. Properties age, markets trend and location values shift all contributing to long term property investment trending along the normal medium of 7-9% in the long run.
6. It can be good to pay more tax. At the end of the day if you are paying tax chances are you are making money. Whilst tax losses work for some investors is should only be a short term strategy if at all. Investors should seek cash flow positive property that will be self supporting and give greater overall return on investment.

So with all this in consideration – you are important in the property investment deal – Portfolios understands this and works with you to bring out the best property investment strategies.

So how many made  New Year resolution to commit to more exercise and eating better? New Years resolutions are a funny thing – but so many people make honest decisions each year and most a broken by the end of the first week of the year.

Lets look at exercise. Most people say they are going to do more or be more committed to it – but why is exercise important?

I am not a medical professional, and  you need to seek medical advice prior to any regular exercise, so I will speak from my own experience. You might even have something to add to this below.

1. Focus

Regular and concentrated exercise works focus in two ways. Firstly it requires focus – you need to concentrate on what you are doing and get the job done – this will sharpen your focussing skills alone. Secondly people who are healthy are able to focus much better than those who are not. So if you are struggling with focus at work, home or in your investment might I suggest regular exercise.

2. Health Benefits

Naturally exercise will bring many health benefits. Regular exercise will burn unwanted fat, increase muscle mass making you stronger and more resilient. Everybody is different and you should always talk with your doctor prior to undertaking an exercise regime – but the general health benefits are there.

3. Happiness

It has been proven that regular exercise makes you happier (at least more content). If you are feeling down or just in a plain bad mood – 30 mins of exercise can be just the ticket. Another side effect is as you get fitter you will also be more confident of your appearance – boosting your self esteem.

4. An Escape

Tied in with focus (rather than running away) – exercise can be a place where it is just you, your thoughts and the road / pool / surf. It is a great place to think – or just to let go of those thoughts which are all consuming right now. An escape like this can give you new perspective and greater clarity in situations.

5. Get Paid More

Yep – you read that correctly. An article I found recently, based on US research, suggests that exercising not only trims your waistline but can also fatten up your salary. The article suggested that regular exercise three times per week could boost your pay by up to 9%. The reasons? Employers often view those participating in regular activity to be more determined and dedicated. Fit staff were also more likely to work harder due to the psychological benefits of being fit. This can also translate into your investments as your focus and drive helps you make better and more appropriate decisions.

What About You?

So there’s a few ideas I have discovered – I’d love to hear from you – particularly if you have definitive research in this area.

The bottom line is – like with investing – the choices we make will always determine our outcome. Our desire at Portfolios is that you will always get the best out of your life – whatever that might be.

Have a great day

Paul Pritchett.

Sources:
http://www.mayoclinic.com/health/exercise/HQ01676/NSECTIONGROUP=2
Daily Telegraph – undisclosed date.

You can even ask the questions

Just a quick update, I am really excited to be sharing some valuable information in one of a series of Business Masters Interviews.

You won’t want to miss this FREE teleconference.

I am being interviewed by David Zeltner from Cash Profit Coaching on “How to Take the Headaches out of Property Investing”

I will be sharing some great information that I know will support you. David will be asking me some really specific questions, however if you have any burning questions that you want answered please email them to david@cashprofitcoaching.com.au in 50 words or less before 10am in the 1st February. David will collate them then I will answer them for you.

FREE Tele Conference

Time: Wednesday 1st February 6.15pm – 7.15pm Sydney Time (AEDT).

(6:45 CDT / 3.15pm WST)

*Please note this tele conference is limited to a number of lines so it’s a case of first in scenario.

Click this link for more information and your login details http://tinyurl.com/businessinterviews

I look forward to answering your questions.

TO SIGN UP CLICK HERE…

Paul Pritchett

Portfolios

I have a feeling this year is shaping up to be one of the most interesting years on record for property investors.

2011 was a reasonably flat year for property with prices not moving much and falling in some sectors. High profile properties and properties on the expensive end of the spectrum also suffered ensuring we all heard about the “doom and gloom” in the media.

Global economic concerns will continue to dominate headlines and undoubtedly our thoughts throughout 2012.

But what about property investment?

In this market, as in most, property investment is a long term investment decision.

Property prices will be interesting in 2012. Property experts agree that in 2012 we are likely to see modest growth in property prices of around 3-5% . However, with any market uncertainty there are great property deals to be had. The astute investor will find well priced property offering good cash flow returns and long term capital growth.

Interest rates are will either remain unchanged or trend lower as the retail sector continues to struggle. This will make a property purchase yield good rental returns in the short term whilst the market recovers and prices trend upwards in the long term, as they have always historically done.

Mining will continue to drive a lot of the good property investment opportunities. As you will see in our feature article mining regions will continue to offer good property investment opportunities.

Already we are seeing buyers returning to the market with property experts tipping a larger influx of buyers from March onwards.

Our feature article on the Hunter Valley - showcases one of the more unique regions in Australia that is growing through a mining boom that is also underpinned by an already large economic base close to Sydney. A number of factors is driving the Hunter Valley’s growth and I encourage you to read the article on investment opportunities in the region and how Portfolios can help.

Welcome back for another year – we trust you had a great holiday break and enjoy a prosperous 2012.

If you want to talk about your plans this year – or find out about some great property opportunities we have at Portfolios give us a call or send us an email.

Source: Domain – www.domain.com.au