Click here to read McGrath Market Review Winter 2011.

As we enter into the fifth month of 2011, are you wondering whether the market is going to gain traction and build upon some early positive signs? Positive key drivers are indicating that we are now in one of the most important selling periods of some time. What are the 8 key drivers that are making 2011 a strong year in property? Read on to get McGrath’s in depth Market Review for Autumn 2011.

Read the John McGrath’s Market Review – Autumn 2011 here.

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.

You Haven’t Missed It!

Sign up today and watch previous sessions from your computer…

Portfolios is supporting this event with our partners Renovating For Profit. We have had a long and fruitful relationship with Renovating For Profit and believe this program will suit any one interested in investing in real estate. If you wish to ask us more questions please leave your details in the fields following Cherie’s letter below. You can also register and catch up with past seminars at any time.

Hi, its Cherie from Renovating For Profit here.

I’ve got some great news to share with you. I’m involved in a brand new ONLINE event where myself and five more of Australia’s most knowledgeable real estate professionals are coming together for a new online conference.

Its called the Masters of Real Estate Investment and this event is new and unlike anything I’ve seen, because it will deliver good quality property educational content straight to your computer from the internet, at absolutely no cost to yourself.

Topics to be included cover developing a positive cash flow property portfolio, renovating for profit, creative property deals – including how to buy property with next to no money, property tax structures and smart property development strategies.

Many of you who have seen me speak before, know I’m a big advocate of self education. Even if you pick up only one new tip, its that one tip that could potentially help you on your way to financial independence.

To date, I know that 9 hours of online property content has already been developed, all put together by professional investors and speakers like myself. The content will be good and more importantly, share information and strategies that you can use in the current property market right now.

The conference series kicks off on September 16th with an overview of the Australian property market with John Lindeman, head of research at Residex, Australia’s oldest property research company.

John’s presentation is amazing and a must for serious property investors!

I think you will really love this and truly hope you value the information. To be part of the event, please CLICK HERE to register now.

Enjoy!

With the Kindest of Regards

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.

Ready Now Or Ready Later? What’s Your Preference?

This month we take a brief look at investment properties purchased off the plan and those that are turn-key.

Which is better? We take a look at the pros and cons of both.

With an off the plan investment property the purchaser is literally buying an apartment “off the plan” based on perhaps a completed prototype or even on the developers history in the development game. Usually the developer is required to sell a certain number of properties prior to the development commencing construction.

On the other hand a turn-key property is as the name implies,  a completed new property that is ready to “turn the key” and move in.

Off The Plan

So lets look at the pros and cons of off the plan first.

Pros:

• You secure a property at today’s prices with minimal initial cash in (sometimes as low as $1000) and dont have to worry about mortgage repayments for some time – or any other cost for that matter – BUT – you also dont have income from a tenant
• Depending on lead time (some as long as 18 months) you could experience substantial capital growth and sell for a profit at time of completion
• You can sometimes determine basic inclusions and colours – usually from a set range so you may have the opportunity to connect with the market better than your developer
• You are gurranteed the property will be brand new and fresh.

Cons:

• There is a risk that a decline in the property market could spell trouble for values and a drop in your LVR. You may not be able to finance the full loan at settlement.
• If property values have plateaued or fallen, the rental yeild of the property may also have fallen
• The developer is only as good as their last project – you need to be sure that the quality of construction and fitout will be in keeping with the price you are paying and the market your development will be aimed at. There have been reports of developers changing fit out at the last moment to cut costs.
• Buying off the plan can be difficult for someone who does not visualise well – being clear on what you are getting, sense of space and functionality will be important.
• You could start paying your mortgage long before a tenant moves in – sometimes the builders work on a progressive scale of work completion – particularly if you are building a house for investment. You could be paying your mortgage months before a tenant moves in, particularly if a hefty deposit is required.

Turn Key

Turn key properties are ready to be tenanted immediately. You will notice that properties listed by Portfolios Property are always turnkey, we want people to being their investment journey today.

Pros:

• You can start your investment cycle almost immediately. Once you have settled you can start earning money from tenants. To get the first tenants in we advise you to work with local agents during the exchange phase to ensure a tenant is ready when the mortgage repayments start.
• Turn key properties in many states attract stamp duty concessions – you need to check in your local state – stamp duty concessions can wipe thousands off the purchase costs.
• You can see what you are getting in terms of investment – you can go through the normal process of getting a building inspections and of course take advantage of the maintenance period of the new property from the builder.

There are not a lot of cons with the turn key option – specifically related to turn key – at the end of the day you get to choose the property that best suits your situation and market and with the assistance of Portfolios can even look at how the investment plays out over the coming years.

We look forward to being able to work with you to make property investment happen.

Welcome to the end of the 09/10 Financial Year.

Paying tax is something we all need to do but none of us like to do.

Next tax time you could be adopting legitimate tax minimisation strategies reducing your tax burden whilst building a strong investment property portfolio.

Find out how…

Before reading this article you should always seek proper, independent financial advice before making any investment decision. See the Disclaimer section at the end of our legal page.

With tax time looming we will all be doing our tax returns and probably realising one thing – we are paying too much tax.

Tax is not a bad thing – someone has to pay for our roads, schools and other infrastructure, but there are legitimate ways to reduce your tax by using the money for something more worthwhile like building an investment property portfolio.

We get questions all the time – how can you own a property for under $30 per week? Why so little?

Well one strategy is Negative Gearing.

What Is Negative Gearing?

Negative gearing strategy in Australia is motivated by our tax regime, which allows deduction of ongoing losses against taxed income. This is further offset by taxing capital gains at a lower rate.

This might sound complicated but in reality it isnt.

How It Works!

You purchase a property and incur costs on that property – these costs include third party expenses, loan interest and set up costs.

If the costs on the property are greater than the (rental) income generated you will technically be incurring a loss on that investment.

But the story continues…

You Earn An Income? This Is How It works

In Australia the losses made on property are able to be weighted against your taxable income.

You will need to have a clear picture of your costs versus income to know your losses – costs include depreciation, setup costs, mortgage costs and interest, ongoing maintenance and property costs such as rates. Just like your personal income – you can claim anything that contributes to the generation of income in your property.

All Portfolios properties come to you with a clear understanding of the costs involved so you make an educated decision on the potential for negative gearing of the property before purchasing.

Your capacity to cover the loss is an important factor in determining the right deal.

So If It Is  A Loss Why Do It?

There are a number of reasons why people consider negative gearing as an option for their property investment strategy from straight tax minimisaton through to the great investment returns to be made on the property.

Many of the Portfolios properties are expected to return in excess of 250% return on investment giving you great returns in any market.

Property is a great investment, but like any investment there is risk and you should seek proper independent financial advice.

Talk to Portfolios and see how we can help you make those steps to a future in property investment.