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Rachel Preston-Bidwell via reiwa.com.au

Perth is well known for its sunshine and hot summer months, and while we are in the transitional spring season it’s the perfect opportunity to prepare your home for the warmer weather ahead.

Although the beach becomes a second home for many West Aussies during summer, it’s also a great time of year to spend at home with family and friends enjoying the long summer days. So we have put together five tips to help you prepare your home and make the most of it this summer.

1. De-clutter

Start with a clean home and head space by decluttering each room of the house.

Get rid of anything you don’t use by giving it to charity, friends and family, or throwing out broken and unusable items. Pack away winter specific items as well, such as blankets and heaters, in vacuum sealed bags or boxes and stow away in the shed.

2. Spring clean

Once you have de-cluttered your home, the next step is to do a thorough spring clean to freshen up your space and ensure it’s ready for your guests and summer BBQs. This can include:

• Washing your walls and windows.
• Thoroughly cleaning carpets, rugs and floors.
• Cleaning out cupboards and throwing away expired food.
• Removing mould, dust and cobwebs.
• Defrosting your freezer (and creating space for your favourite ice cream).

 

3. Make sure your summer appliances are in working order

Whilst performing your spring clean, it’s also a good idea to ensure your most used appliances during the summer months are in working order, such as:

• Air conditioners and fans – Perth summers pack a lot of heat, so it’s important you have good ventilation to cool your home. Double check the settings work on your fan or air conditioner units, and the blades/vents are clean to ensure you don’t circulate dust and allergens around the room.
• BBQ – an essential part of any summer dinner party is the Aussie BBQ. Now is a good time to deep clean your hotplates, check the gas and ensure the all the fittings are safely working.
• Pool and spa – if you’re lucky enough to have your own private oasis in your backyard, be sure to get your pool and/or spa ready for use during the hotter months. Get out the pool cleaner, check the jets and ensure your safety gate/fences are in tip top condition.

 

4. Prepare your outdoor area

It’s a safe bet you will be spending many nights and lazy days during December through to March outside on the deck or under the pergola. In this case, don’t forget your outdoor area in your spring clean.

Small but effective measures can be taken to ensure you backyard is summer ready, including:

• Mowing the lawn, cutting back hedges and trees, and removing any weeds.
• Hosing down pavement and/or oiling the deck.
• Cleaning your outdoor furniture to remove any dust and cobwebs.
• Fixing shade sails, purchasing an umbrella or replacing missing roof panels in your outdoor area to ensure you have appropriate shade from the harsh summer sun.

 

5. Decorate for summer

Just as winter brings out the richly scented candles and heavy fleece linens, in summer you may want to lighten up your décor.

Swap out heavy linens for lighter, cotton blends in the bedroom, and replace your fluffy blankets for a light throw in your living room. You can even introduce some greenery to your kitchen and living areas, such as a low-maintenance succulent plant, to create a more summery ambiance – some plants can even purify the stuffy summer air.

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Samantha Jones via reiwa.com.au

It’s no secret that the Perth rental market currently favours tenants, so if you’re looking to purchase an investment property it’s important to select a rental that appeals to your target market.

Unlike purchasing your own home to live in, buying an investment property needs to be approached with your head – not your heart. Features you may value in your own home, may not necessarily appeal to prospective tenants.

You need to think like a tenant and buy a property that meets their needs. Here are five tips for purchasing a rental that appeals to tenants:

1. Location is paramount

As with any property purchase, location is paramount. This is especially the case when buying an investment property.

A common tenant requirement is proximity to amenities. Be sure to buy in areas that are close to key amenities like shops, transport and schools. It’s also a smart idea to seek locations that offer a good lifestyle, for example younger tenants generally value living close to thriving hubs, while families with young children will value being close to parks and kid friendly facilities.

2. Consider the home’s internal layout

Give consideration to the internal layout of the property you choose to invest in. Many tenants choose to share accommodation, so it’s a good idea to look at properties that have features that appeal to this style of living.

Things to consider when assessing the home include:

• Is there good separation between living areas and bedrooms?
• How many bedrooms does the home have? Are they spacious?
• Is there more than one bathroom?
• Are there plenty of storage options?

 

3. Outdoor areas are important

We’re lucky in Western Australia that our climate is warm and favours outdoor living. With this in mind, it’s a good idea to factor in some kind of outdoor area into the rental home you purchase. Whether it’s a balcony, a courtyard or an enclosed alfresco – outdoor living options are attractive.

While many tenants value outdoor living space, it’s worthwhile choosing a home that is low maintenance. Gardens may look beautiful, but they require a lot of upkeep so it’s best to invest in properties with low maintenance outdoor areas as prospective tenants may be put off by the work required to keep a garden looking good.

4. Parking options are highly regarded

Being able to offer tenants a designated parking space is very attractive. While in WA most homes come equipped with a garage or carport, units or apartments – particularly those in the city – often require tenants to park off-street. A lack of parking options is an inconvenience to tenants, so it’s beneficial to look for investment properties that provide tenants with a secure space to park their car.

5. Extra features will help your rental stand out

As an investor, you need to be competitive in the current market to secure a tenant. In order to make your home stand out, it’s worth ensuring the property has some attractive extras like:

• • Airconditioning – WA’s long hot summers can be uncomfortable without airconditioning. Tenants want to be able to escape the heat when inside, so airconditioning is often a key requirement.
  • Quality appliances – modern appliances like ovens, dishwashers and cooktops can go a long way in helping your home stand out.

 

• • Digital connections – we live in a technological age, so features like good cable connections for internet and wifi and strong mobile signals are increasingly important factors for tenants.

 

• Pet friendly – rental properties that accommodate pets will appeal to a wider selection of applicants.

If you have any questions about renting out your property in Perth, speak to Ron Padua on 0404 428 843 or email bdm@pmmetro.com.au

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via reiwa.com.au

The McGowan Government has handed down its 2017-18 State Budget and has listened to the concerns of the WA property industry by not meddling with property taxes.

In the Treasurer’s speech, the Hon. Ben Wyatt MLA advised the State Government did not consider increases to property taxes for WA residents as part of their Budget repair measures, recognising the impact of the three consecutive land tax increases in previous Budgets.

REIWA Deputy President Damian Collins said given the McGowan Government had faced challenges when it came to the State’s fiscal position, it was pleasing to hear there would be no increases to property taxes for WA residents.

The Government is planning to introduce a four per cent foreign owner duty surcharge on purchases of residential property by foreign individuals and entities from 1 January 2019. This is expected to create $49 million in revenue by 2020-21.

“The introduction of a new foreign owner duty surcharge could hinder overseas property investment. Despite foreign investors only representing a small proportion of the WA property market, caution must be placed to ensure this section of the market does not reduce further.

“The Government expects to create revenue from this surcharge, however, it may only worsen the situation in terms of transfer duty revenue, as potential foreign investors may be less incentivised to purchase residential property in WA,” said Mr Collins.

In its pre-budget submission, REIWA recommended the Government introduce five key areas of reform:

1. Make no further changes to rates or thresholds for land tax.
2. No increase to transfer duty rates or change thresholds.
3. Undertake a state tax review to assess the viability of a shift to a broad-based land tax system that ultimately removes transfer duty.
4. Maintain the existing transfer duty exemption for first home buyers at $430,000 and re-introduce the $3,000 First Home Owners Grant for existing dwellings.
5. Introduce a $10,000 concession on transfer duty for seniors over the age of 65 to encourage ‘right sizing’.

“REIWA welcomes the State Government’s commitment to keep property taxes on hold for WA residents and whilst some of the reforms we recommended were not addressed in the Budget, we appreciate the current fiscal position,” said Mr Collins.

The State Budget also revealed that growth in the State economy is expected to recover from 0.25 per cent in 2016-17, to three per cent in 2017-18. Employment growth is also forecast to recover, with nearly 20,000 jobs expected to be created in 2017-18, attributed to a modest increase in population growth expectations.

“The McGowan Government should be congratulated on their efforts in reducing the State’s debt. REIWA will continue to work with the Government to help home ownership become a reality for more West Aussies and also assist the Government in getting the Budget back to surplus,” said Mr Collins.

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Written by Natalie Hordov via Eastern Reporter REAL ESTATE

THE Perth property market is showing signs of stability with both the median house price and overall median rent holding steady in the three months to August 2017.

According to reiwa.com data, the median house price was $515,000, while the median rent was $350 per week for the fourth month in a row.

President Hayden Groves said it was encouraging to see the median price remain firm across both sectors of the Perth property market.

“The stable medians are good news and indicate that seller’s and landlord’s expectations are matching those of buyers and tenants,” he said.

Listings for sale have continued to trend downwards over the past month, decreasing by 1 per cent and are 10 per cent lower than three months ago.

“The reduction of properties for sale should create a better balance between the supply and demand of Perth’s overall housing stock,” Mr Groves said.

“Traditionally in spring, there tends to be a lift in sales activity which means there is potential for the median house price to increase in the coming months as we see more demand for housing and increased competition from buyers.”

In the residential rental market, reiwa.com data showed stock reduced by 6 per cent to 10,046 properties for rent, with leasing activity up by 8 per cent during the month of August.

“The boost in leasing activity is pleasing to see and has contributed to the declining trend in listings levels as rental stock gets absorbed due to the demand from tenants,” Mr Groves said.

“This improved activity is also helping to keep the overall median rent in check at $350 per week, stable for the fourth consecutive month, which is welcome news for landlords and property managers alike.

“With the warmer weather ahead, we should typically see both buyer and tenant activity levels increase.

“Together with the stabilising trends in median house and rent prices, the Perth property market is showing positive signs as we head into spring and summer.”

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Urban Road Immerse ($34 — $149)

Rachel Castle Ace of Hearts Screen Print ($170)

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Author: Emma Bolger via domain.com.au

“If you can create something time cannot erode, something that ignores the eccentricities of particular eras or moments, something truly timeless… this is ultimate victory.” – Dr Ferry Porsche.

When attempting to create a timeless interior, it’s important to be clear about your interior decorating style, while also considering past, present and future trends.  Here are five key elements that will enable you to create a timeless foundation that you can develop – or easily reinvent – over time.

1. Choose open-plan design
Open-plan living provides a seamless transition through different areas of the home and allows a unified approach to interior design.

Particularly notable is the relationship between the kitchen, dining and living areas. To create a seamless relationship between zones, consider carrying your flooring, colour scheme, any motifs or lighting styles through both spaces.

2. Go for white walls and ceilings

White walls and ceilings create continuity in open-plan spaces, while providing a blank canvas to evolve your decor at any time.

With so many variations of white paint available, it’s important to select the white that best suits your interior style and the feeling you want to create in your home.

Cool whites: Ideal for neutralising bright light in spaces abundant with natural light, the crispness of cool whites also makes them a popular choice for modern and minimalist decorating styles. With a black or blue base, start your search with Dulux “Vivid White” or Porter’s Paints “Milk”.

Warm whites: If you want to make a room feel more inviting or have a lot of natural textures in your home, then warm whites are for you. With yellow, brown or red bases, my favourite is Dulux “Antique White USA”, but other popular warm whites include Taubmans “Plain Vanilla” and Porter’s Paints “Long Grain”.

As you start to investigate whites you may also be drawn to greys. Cool greys are ideal for glamorous spaces, whereas warm greys set a more relaxed tone.

3. Think about your flooring

We’ve moved past the days where carpet dominated flooring choices at home. As hard flooring takes its place, texture is moving to the forefront. Here are some good textural options:

Timber: Oak is a popular timber choice as its grain adds just the right amount of texture to suit any interior style. From the blonde oaks that are seen in Scandinavian decorating styles to dark chocolate tones that amp up the glamour, the variation of tints make oak easy to team with your style. Spotted gum, blackbutt and other Australian species are growing in popularity, and their distinctive grains and colours make them a good match for timeless interiors.

Polished concrete, stone or tiles: These look classic in various shades of grey. Selected in this instance as an alternative to timber, they are also useful in wet areas of the home, such as laundries and bathrooms, where timber flooring is not as suitable.

Carpet: Carpet provides a luxurious foundation to sink your feet into and works particularly well in bedrooms or other secluded areas of the home that aren’t high in traffic and suit softness underfoot. With timelessness in mind, it’s hard go to past twist or textured carpet designs. While both styles are easy to maintain and work well with all interior styles, a twist carpet is ideal if you have pets, as their claws are less likely to get stuck in the fibres.

Rugs: Rugs enable you to enhance your interior style, while softening the sound, and defining zones within a larger area. When it comes to rug fibres and textures, it’s best to be guided by the look and feel you want to create – keeping in mind that timelessness is about quality not quantity.

Tip: Selecting the right size rug for your space is key and one of the best ways to determine this is by using a sheet. Simply place a sheet down in the area you want to place a rug in and play with the size of the sheet and placement of your furniture until you find a balance you’re happy with.

4. Move to metals
From stainless steel and chrome, to copper and rose gold, metallic finishes have a lifelong appeal. Ideal for lamps, fixtures, vases and other smaller accessories, keeping metallics as accents within your interior scheme will allow it to remain timeless while adding character to your home.

Although it’s important to stay true to your interior style, don’t be afraid to challenge conventional thinking by mixing different metallic finishes in the same space.  This kitchen provides a good example as the stainless-steel appliances and fittings recede into the background while the copper light fittings take centre stage.

5. Select clean, simple lines
Choosing streamlined fixtures, fittings and appliances allows them to seamlessly tie into your interior. You can either:

Make your fixtures fit in with your wall colour: If you prefer a minimalistic approach or have selected statement pieces throughout your space, then consider following the lead of this interior, which ties the tones and textures of the kitchen cupboards and stainless steel appliances into the hue on the walls.

Or mix it up: If your decorating style embraces different textures, or you’re looking to do something a little different to the norm, then select a different material, colour and/or texture (timber, metallic, glass or statement colour) for cupboards, splashbacks, benches, or fixtures and other fittings.
This kitchen is a good example, utilising American oak veneer (un-stained with a sprayed clear coat) for the cupboards and extended ceiling in addition to a black veneer bench, the streamlined design creates a statement within the home while not overpowering the rest of the interior. It is this balance, between statement and a complementary streamlined design – that makes it timeless.

As you combine these five key elements with your interior style, you’ll find you’ve created a timeless home to sit back and enjoy.

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Author: REIWA President Hayden Groves via reiwa.com.au

Buyers are often sellers too. Most people who decide to sell their home also look for an alternate property at the same time and it’s not uncommon for them to find something appealing before they have secured a buyer of their own.

What is a ‘subject to sale’ offer?

Buying a property “subject to the sale of another property” is common and REIWA agents are well equipped to ensure the sale agreement is procedurally correct.

Normally, these agreements enable the seller to continue to promote their property for sale and, in the event of receiving an alternate offer to purchase (normally not subject to the sale of that buyer’s property), give notice to the first buyer of their intention to proceed with the second offer after two business days.

This colloquially termed ‘48 hour clause’ provides the buyer two business days to obtain an offer on their property or waive the benefit of the subject to sale condition.

What does a ‘subject to sale’ offer entail?

Certainly, these arrangements can get tricky. Agents need to be especially careful not to prejudice the second party by giving the first buyer a hint that a second offer might be on the way. Notices served between the parties must also be technically compliant and strictly adhered to so as to not unfairly advantage either buyer.

A crucial point for sellers to be aware of is if they are accepting a ‘subject to sale’ offer, at say $600,000, this then binds them to that sale price within the 48 hour period – even if a second unconditional offer is higher (provided the original buyer can make their original offer unconditional within the 48 hour time frame).

’Subject to sale’ offers can benefit sellers

Although this type of sale requires more effort, contracts for sale that include the ‘subject to sale’ condition, often succeed and proceed smoothly to settlement.

This type of sale also has the potential to put the seller at an advantage, with the buyer often expecting to pay a premium for the privilege and protection of settling after the sale of their own property.

Given the conditional nature of the sale, sellers are justified in asking for a higher price from the subject to sale offer. There have been instances where the seller rejected a ‘subject to sale’ offer at a premium price, only to have that same buyer return to the same property after they’ve sold and pay a lower price.

I would advise sellers to consider all offers presented to them, including those that are subject to sale. In this market where competition is high between vendors, it’s in your best interest to give consideration to all serious buyers.

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Image Sources: Styling by Bree Leech and Photography by Lisa Cohen

Image Sources: Styling by Bree Leech and Photography by Lisa Cohen

Image Sources: Styling by Bree Leech and Photography by Lisa Cohen

Image Sources: Styling by Bree Leech and Photography by Lisa Cohen

Image Sources: Styling by Bree Leech and Photography by Lisa Cohen

Image Sources: Styling by Bree Leech and Photography by Lisa Cohen

Image Sources: Styling by Bree Leech and Photography by Lisa Cohen

Image Sources: Styling by Bree Leech and Photography by Lisa Cohen

Image Sources: Styling by Bree Leech and Photography by Lisa Cohen

Image Sources: Styling by Bree Leech and Photography by Lisa Cohen

Image Sources: Styling by Bree Leech and Photography by Lisa Cohen

Image Sources: Styling by Bree Leech and Photography by Lisa Cohen

Image Sources: Styling by Bree Leech and Photography by Lisa Cohen

Image Sources: Styling by Bree Leech and Photography by Lisa Cohen

Image Sources: Styling by Bree Leech and Photography by Lisa Cohen

Image Sources: Styling by Bree Leech and Photography by Lisa Cohen

Image Sources: Styling by Bree Leech and Photography by Lisa Cohen

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via therealestateconversation.com.au

With spring expected to draw an influx of buyers, and amid tight supply of properties for sale, Perth property prices could rise in the coming months, says Hayden Groves, president of the REIWA.

The Perth property market is showing positive signs as we head into spring and summer,” says Hayden Groves, president of the REIWA.

New data from the REIWA shows Perth’s median house price and median rent held steady in the three months to August 2017.

The median house price remained consistent at $515,000, and the overall median rent was stable at $350 – the fourth consecutive month rents have held steady.

REIWA President Hayden Groves said the results are “encouraging”.

“The stable medians are good news and indicate that sellers’ and landlords’ expectations are matching those of buyers and tenants,” said Groves.

Property listings down 10 per cent for the quarter

The reiwa.com.au data shows listings for sale eased one per cent lower in August, and are down 10 per cent compared with three months ago.

Groves said prices could rise in spring, when it’s likely demand will pick up.

“Traditionally in spring, there tends to be a lift in sales activity,” he said.

“There is potential for the median house price to increase in the coming months as we see more demand for housing and increased competition from buyers,” said Groves.

In the rental market, stock is down 10 per cent, and leasing activity is up 8 per cent

In the residential rental market, reiwa.com data shows stock levels declined by six per cent to 10,046 properties in August, and leasing activity rose by eight per cent.

“The boost in leasing activity is pleasing to see and has contributed to the declining trend in listings levels,” said Groves.

“Rental stock gets absorbed due to the demand from tenants,” he said.

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Rachel Preston-Bidwell via reiwa.com.au

Do you currently own an investment property in Perth or are looking to purchase one? We have four tips for how to be a good landlord, from understanding your rights and responsibilities and those of your tenant, to finding the right assistance to help you safeguard your investment.

1. Understand the law

Renting in WA is governed by the Residential Tenancies Act 1987 and the Residential Tenancies Regulations 1989. As a landlord, it’s good to have a basic knowledge of these laws and regulations as there are specific provisions covering issues, including but not limited to:

• Security bonds
• Rates and taxes
• Damages and repairs
• Notice periods

More information about the relevant laws and regulations can be found on the Department of Mines, Industry Regulation and Safety website.

Brush up on your rights and responsibilities and if you have any queries, speak to one of our friendly officers in the REIWA Information Service.

2. Take note of your safety responsibilities

Ensuring your investment property is in working order prior to renting it out is a must to keep your tenants, property manager and yourself safe.

As the landlord, you have a responsibility to ensure your property meets certain safety standards and if issues arise during the tenancy, you must address them in due course.

Three main safety issues to be aware of include:

• Blinds and curtains
• Pool and spa fences
• RCDs and smoke alarms

Read our article about your safety responsibilities as a landlord for more information.

3. Know the costs involved

An investment property is just that, an investment. Landlords should expect to invest some money in their property in order to reap the rewards later in life, whether it be for a retirement fund or to purchase another property.

Be sure to consider the costs involved in renting out your property, including:

• Insurance
• Property taxes
• Strata fees and/or rates
• Maintenance and repair costs

Some costs are tax deductible, so speak to your property manager or accountant for more advice on making a claim come tax time.

4. Engage with a property manager

Not only will a property manager act as a liaison between you and your tenant, they can assist you with the following:

• Evaluate the market – a property manager can conduct an evaluation of your property in comparison to other rentals on the market. This can help you determine a competitive rent price and marketing campaign to secure a tenant.
• Help with tricky questions – property managers undertake extensive and continual learning to stay up-to-date on rental laws and regulations. They can help you to understand both yours and your tenants’ rights, and further assist you with tricky situations such as break leases.
• Find your perfect tenant – your property manager will hold home opens and assess applications to help you find a tenant. Further, REIWA agents have access to a National Tenancy Database, which allows them to review a tenant’s rental history.
• Maintain your investment – through regular property inspections, a property manager can ensure your investment remains in tip top condition. Further, they can assist by organising repairs and maintenance calls.

If you have any questions about renting out your property in Perth, speak to Ron Padua on 0404 428 843 or email bdm@pmmetro.com.au

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via reiwa.com.au

Perth’s median house price and median rent have both remained stable in the three months to August 2017, with the median house price sitting at $515,000, and the overall median rent resting at $350 for the fourth month in a row.

REIWA President Hayden Groves said it was encouraging to see the median price remain firm across both sectors of the Perth property market.

“The stable medians are good news and indicate that seller’s and landlord’s expectations are matching those of buyers and tenants,” said Mr Groves.

Sales activity

According to the latest reiwa.com data, listings for sale have continued to trend marginally lower over the past month, by one per cent. However, in comparison to three months ago, listings levels are lower by 10 per cent.

“The reduction of properties for sale should create a better balance between the supply and demand of Perth’s overall housing stock.

“Traditionally in spring, there tends to be a lift in sales activity which means there is potential for the median house price to increase in the coming months as we see more demand for housing and increased competition from buyers,” said Mr Groves.

Leasing activity

In the residential rental market, reiwa.com data shows stock has reduced by six per cent to 10,046 properties for rent, with leasing activity up by eight per cent during the month of August.

“The boost in leasing activity is pleasing to see and has contributed to the declining trend in listings levels as rental stock gets absorbed due to the demand from tenants. This improved activity is also helping to keep the overall median rent in check at $350 per week, stable for the fourth consecutive month, which is welcome news for landlords and property managers alike.

“With the warmer weather ahead, we should typically see both buyer and tenant activity levels increase. Together with the stabilising trends in median house and rent prices, the Perth property market is showing positive signs as we head into spring and summer,” said Mr Groves.

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Nicole Cox via realestate.com.au

Perth’s property prices have dipped more than 10 per cent in the past three years, but a new report suggests evidence of some relief with the rate of decline abating.

The latest CoreLogic Hedonic Home Value Index shows house values in Perth have fallen by 2.6% so far this year, making it the worst performing capital in Australia.

In August, Perth property prices dropped 0.8%, compared to the 1.3% decline in July.

House prices suffered a 0.9% drop, while unit prices fell by 0.6%, bringing the median property price in Perth to $462,927.

In August, Perth property prices dropped 0.8%, compared to the 1.3% decline in July. Picture: Getty Images

August property data showed Perth and Darwin continued to endure declining dwelling values, which had trended lower over the past month and rolling quarter.

“However, the annual trend highlights the rate of decline has been easing,” the report says.

“Since peaking in 2014, Perth dwelling values have declined by a total of 10.8%, while the cumulative decline across Darwin has been more severe with values down 18.6% from the market peak.”

CoreLogic head of research Tim Lawless says despite lagging property values in Perth, it was still one of the most affordable markets in the country.

“The silver lining around the decline in values is a substantial improvement in affordability,” Lawless says.

On Tuesday, WA Housing Minister Peter Tinley told a Committee for Economic Development Australia that lower-income earners were still being priced out of the Perth property market, despite softening values.

Tinley said Perth’s shortage of affordable housing, coupled with stagnant wage growth and the high cost of living had contributed to low-income earners being unable to realise the great Australian dream of home ownership.

CoreLogic says national dwelling values remained flat during August, with capital city values edging 0.1% higher. Simultaneously, regional dwelling values slipped 0.2% lower.

The report says the slowdown in growth has been most visible in Sydney, while the Melbourne market has been more resilient with auction rates consistently above 70%.

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via domain.com.au

Have you ever wondered how property investors seem to keep buying properties without saving up for years to put down a deposit? It’s because they’re using a tactic called leverage: using the equity generated by the rising value of an existing property to purchase a new one. This property then grows in value, allowing the investor to repeat the process and buy again.

Sounds good in theory, but is it all it’s cracked up to be?

How leverage works

Leverage is a simple concept. It’s borrowing to increase the potential return of an investment. Taking out a mortgage to buy a home is a form of leverage.

Leveraging the equity in an existing property – whether a home or an investment – depends on the value of that property growing while the size of the mortgage reduces or stays the same. For example:

• You buy a property for $400,000, putting down a 20 per cent deposit ($80,000) and borrowing the remaining 80 per cent ($320,000)
• Over time, the property increases in value by $100,000. The 80 per cent mortgage would now only be 64 per cent of the property value – or less if you’re paying off the principal as well as the interest.
• You refinance, increasing your mortgage up to 80 per cent of $500,000. You create a cash pool of $80,000, which can be used as a deposit to buy an investment property

Property investor and mortgage broker Jane Slack-Smith of Investors Choice Mortgages highlights a number of benefits to this strategy.

“Using equity in this way minimises risk by keeping your cash in your pocket – you’re not using your cash reserves,” says Slack-Smith. “It also takes a long time to save cash – say, five years to save $100,000. In that time, property values are likely to increase faster than the interest on your savings.

“By using equity in an existing property, you can get into the market today and buy at today’s prices, benefiting from the coming years’ growth.”

Risky business?

There are risks to leveraging equity to buy investment properties. First and foremost, you have to be certain that you can service all the mortgages you’re taking out, otherwise you could lose some or all of your assets. Researching potential purchases thoroughly is essential to avoiding a bad investment, says Slack-Smith.

“Leveraging equity doesn’t relinquish you of the responsibility of researching before buying an investment property. You should ensure that you have a clear strategy – flipping or buying to hold – as well as ensure you’re buying in a good suburb.”

You could also end up being plagued by cross-collateralisation if you’re not careful. This is where lenders use equity in more than one property to secure the loan. While it may allow you to borrow more in the short term, in the long term it could hinder your empire-building plans.

“Cross-collateralisation reduces your flexibility. If you want to draw out equity from an investment property in a few years, it means the bank may refinance your entire portfolio, rather than just one property.”

Depending on how individual property values have changed, that could mean you’d be unable to access any equity. While cross-collateralised loans can be disentangled, it can take up to six months.

Plan of attack

It’s essential that you plan ahead before you start refinancing. A good mortgage broker should be able to help you with this process.

“It’s important to have a clear initial plan of how you’re going to set out your finances. If you plan to buy two properties, ensure you have enough equity to cover the deposit, stamp duty and buyer’s agent fees for both purchases.”

Slack-Smith recommends setting up individual loan splits against your first property that will only be used to finance the purchasing of further properties. The interest on those splits should also be tax-deductible, as long as those splits are only used for investment purposes. She also recommends setting up the splits as lines of credit, rather than as a conventional mortgage.

“A line of credit is usually a little bit more expensive, but it’s like a big credit card – you don’t pay for what you don’t use. Just be disciplined and don’t use them to finance new cars or holidays!”

Leveraging equity growth in your existing properties can help you build a property empire faster – as long as you set it up correctly from day one and do your research. Otherwise, you could find your portfolio collapsing faster than a house of cards.

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via houzz.com.au

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Author: REIWA President Hayden Groves
Modiefied via reiwa.com.au

Over the last couple of years as the Perth property market has slowed, there has been a lot of talk about ‘waiting for the bottom of the market’ to arrive.

In an ideal world, it would be crystal clear when the bottom had arrived and primed buyers could act immediately to secure their dream home, content in the knowledge they had purchased their property at the absolute lowest possible price.

How do you tell when the bottom of the market has hit?

The truth is, it’s virtually impossible to tell whether the actual ‘bottom’ has hit until it has passed and we’re on the upswing again. The best we can do is observe trends in the market and make an educated guess. It’s not an exact science and can be influenced by a number of external factors, such as the economy, consumer sentiment and state and federal elections.

In Perth, signs over the last quarter suggest our local market is beginning to stabilise, with all key indicators (median house price, sales activity, listings for sale, average selling days and discounting) recording little or no change in the three months to June 2017.

Historically, one of the earliest signs of a change of momentum in the market is a period of stability. Although no one can accurately ascertain the future of the property market, the signs are there that we have finally found, or are very close to finding, the bottom.

Take advantage of affordable conditions

If you’ve been thinking of buying a home or purchasing an investment property, but have been holding off for the ‘right’ moment to strike, I’d advise you to take action sooner rather than later. Although we might not be able to predict with absolute certainty the ‘bottom’ of the market, we do know that property markets are cyclical and conditions will change again.

With the signs there that we’re heading into a period of stabilisation, now is the time to buy. There is lots of choice in the market with listings for sale , so you are in the best possible position to find a home that meets all your requirements at a competitive price.

I would advise buyers who are considering purchasing property in this market to take advantage of the steady, but quieter conditions. Do your due diligence and view a range of different properties in suburbs that appeal to you to ensure you explore all your options.

If you’re unsure what the best move is, speak to us on 9475 9622 or email us at mail@pmmetro.com.au  about your plans. They are well educated on your local market and will be able to advise what is most suitable for your situation. 

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