Property Investment Is Like Any Other Investment…

…so remove emotion and learn how to make better choices.

I read a great article recently that was directed at property investors who use too much emotion in their choices and often wind up not going past one investment property.

Property investment is about building a portfolio. It is what Portfolios does best.It is all outlined in our feature operational promise The Portfolios Property Way.

When Portfolios work through investment deals with our clients we are looking at an all up investment package not just one property. Who and what is the portfolio serving? What do you want to get out of it – or give out of it? What about your next generation?

The Statistics

I found it fascinating this article quoted statistics from the Australian Taxation Office that showed 73% of investors stopped after one property purchase. The Bureau of Statistics paints a crazier picture – over 50% sell their properties within 7 years citing unforseen costs amongst excuses.

Pointers

The article points out a few pointers on buying worry-free property. Some that I agree with and have added to include:

Buying New: New properties have greater cost recover through deductions and can attract stamp duty concessions. A clean fresh property is also easier to let and less maintenance.

Buy Brick: Brick is a more durable and ageless product that will lower your ongoing maintenance bills.

Choose Quality Work: A property that is well built will hold out for your tenants better, require less maintenance and be easier to sell in the future.

Its Not All About A Post Code: Buying by the post code can be dangerous. Look for good growth. Be aware of the area you are buying in, understand local and national growth cycles and rental yields.

Flat Markets Are Not All Bad: A flat or slightly declining market is not all bad. Good rental yields will see you well place to take advantage of ongoing capital growth that seems to be the trend over 7-10 years.

Supply And Demand: Understand who your area is popular with. Understand local demographic sensibilities like seniors or students, young families, local facilities etc.

The Portfolios Way

At Portfolios we have taken most of the guess work out of choosing the right properties. Over the coming weeks we will be posting some of our processes that show you how we have done the homework for you and can open the door to develop a successful portfolio – even in this market.

Source: Domain Real Estate Magazine – Port Stephens

If you had a win on the Melbourne Cup and invest in property – Tuesday 1 November would have brought you extra good news.

Weak inflation leading into the September quarter for 2011, down to 0.6% from 0.9% assured investors good news on Melbourne Cup day – a drop in the interest rate by 25 points.

The big four banks were quick to act with three of the four major banks dropping their rates by the Reserve and the nab slightly less.

Inflation is low and likely to stay that way for now – retail figures are flat, people are saving rather than spending.

The Good News

But its good news for property investors with competitive property prices, excellent rental yields across the country and the rising confidence in property prices.

The mining boom rolls on with a seemingly insatiable demand for our resources coming from the nations that seem to have unlimited demand – Asia.

In the next issue we will discuss the state of the Australian property market leading into the new year and our informed prediction on where we think things are headed.

At Portfolios we are committed to property investment as a long term process – with great rental yields and flattening prices now is a great time to buy. Give us a call to find out how we can help you.

Click here to read McGrath Market Review Winter 2011.

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Final Call, 5 Studios Left!

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Kingaroy QLD

API ranks it in the TOP 100!

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Gladstone QLD

NRAS approved development!

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Cessnock NSW

Right on the doorstep of the Hunter Valley mining region

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Take Action Today

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With Summer around the corner we start to think about our properties, the wild summer storms and dry heat bringing bush fires – summer is a volatile time for property investors.

But have we considered ourselves in the equation?

What would happen to your loved ones if you were no longer around to pay the bills?

I know it sounds morbid on this fine Spring day but the reality is these things happen, and quite often it is the family that is left holding the financial ball, so to speak.

This is where Portfolios can help.

Portfolios Plus provides the services of insurance professionals through our network of trusted providers.

Personal Insurance

Protecting yourself and your family is a vital part of a successful property investment strategy. If you were to suffer in an accident or be unable to repay your investment loans through disability or death would your family be able to support your portfolio?

What kind of legacy will you leave?

Protecting yourself is one of the greatest gifts you can give to your loved ones if you should be unable to support them.

Portfolios through our insurance providers can offer you one or all of the following insurance products:

• Life Insurance
• Accident Insurance
• Income Protection Insurance
• Temporary Or Permanent Disability

Insuring Your Portfolio

Whilst Portfolios does not provide insurance in this area we recommend you contact your property insurer to discuss a deal with them.

There are other forms, the important thing is to make sure you are covered.

A chat with a trusted Portfolios insurance advisor will ensure you are not in the dark.

Are You Wanting To Know More?

Expressing interest in insurance is simple, contact Portfolios today by downloading and filling out Insurance Signup Form and we will pass your details onto Peter Bentley, our trusted advisor, who will contact you in the coming days to discuss your requirements on behalf of Portfolios.

Are you getting the most from your investment property?

Up to 80% of property investors are not properly depreciating their investment property asset – missing out on the potential to make thousands more.

Its a simple problem – often over looked.

Depreciation on an investment property is effectively free money.

Are you missing out on free money?

Bradley Beer from BMT Tax Depreciation says that “If you own an investment property and have not been claiming depreciation, you will be missing out on thousands of dollars. Even if you are claiming depreciation you may not be maximising your claim. Property depreciation will help an investor to increase their cash flow by reducing the tax they pay.”

Asset depreciation is nothing new to a business owner.  If you earn an income from an asset you can depreciate that asset as an expense, albeit a ‘paper’ expense. Expenses of course are tax deductible.

The difference with property investors is that the Australian Tax Office allows property owners to claim this depreciation as a deduction against their taxable income. Depreciation expenses, along with other ‘paper’ property costs can cause a property to make a loss on paper thus allowing Australian tax payers to claim this loss against their pre-tax income.

What Is Depreciable?

All aspects of a property and the property’s fixtures and fittings are depreciable as all aspects of the property age. If the building was constructer prior to 1985 you can not claim depreciation on the building, only the fixtures and fittings.

What About Older Properties?

Purchasing an investment property should always be about the deal and your personal outcome not whether it is depreciable or now. However, you should know that all properties are likely to have aspects that are depreciable.

We recommend you get a proper depreciation schedule on an older property before settlement. After all it is part of your due diligence on the property.

Are You Renovating – What About The Old Fixtures?

Renovating a property – you may be eligible for scrapping benefits.

Scrapping occurs when the items you are removing from a property, to improve that property, still have both a value and future depreciation benefits in them. You write off the potential depreciation benefit as a deduction against the property income. This also applies to the building.

If you are renovating do not throw away fittings and fixtures without understanding their depreciation potential.

Just more proof that a properly through through strategy and finance deal can get you set up to make the most from your property investment journey. Make it happen with Portfolios.

Get along to this seminar – we know it will help you with your property investment aspirations.

The team from Renovating For Profit are speaking LIVE in upcoming events in Brisbane, Sydney, Melbourne & Perth with the fantastic team at Think And Grow Rich.

Make no mistake, the wealthiest people in the world have generally made their fortunes via property. If you’re someone who believes that property is the way to wealth, then you’ll certainly love Stuart Zadel’s Property Entrepreneur’s Conference where you’ll hear from a number of Australia’s top property experts.

CLICK HERE to secure your complimentary tickets.

As Australia’s undisputed King & Queen of Renovation, Renovating For Profit certainly pride themselves on their reputation and NEVER make personal recommendations for just anyone. They personally guarantee you will walk away from this conference with a tonne of practical information you can actually implement.

SO WHAT’S THIS EVENT ALL ABOUT

WHAT CAN YOU EXPECT?

It’s a 2 day weekend event with a line up of the best property experts in the industry. Called the “”TGR Property Entrepeneurs Conference”, it will feature Australia’s elite property professionals across development, property options, creative cashflow, mindset and of course, property renovation.

Now we know you’re personally interested in property renovation which is a fantastic way of increasing your cashflow. Do you want to learn how to make lump sum cash profits by doing quick cosmetic reno’s or are you willing to take on a larger structural renovation?

There are thousands upon thousands of people all over Australia now buying old houses, getting in, renovating them and reselling for lump sum cash profits.

You can do it! The question is – do you want to learn how to do it properly?

If this thought intrigues you and you want to learn more, come along and hear us present our 8 Step renovation system where you’ll walk away with a heap of practical reno tips and a wheelbarrow of laughs!

Follow the links to get 2 Free Tickets for you to attend this event & an advance copy of Stuart Zadel’s book “Think And Grow Rich Property – 2nd Edition” which you’ll personally receive at the event.

To formally reserve your FREE tickets, please CLICK HERE to secure your seat(s) now.

Be Quick -

Stuart’s events do sell out fast so a word of advice … don’t leave it this to the last minute…..

We recommend you get along to this seminar.

This Property Pays You – Roma Qld Property of the Month

We’ve scoured the Australian investment property market and found it, an investment property that will pay you from day one.

Roma in South Western Queensland is a small town offering big opportunities with high rental yield and good capital growth potential.

Now with a positively geared property to add to your portfolio you could build on your strategy to pay off your mortgage sooner. Roma offers the benefits of long term growth and high rental yields. A well connected town, the urban centre is also a regional hub boasting schools, retail and other essential community services. Roma also has a relatively low unemployment rate of around 3% with property occupancy rates below 1%

About Roma

With a population around 7,000 people, Roma is also located in the Suarat Basin in the western Darling Downs area of Queensland approximately 480kms WNW from Brisbane. It is situated at the junction of the Warrego and Carnarvon highways and is the centre of a rich pastoral and wheat-growing district.

The local agriculture industry is worth approximately $620 million annually, 64.3% being generated from crops. 58.7% of businesses in the Maranoa are in the agriculture, forestry and fishing sector, which employs 32.7% of the region’s workforce.

A Changing Industry Mix

But the industry mix is changing.  The “mining boom” is creating towns that are producing exceptional rent and capital growth. The Queensland Resource Council estimates more than 18,000 new jobs will be created in coal seam, gas and LNG industries and another 23,000 in the minerals sector.

Since 1906 natural gas from the local area was used for lighting in Roma. The industry is now expanding exponentially, particularly with coal seam gas.

Origin Energy’s Spring Gully Coal Seam Gas Development is located about 80 km north of Roma and its projects include an 87 km gas pipeline to Roma’s neighbour town of Wallumbilla, Queensland to connect with the 434 km Roma-to-Brisbane gas pipeline hub there.

The Proposed Spring Gully Power Station is an $870 Million, 1000MW power station will provide electricity to South-East Queensland.

Great Potential

If you prefer positively geared property to balance out your portfolio, contact us quickly as there are a limited number of these properties available. In the fields below leave your name and phone number – this will be sent to our private server and we will be in contact.

Add Roma to your portfolio today.

The sub prime market in America caused all sorts of problems for the lending marker world wide, raising the cost of lending for lenders and of course increasing interest rates for the average borrower. We examined this in our last article on the sub prime market.

But the low doc market in Australia did not cause the same issues locally as the sub prime market did in the US.

Why?

In short the Australian Reserve Bank knew about the American sub prime market and long prior to banks being able to offer low doc loans was able to put a watch on the market and keep it under control.

About Low Doc Loans

“The term ‘Low Doc’ came about because borrowers need fewer documents to apply for a loan. Rather than provide payslips or tax returns, a borrower can simply state what their income is, a process called “self-verification”. Low-doc loans are primarily for self-employed people with limited records of their income.”

One of the controls over the low doc market has been the Australian Taxation Office. Unlike the IRS in America, the ATO has been watching the low doc market for people who understate the income on tax records for tax purposes and then ’self determine’ their income to be higher for the lender. With this stand over tactic the low doc market has not had the same free reign.

History

Back around 2005-7 when the low doc market was booming the Reserve Bank was more concerned about borrowers who used low-doc loans to overstate their income and get their hands on more money.

“In its biannual Financial Stability Review, early 2005, the Reserve put low-doc lending on its watch list, citing it then as a potential threat to the banking system.” This action perhaps protected many Australian property investors and home owners from the credit crunch that took hold from late 2008.

Some Banks More Exposed Than Others

The rural / regional banks in Australia, perhaps desperate to increase their market share, were the major protagonists of low doc lending. Banks such as the Adelaide Bank was at one stage lending over 30% on low doc with Suncorp around 10% with the majors staying somewhat in single digits.

Criteria In 2010 – Greater Stability

Today, in Australia, to be able to apply for a low doc loan you must be able to secure 20% of the equity yourself. Banks will no longer lend above this amount on a low doc loan giving the borrower and the lender a healthy buffer against loss.

If you look on the Portfolios Property site you will see in each of our property deals we supply both low doc and full doc scenarios with lenders requiring 20% or more equity for low doc.

Managing Lender Risk

The lenders also manage the risk by requiring mortgagees to take out lenders insurance. Mortgage insurance protects the lender from default and can cost over $10,000 on an average loan.

The financial difficulty and bankruptcy clauses in the US has allowed them to become a nation of entrpreneurs, but has also made it too easy to default.

The ‘get out’ clauses in Australia are much tougher than in the US. While lenders here went on a spending spree in similar proportions to America, the regulatory constraints of getting out of your debt in Australia is much tougher than overseas. In America lenders in many instances were simply walking away from the properties leaving the keys in the door and sometimes within months were back in another mortgage again.

Having a glut of properties worth nothing, with huge mortgages over them, and no one to buy them stung the American, and world financial system hard.

This situation hasnt been and is unlikely to be repeated in Australia with tighter controls.

A Good Strategy For Some

We recommend you review your loan types with Portfolios. Low doc loans are still available and in the right conditions can be very profitable.

Contact Portfolios for more information using the form below.

We are constantly being asked why we put so much of a focus on Queensland when there are great deals around the country in property investment.

At Portfolios we scour the entire Australian property investment market, and will be bringing other property opportunities from other states, but it is true, we have seen the most potential to date in Queensland.

In this article we will show you why Queensland show great potential in property investment and why we have chosen to offer such a large proportion of our property selection here.

Firstly you will you note that all Portfolios Property is measured against our strict property selection criteria. In selecting these properties only properties scoring more than 15 out of 20 even make our short list, with the majority of our offering being 18 or above. See our previous article on property selection.

When we show you Queensland’s benefits, perhaps you might ask yourself – when looking at your potential investment – whether the area you are investing in stacks up.

What About Queensland?

The real Gross Domestic Product growth in Queensland is the highest in the country. When placed on the international stage, GDP in Queensland even out performs global competitors like UK, USA and Japan. This is staggering for one state. Much of this is on the back of the resources sector but there is also heavy expenditure right across the state in infrastructure.

Following on from above, Queensland is home to the largest public infrastructure spending program in Australia’s history. You only have to take a drive through Brisbane to see the massive expenditure taking place, but outside of the metro areas ports, roads and rail are being constantly upgraded to meet the growing market.

Queensland is home to a growing young and entrepreneurial workforce fueled by numerous world-class educational institutions. In step with this is Australia’s fastest growing consumer market, being buoyed by the relatively young affluent population. Not to be outdone many parts of Queensland are experience growth in the retirement market with favourable climate and low cost of living.

In terms of trade and economy, Queensland has the 2nd highest number of international arrivals into Australia behind Sydney. The East Coast now known as Australia’s trade coast – connects Queensland to global markets (through many ports including Gladstone, Cairns) There are over 127,000 businesses and the number is growing daily.

Queensland has been ranked by KPMG as one of the world’s most cost-competitive locations. With the fastest growing population in Australia – major domestic inward migration – as well as from outside Australia, it is unlikely property prices will stop growing in the near future.

So there you have it – we believe Queensland is a great market for property investors.

Portfolios encourages you to consider your next investment in Queensland and as always are happy to discuss your unique requirements and investment strategy to help your investment property portfolio grow.