3 easy ways to find good properties

3 easy ways to find good properties

How do you find a good property to purchase? Most property investors find their own ways to identify a good investment. A good investment is an asset with the right price, surrounded by different socio-economic drivers that fuel both cash flow and yield.  While many people would say that the number of properties in a portfolio is a gauge for an investor’s success, it is far more pertinent to focus on certain characteristics of an asset in order to actually achieve their long-term goals.   A good checklist is:  Make sure to pay the right price  Before purchasing a property make sure of whether or not you are paying the right price. Regardless of the bank’s evaluation of the property take time to assess it for yourself with the help of property professionals.  Do your own evaluation first just to figure out where it’s at by speaking to different agents and everything… And then if your still not sure go and get the evaluation independently.  Buy in the right area  Like many property investors, the location of an asset plays a big role in the decision-making.  The right area is surrounded by enough infrastructure and places, communicable to the job centre, hospitals, universities and all and are in areas that are poised for economic growth in the coming years.  Identify the right ‘supply and demand’ rate  An area’s population is telling of the rate of supply and demand for dwellings, hence, a growing population is always a good news for a property investor.  If you can hold onto a block of land, which is where there’s not enough supply, then you can...
Beware of Fake Property Market News 

Beware of Fake Property Market News 

Ah, the Internet. Don’t you just love it? Overflowing with so, so much information! And plenty of it is dedicated to property. So what is real and what is fake?  The Dilemma  It’s information overload, and all anyone needs to add to it is a computer and a connection. That’s right, you don’t need qualifications or actual knowledge – anyone can write anything about anything and put it up on the internet as ‘research’. Isn’t freedom of speech wonderful?!  Beware though – and this is stating the obvious – much of information is questionable quality. Digest what you read with a grain of salt, or suffer the consequences of monetary heartburn.  If the reader doesn’t have sufficient background knowledge on the topic that they are reading about they won’t have the ability to interpret good information from bad or well-informed opinions from gross generalisations.  Why is it suspect?  With media companies continually making cutbacks to stay afloat in this digital age, journalists are under increasing pressure to reach daily ‘click-count’ quotas through producing higher content volumes; quality becomes a secondary consideration.  Much of what gets published on the internet about property markets is backward-looking, is heavily focused on only a few Australian cities, and can be influenced by vested interests.  There’s a lot of mass-produced generalisations which fill people’s devices these days. In some ways, it’s suppressing people’s intelligence. People consume content, they fail to ask themselves ‘why’ others have a specific point of view, and just adopt the consensus as gospel.  What to look for?  An example was the abundance of property news stories in 2014 and 2015 with every Tom, Dick...
What to do when you’re ‘maxed out’ by the bank 

What to do when you’re ‘maxed out’ by the bank 

Every single investor has had to deal with different types of hurdles throughout their property investment journey – from choosing the right property and managing your assets to balancing equity and debt.  Thor Wedden sought the help of Smart Property Investment’s Phil Tarrant, co-host Tim Neary, and wHeregroup founder Todd Hunter to find a way out of his predicament.  According to him, after buying a few properties, which is valued at $2.2 million and has around $1.6 million in debt against it, he was afraid that he may have “maxed out” in terms of his capacity to keep growing his portfolio.      Is there something an investor can do once the bank says he can’t borrow anymore?  Todd Hunter: Well, it looks as though part of the issue here is he’s talking about his LVR being at 76 per cent, and anything over 80 per cent then incurs mortgage insurance. It doesn’t mention too much about the servicing side of things, whether he can actually physically borrow more money or be able to repay more money, so I’ll assume he’s talking sort of more the LVR side. Couple of options: You can value add onto the portfolio that you already have. I say that in ways of doing some cosmetic renovations to increase the value of the properties, who then will allow you to actually sort of borrow against that.  If they’re already sort of neat and tidy and there’s not much value add to be done, then you do have that option of going into that mortgage insurance territory. If it’s for investment purposes, it can be capitalised and it is a tax deduction,...
Why you should ignore the property headline ‘noise’ 

Why you should ignore the property headline ‘noise’ 

Guy Williams have spent over 20 years in a remarkable investment journey and has since maintained a 37-strong property portfolio. Aside from good education and correct strategy, he attributes his success to his ability to “ignore the noise”.  WHAT NOISE?  Guy told Smart Property Investment: “I just kept doing it and ignored the noise. I ignored the noise. I had a buy and hold strategy, but while I was doing that last year, people were saying, ‘Are they going to remove negative gearing?’ That’s a little bit of noise.   But over a 20, 30, 40-year time frame, it doesn’t really matter. I’ve seen huge interest rates, I’ve seen low interest rates. You see all these things happen, but over that length of time it doesn’t really matter. I think the noise gets in the way of people doing things.”  WHY?  While it is important to keep yourself up-to-date regarding movements in the property markets, it is equally vital to know which headlines are not worth mulling over, according to Guy.  You read a newspaper, they’re looking for headlines, they’re looking for stories so they want something like, ‘Interest rates are about to shoot up!’ or ‘They’re going to go ballistic in 2017’. So you’re going to think, ‘I’d better not invest. I’ve missed the boat’. Or maybe there’s a price bubble and so property prices are going to crash, so you say, ‘Oh, thankfully I’m not in it’. There’s all this noise and it comes out on a daily, weekly, monthly … It’s mainly just ignoring that,” he said.  WHAT TO DO?  Instead of worrying himself over “doom and gloom” headlines, Guy...
Will Mortgage Brokers survive the technology boom?

Will Mortgage Brokers survive the technology boom?

With the unprecedented rise of artificial intelligence and other technology advancements, is human interaction set to be obsolete in the future of mortgage brokering?  What do brokers do? Mortgage brokers are among the most important members of a property investor’s financial team. Aside from helping investors make sound financial decisions, mortgage brokers also assist banks by being an effective channel to connect them with clients who are looking to secure finance. While some banks have a direct channel, the fact that more than 53 per cent of mortgage loans are secured through brokers make these professionals indispensable.  However, many are starting to ask the question: For how long will mortgage brokers be relevant in the field of property investment? The past few years saw the rise of artificial intelligence and other remarkable innovations. Technology is definitely changing the landscape of the wealth-creation business.  Despite changes, the mortgage broker believes that the “human touch” will always have a place in the property market, especially considering the added complexity brought by new guidelines from administrative bodies such as the Australian Prudential Regulation Authority (APRA). Mortgage brokers, as well as other property professionals, will remain an integral part of the vast property investment landscape for years to come.  A growing industry  The APRA has recently altered guidelines on lending and interest rates in order to avoid having investment books grow too fast. The changes implemented not only widened the disparity between interest-only rate and principal interest rate but also added more variables to consider when securing finance, making it more complex for property investors.  Before, you had fixed and variable rates. Now, we’ve got fixed interest-only, fixed...
Diversify and take advantage of all property cycles

Diversify and take advantage of all property cycles

A key decision investors face when they are growing a portfolio is whether or not they diversify into different locations.    There are many different reasons why an investor might focus on a single area or purchase in different locations. Aside from the investment thinking behind the decision to diversify or not, there are also financing implications that you should consider.    Having a well-diversified portfolio means that your assets will likely grow at different paces at different times. Good finance structures allow you to borrow against individual assets, rather than your total portfolio position.    This means a well-diversified property portfolio can provide a more consistent source of equity growth in your portfolio, making it easier to release equity over time and helping investors grow their portfolios during slow markets.    The key to this is ensuring that your loans are not cross-collateralised, a common financing problem for investors. A cross-collateralised loan is a loan secured against more than one property.    Having each loan only secured against one property means your properties are separated in financing terms. This allows you to release equity from one property if it has grown in value, regardless of how the rest of your portfolio is performing.    A case, for example, of diversification below can help you release equity:  David and Susan are best friends and have decided to make 2017 their year to invest in property;  David’s strategy is to buy what he knows. He buys seven investment properties in his local area;  Susan takes a diversified approach and opts to buy seven investment properties in seven different locations;  Both...