---

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.

---

via houzz.com.au

---

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. 

---

---

(click on above to view video)

In the current market  Team Q are bringing success with Auction Campaigns’ with a sell through rate
( before / under hammer or within 1 week post Auction ) of 100%..!

That means your property is SOLD within 28 days for the highest possible price the market will pay.
( Average Days on the market Perth – REIWA 52 days )

Team Q –  your local real estate agents delivering results!

Call now 0412 934 217

UPCOMING Team Q Auctions’  you are invited!!

Saturday 19^th Sept ‘17

1pm – 108 Tibradden Circle Ascot

2pm – 13 Mc Larty St Cloverdale

---

Rachel Preston-Bidwell via reiwa.com.au

Perth home buyers looking to trade up are now seeing more opportunity in areas such as Peppermint Grove, Applecross and North Coogee, which topped reiwa.com’s list of affluent suburbs which have become more affordable.

REIWA President Hayden Groves said while prices in these suburbs were still well above the Perth median house price, they had become more affordable for buyers looking to trade up into those million dollar suburbs.

Peppermint Grove saw the biggest annual average change in its median house price over the past five years, shifting from $3,750,000 (year to April 2012) to $3,350,000 (year to April 2017).

“Buyers are looking for opportunities in areas with a good lifestyle scene, cafes and restaurants. In particular, we are seeing buyers placing more importance on proximity to good public schools.

“Suburbs such as Applecross, Nedlands and Peppermint Grove are within the catchment for some of Perth’s best public schools. Due to the easing off in median house prices of these suburbs, the opportunity is there to secure your ideal family home if you have the means,” said Mr Groves.

There’s also good news for sellers in Applecross, City Beach, Nedlands and Peppermint Grove, as properties are selling quicker in comparison to five years ago.

“In 2012, it took on average 120 days to sell a property in Peppermint Grove for instance. In more recent figures, the average selling days for the suburb sits at 90 days.

“We are also seeing sellers willing to negotiate and discount their initial asking price to achieve a sale,” said Mr Groves.

The average discount sellers in the five suburbs are applying to their asking price is around the eight to ten per cent mark in the year to April 2017 data.

“Both buyers and sellers are benefitting from the current market conditions in these million dollar suburbs,” said Mr Groves.

SUBURB	MEDIAN HOUSE PRICE (YEAR TO APRIL 2012)	MEDIAN HOUSE PRICE (YEAR TO APRIL 2017)	AVERAGE SELLING DAYS (YEAR TO APRIL 2012)	AVERAGE SELLING DAYS (YEAR TO APRIL 2017)
1. Peppermint Grove	$3,750,000	$3,350,000	120	90
2. Applecross	$1,380,000	$1,265,000	96	72
3. North Coogee	$1,250,000	$1,155,000	66	97
4. City Beach	$1,715,000	$1,637,500	80	60
5. Nedlands	$1,507,500	$1,462,500	65	41

^{Figures based on median house prices in the year to April 2012 versus year to April 2017. Filtered for suburbs with greater than 15 sales, with a median house price of more than $1 million.}

---

Liz Durnan via domain.com.au

We all know those super-organised people, don’t we? They’re up at the crack of dawn baking muffins for the school fundraiser, work nine-to-five in a high-powered job, have numerous well-turned out children and, on top of it all, their house is always perfectly clean and organised – without any paid help. Do they make you sick, or do you secretly envy them? Don’t waste your energy. Instead, watch how they do it and see what you can learn.

Our homes shouldn’t be driving us mad; they should be our sanctuary. As much as I wish I could pay one of those personal organisers to come into my house and turn it upside down, I don’t have the spare budget (sigh). So I’ve learned from my clean-freak friends and I’m forever reading up about what I can do to take control of my home. Here’s what I’ve found helpful:

Photo by Juliette Byrne – More living room ideas

Regular clean-ups

Like many people, I’m more of a regular procrastinator than a regular cleaner, often preferring the motto “Why do it it today, if I can do it tomorrow?” However, since having kids and a home to look after, I’ve learnt the hard way that this motto isn’t really doing that much for me.

I’ve often watched friends with tidy homes and wondered what their secret is. Now I know; they simply clean up as they go rather than wait for the magic fairy to come in and do it.

Photo by Juliette Byrne – More living room ideas

 

They never wake up to a kitchen full of dirty dishes.

By doing a little bit each day in bite-sized chunks – and getting other members of the household to do the same – things don’t pile up and become overwhelming. Create a roster so that everyone knows what they have to do and when.

A place for everything
I know Marie Kondo didn’t invent this idea, but if there’s one thing I’ve taken from her much talked-about book, The Life Changing Magic of Tidying Up, it’s the idea of having a place for everything and putting everything back there.

Apply this rule to all areas of the house – from the kitchen and the laundry to the linen cupboard. Take stock of every single item you own and ensure there’s a place for each one.

Best of all? Your mornings will be transformed. No more running around the house first thing in the morning looking for your keys, your coat or the other shoe – you’ll know exactly where to find everything, and fast.

Use storage wisely
However, good storage with a place for everything only works if you’re managing it. Have you ever blamed your messiness on your lack of storage? I used to, but recently I finally got the new fitted wardrobes and mudroom of my dreams installed, only to find we were still messy – alas, the storage doesn’t magically tidy up for you. Of course it helps, but you still have to do the work of keeping it organised. The other members of the household need to be schooled in the simple ways of putting their things away too.

Photo by Schmidt Kitchens Palmers Green – Search kitchen design ideas

Declutter sprees
One of the ways our houses can drive us mad is by having too much stuff. Are you forever unable to find things – your wallet, the potato masher, your favourite pan? This is often because we can’t see the stuff we’re looking for among the chaos. If you have a family and new things regularly coming into the home, it’s important to get rid of stuff often too. Regularly – even as often as monthly – go through kitchen drawers, pantries and wardrobes and take stock of what you have, getting rid of what you’re not using.

---

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

New reiwa.com data has revealed Perth sellers who choose to auction their property are achieving significantly faster selling times than those who sold using the more traditional private treaty method.

The results for the three months to June 2017 showed it took Perth sellers just 28 days to sell under the hammer, compared to the 70 days on average it took for private treaty sales – a notable difference of 42 days.

While still only a small component of the Perth market, Western Australians have become more familiar with this method of sales in recent times, thanks in large part to the popularity of TV shows like The Block bringing auctions into people’s living rooms.

Auctions and the East Coast

If you’re considering selling, there are many reasons why an auction can be the way to go in the current market. You only have to look to the success of this method on the East Coast to understand how powerful of a selling option it can be.

In Sydney for example, auctions represent approximately 33 per cent of all sales, while in Melbourne that number is close to half of all sales. By comparison, auctions are only around two per cent of all sales in Western Australia (based on March 2017 data).

Benefits of selling at auction

For the seller, one of the biggest benefits of going to auction is the sense of urgency and competition this method generates amongst buyers, predominantly due to the shorter marketing and campaign period of auctions.

When listings are plentiful and buyers have plenty of choice available to them, an auction can help your property stand out. Additionally, selling by auction provides reserve price protection and as the seller you have the opportunity to set specific terms of sale.

If you’re considering going to auction, familiarise yourself with how they work and discuss your options with a REIWA agent to ensure it’s the right selling method for you.

Buying at auction

Alternatively, if you’re a buyer interested in a property that is going to auction, do you research prior to the day so you’re well informed and know what to expect.

If you’re uncomfortable with the idea of bidding yourself, you can consider hiring a buyer’s agent who can provide advice before and on auction day.

They also help with a number of other tasks including due diligence on the property, researching the property’s value, helping you decide on your purchase price limit and bidding for you on the day.

Here at Porter Matthews Metro we have a well thought out Auction process and success rate, if you have queries as to how this method might suit you, please give us a call on 9475 9622 or email us at mail@pmmetro.com.au

---

Nicole Cox via realestate.com.au

Perth’s house prices took another dip in July, but the outlook is brighter for owners of units and apartments with an improvement in values, new data from CoreLogic shows.

Perth retained the unenviable title as the weakest performing property market in Australia, with a combined drop in dwelling values of 1.3% for July.

The CoreLogic Hedonic Home Value Index reveals that unit prices surged 1.8% in July and 4.2% in the past three months to a median price of $400,000, but house prices dropped 1.6% last month to return a 2.5% decline since the same time last year.

The median house price in Perth is now $498,200.

CoreLogic says there has been a slowdown in growth conditions in the hottest markets of Sydney and Melbourne.

At the other end of the growth spectrum, Perth and Darwin have continued to see dwelling values slip lower during July, taking the cumulative decline to 10.2% in Perth and 14.5% in Darwin since both markets peaked in 2014.

“The ease in the rate of decline has been most visible in Perth, providing a signal that the Western Australian capital may be approaching the bottom of the downturn,” the CoreLogic report found.

“Listing numbers have been falling across Perth which is a positive sign of improving conditions and transaction numbers have found a new floor at around 2500 sales per month.”

CoreLogic Head of Research Tim Lawless says while the market has slowed from recent highs, growth remains robust.

“I don’t think there is any one factor causing the market to lose steam, rather it is the culmination of several factors working together,” Lawless says.

“Higher mortgage rates and tighter credit policies have dented investor appetite. This is clear from the RBA’s monthly credit aggregates which show investment related housing credit growth has consistently slowed from late last year.”

He says higher mortgage rates are now also impacting on interest only loans as well as fixed rate loans, which is likely to further deter some prospective buyers.