Most markets are at the beginning of a long term growth cycle. Property remains an excellent asset class for long term investment and definately offers more stability than the volatile share market.

Once confidence returns, Australia will be in good shape. Unemployment remains relatively low and rents are very strong.

A key factor is interest rates.

Buyers have been concerned about interest rates increasing and we really need to see a rate reduction. With three year fixed rates now below the variable, this indicates the banks belief that interest rates are on the way down. A great relief for home owners.

Some market observations:

* In RP Data’s June results, Canberra was the best performing capital city with property values up 0.50%. Prices are now beginning to stabilise after 3-4 years of substantial growth.

• Vacancy rates are very tight with renters competing strongly in the markets with little stock. Some renters are offering higher rents or advance payments. According to RP Data, there were 9,000 less new advertised rentals in July 2011 vs July 2010 nationally.
• There has been a record number of refinancing which indicates buyers are taking advantage of better deals so they can upgrade or at least reduce the interest rates on existing properties.
• An increasing number if young people are choosing to buy an investment property ahead of their first home.
• Many consumers have de-leveraged by paying down their loans. Whilst not good for retail, they may have more cash in the bank and their super fund. In some markets, people are downsizing to a more affordable home specifically to reduce the size of their mortgage.People are conscious of debt and are acting accordingly.

Source: John McGraths Market Review – Spring 2011

Click here to read McGrath Market Review Winter 2011.

In this second article we give you further insight into making property renovation a great opportunity for you.

The truth is that renovating investment property is an involved and complicated process. But we can help.

In last month’s article we looked at a range of issues including starting out with your end game in mind, understanding the gains you wish to make by having a clear picture of your entry costs, improvements to be made and buffering a contingency.

I remind you that becoming a great project manager is perhaps the best skill you can bring to any reno deal.

Here are some more tips to guide you in successfully renovating an investment property:

1. Be Armed With Knowledge

When you look at a property there is a lot you will need to know about it. Here are some questions you might ask:

• What is the property worth?
• What needs to be done?
• What should be done to capitalise on a profit?
• What is the cost of works?
• Based on your end result get an honest market appraisal on your plans

Due Diligence and knowing all the ins and outs are the key.

2. Know Who Your Selling To – Remember Capital Gain Is The Game

Too often in investment property renovation investors are unclear of the market they are selling to. Make sure when you are deciding on the kind of dwelling you are ending up with that the improvements will suit the local demographic.

For example, if you are renovating a small two bedroom apartment in a dense urban area surrounded by chic cafes and restaurants you are likely to be targeting a young professional or possibly even singles market. Know what this market is looking for and adapt appropriately. Also use colours, textures and furnishings that are appropriate for your market.

This is a good time to remind budding renovators to not get too personal or emotional in your improvements. You are improving to sell not to live in. Keeping it simple also keeps the profit larger.

3. External Factors

What else could possibly hinder the profitability of your development? Use the settlement period to discuss your plans with the local council, if independent assessors are involved perhaps get them onside with your ideas.

Build a relationship with a reliable building team – particularly one you might be able to pay to handle your estimating for you – if you aren’t planning on doing it yourself. Truth is we do very little of our own physical work now purely managing the deal and the project.

At Portfolios we can even show you strategies how to finance the deal using other people’s money and time.

4. Get Loan Pre Approvals

This is your greatest bargaining tool. Both vendors and agents love them and it could help you get a better purchase deal.

Also once you have costed the entire project and built in contingencies, and been approved for the finance then you can get to work immediately and not spend costly months waiting for additional finance.

5. Ask If You Are Unsure

Asking questions can save you from embarrassing mistakes. Ask experts, get information on your potential deal from everywhere possible including competing agents, local council, neighbours, builders, professional property inspectors, valuers, independent property information specialists, and the list could go on.

Financing The Deal

So the deal looks good and you have done your homework – like in any income generating opportunity (or business) you have to spend money to make money.

We have personal experience in renovating property. By talking to Portfolios we can show you how to structure the deal and in turn finance it to maximise your returns, and our friends at Renovating for Profit can show you how to make a lifestyle out of renovating investment property.

First things first fill out a portfolio review or give us a call and we will help you through the steps to making a good life out of investment property renovation.

Make It Happen – you’ll love it.

Paul Pritchett

Most Searched Terms: Portfolios Property, renovation for investment, capital gain, capital growth, Australia, Sydney, Melbourne, Brisbane, Newcastle real estate market.

A Never to be repeated bargain! Contract has crashed, and YOU are the winner!!

One Only House/Land package in town of Chinchilla for just $375K with Ducted Aircon.

Call Keiran at Portfolios Property for details on 0447 255550

$1000 *refundable EOI, will secure this for you TODAY! This wont last!!

Find out more about this deal…

At Portfolios we have profiled Chinchilla a number of times previously in this broadcast and have profiled it on our property website.

We believe that Chinchilla is a fantastic investment property opportunity and having only a one property left at this fantastic price it will be a shame to miss out.

Chinchilla is located in the Darling Downs 250 Km NW of Brisbane. It is a popular tree change destination. With an historical capital growth of 14% and rental yield 6.6% with vacancy under 1.0 the stats really hold up for this property. If you earn in the 40% tax bracket – this property could be yours from just $43 per week.

Strong population growth continues throughout the region alongside ever increasing job opportunities and tightening rental availability has driven up rents sharply.

The town has a great community spirit and has hospitals, schools and many ammenities of normally much larger towns.

Over $10 Billion dollars is currently being spent on Coal mines, Gas pipe line, Rail line linking rural Qld, gas exploration & waste water purification.

You can find out more about Chinchilla here but we suggest you dont delay to get this great price.

What if you could own your own investment property from just $32 per week? *

You could be realising return on invesmtent in excess of 700%.

Portfolios investment property of the month is Chinchilla.

Chinchilla, located in the Surat Basin Region is undergoing a massive build up of workers and their families, with a strong capital growth over the last 3 years and with the newly signed LNG deal with China this is a place to buy.

Chinchilla is located about 200km west of Brisbane with ever increasing job opportunities. Tightening rental availability has driven up rents sharply and will continue to do so.

The region has hospitals, schools and many amenities of normally much larger towns. Over $10 Billion being spent on Coal mines, a gas pipe line, rail links, gas exploration and waste water purification projects.

The government is also investing in rail in the Darling Downs, linking this region and its rich, diverse production with export ports such Gladstone.

According to investment sources the region around Chinchilla enjoys a 98% employment rate and a rental vacancy rate around 1%.

If you earn over $80,000 per anum we’d love to talk to you about this deal. We have turn key, brand new, four bedroom homes ready to be tenanted today.

If you earn under $80,000 then you might find this deal to be worth while with low property price entry, expected capital gains and expected rental hikes in the coming 12-24 months.

Chinchilla presents a great opportunity. You can view this and other properties in this region at www.portfoliosproperty.com.au or just go to Featured Properties.

With the average loan for an investment property being refinanced every three years it is little wonder the banks have introduced fees to make you think twice about moving away from them.

Loan exit fees have become common place in the mortgage market. Today very few banks provide loans without them. But it hasn’t always been the case.

Lenders exit fees serve to discourage people from refinancing to other banks – or even with the same bank. They are designed to keep customers as long as the bank can.

The challenge for banks is that most home loans do not make as much profitability in the first few years as they do in the ensuing years. Banks need to recoup profit if the customer chooses to exit early.

Fees can range from $400, an average of major lenders around the $750-$1000 mark with non-bank lenders charging a percentage to exit of around up to 2.5%.

Whilst we dont necessarily agree with these exit fees it is something we have work with developing your strategy.

What you need to understand is your strategy affects the loan options and it is far more than just the interest rate.

At Portfolios we understand all consideration of your deal and the associated loan/s which is why we aim to offer up to three loan options into your strategy each with its own profile and considerations. Make sure you take the time to review and discuss.

For example if you are purchasing to renovate and sell  quickly  then we will offer up to 3 loans that typically would have  lower exit fees for great profitability in your deal.

However if your strategy is to buy and hold the property then the early exit fees are not so much of a consideration.

Portfolios will work with you to develop the right strategy that includes Structure, Strategy, the Property and Finance.

If you wish to look at your options and get started complete our FREE Portfolio Review and we will be in contact with you shortly.

Portfolios looks forward to working with you to …Make it Happen.

With all the talk once again of flattening markets in Australian cities astute property investors are looking to regional Australia, Queensland in particular, and with good reason.

There are plenty of opportunities to be found in regional Australia particularly in the resource rich state of Queensland where the mining boom is being re-born in towns where property values are still affordable.

I seriously think we might be staring at another Karratha in the Darling Downs and around service ports like Gladstone. Karratha is a mining town in northern WA wher the property market soared almost overnight due to the intense mining boom of the last decade. Average properties became million dollar hotspots and rents went from average to exorbitant in a short space of time.

The best part of the Darling Downs and Surat Basin area is that property prices are still reasonable and the large projects for the region are starting .It is a case of strike while the iron is hot and this one is hot.

The government and private sector have committed to investing over $10bn in infrastructure which will on its own create significant demand for housing and rental accommodation.

We mentioned in the last newsletter that the largest company to company deal Australia has ever seen has been signed between a Chinese resource company and an British mining company based in Queensland that will see Liquid Natural Gas exported from the Surat Basin to China over the next 20 years.

Putting the Darling Downs aside there’s Gladstone, and surrounding local region, already a strong infrastructure hub set to receive billions of dollars of investment on top of that invested in the last few years in new industry, mining and infrastructure.

Coming back to something more predictable are the growth spots in SE Brisbane. Brisbane and the Gold Coast is the fastest growing population centre in Australia. Areas such as Coomera north west on the Gold Coast Hinterland is a great investment.

Portfolios has investment properties available in all these areas, ask us about places like Chinchilla, Dalby, Kingaroy or Gladstone, Calliope or Coomera. Properties like these ones present a great investment opportunity to enhance any portfolio. We already have clients snapping up these properties sometimes multiples of them.

You can see some of these properties in our Featured Properties section or ask us about other opportunities for you.

The team look forward to working with you to… Make it Happen

Will the market go up?

Will the market go down?

Will it stay exactly as it is?

What is happening out there?

Without predicting the next market movements lets talk about the state of play.

Currently in Australia the economy is looking good, growth is abounding, people are sensing a greater level of confidence in the market as evidenced in a recent news article. CommSec’s National Performance Guage shows that those who owned shares and property have increased their wealth by 8% in the last year and 40% in the last decade.

The way I see it there  are two sides to the property market – what is going on locally and what is going on globally. I just want to focus on the local market for now.

The Australian Economy is performing well. Growth indicators are up, interest rates are climbing in response to strong economic growth and there has been a considerable jump in house prices.

In the favour of property investors is the growing housing shortage facing Australia. It is predicted that Australia will need an additional 800,000 properties than it is currently supplying if nothing changes between now and 2030. This is a phenominal claim, and even if something is done this is great news for property investors.

A shortage of properties means great potential capital gains, as well as increased rentals driving more cash flow positive property, or at least swallowing the gains in interest rates.

Finally, on the economy, banks continue to be tight in their lending – so getting money for that investment property is a challenge without someone like Portfolios to work for you. We have sound long term relationships with a number of banks and financial institutions , with our level of understanding of the finer details of their policies and ways we can often help you where others cannot.

So boom or bust? – the age old question is when is the right time to buy, but a long history of capital growth has taught us that now is always the right time to buy in the long run.

Join The Queue…

What would you say if we said we could help you pay off your home loan in 6 years by buying investment property?

Do you know there are strategies you could be following that could be leading you to financial freedom while paying off your house sooner.

A recent report put out by PRD Nationwide notes that Australian households now need on average 29% of their income to service the average home loan.

There is a significant impost on already cash strapped families, and with rates set to rise – we believe at least 0.5% over the course of 2010 – affordability can only get worse.

Firstly what does this do to the property market?

The first affect could be slowing the rate of people purchasing property – putting pressure on home prices but also then placing upward pressure on rental as more people entre the rental market.

Secondly it can slow the price of houses as people choose to stay away from property.

Australia does continue to face a chronic shortage of dwellings, effectively insulating us from the risk of downward prices to the extent seen in the USA or the UK. However, as people baulk at the cost of owning a home this could pressure the property market somewhat.

But we believe – the astute buyers can still make money in the property market in Australia, both in rental returns in tight markets and in many capital growth hotspots around the country.

Don’t let the cost of home ownership fool you – we can show you ways that you could own investment property and pay off your home much faster than you are doing now. All without affecting nor using any of your household or job cashflow.

By leveraging some of the equity in your home, people can purchase property, and if properly structured through tax savings, deductions and restructuring finances save yourself time and of course money on your home loan.

I would love to have the time to be able to show you our strategy for saving you money on your home loan and at the same time increasing your investment proeprty portfolio, so why not give me a call and I’ll show you how in your situation.

Make It Happen

Paul Pritchett – Founder Portfolios

Keeping it streamlined and delivering on your property investment deals is key. We thought it beneficial to share ways that you can ensure streamlined approvals and delivery:

1. Be Clear, concise and consistent with information and documentation.

At Portfolios we ask you to complete a Client Portfolio Review with all required information, especially Assets and Liabilities on the second page.

Make sure the quality of the copies are good, noting faxes and ID documentation rarely mix well.

Tell us you whole story, good , bad and not so good,  we need to know.

If you do not know tell us, as we like to ensure you understand and continue your property investment education.

2. Have a your story straight.

Take the time upfront to allow Portfolios to work through and document your property investment strategy and the finer details. This is important to get the process right and the strategy to deliver your plans.

Knowing the fundamentals of your deal after thorough due diligence and then not changing it unless forced to.

If you have a change of plans notify us  as soon as you can as usually we can accomodate your new direction.

3. Send the full set of documentation all at one time.

Just like planning to know your strategy – taking the time to get all the documentation together for then initial submission.

Lenders will not even review a loan that is not 100% complete with documentation. Hence it  will mean less grief when the lenders and stop them putting your deal in the deferred pile.

For over 50% of loans at present the lender is requesting additional documentation after submission, allow for this.

4. Be patient after loan submission.

The current lending climate is full of red tape and delays. Approval delays have improved on this time last year.

You need to understand and appreciate that we chase service levels with lenders and sometimes stick to the ones that deliver consistently in lieu of another.

The team understands your passion and interest in the ‘knowing of loan approval’, its ours as well.

5. You will hear about any update.

Know that as soon as we hear an update we will inform you.

Its exciting when approval comes through – at Portfolios sometimes we get more excited than our clients.

Check your email each day, as any update from a lender would be to us via email which we review and forward to you.

6.Conditional Approval – Formal Approval

Note that currently Conditional Approval is forecast as 3-5 days and Formal Approval is forecast as 10- 14 days.

To settle a refinance (you have cleared funds in your account) and for purchases it takes 5- 6 weeks at present.

This is from loan submission to the lender, 100% complete, ready to purchase your property/ies.

Contacting us with expectations over and above the timeframes may cause you frustration, we ask you to note point 5.

Portfolios works to a program outlined above, we put client service at the top of our priority – we deal with the banks for you and keep you informed.

For example, each and every day, for each loan submitted, Portfolios checks the lender’s website as well as email and phone follow up in some way. The team are well drilled in keeping your loan progressing and pushing your loan through…its in all stakeholders interest.

Its an interesting lending market out there at present. You might need a hand to deliver your plans, Portfolios wants to help Make it Happen.