Discover the Benefits of Investing in New Homes

Investing in New Homes

Your Investment Property in Australia Doesn’t Have to be Pre-Owned

Whether you buy an old or new property is one of the key decisions you’ll have to make when buying an investment property in Australia. Both have their advantages. With an old property, you can often secure a great deal, plus there’s potential to renovate and add value. You can also feel more certain about how the property will perform

A new investment property in Australia may not come with those assurances. However, you shouldn’t discount them outright. In fact, investing in new homes comes with several benefits that may earn you more money.

Benefit #1 – Higher Capital Growth

As we all know, location is important when buying an investment property in Australia. Choose the wrong location, and you limit the capital growth your property will enjoy. Buying an old property in a desirable location practically guarantees you’ll enjoy capital growth. That’s a given.

But many don’t realise that the same applies to new properties as well. In fact, a new property may enjoy greater capital growth than an old property in the same location. Newer properties tend to enjoy higher levels of demand than old properties. Buyers and renters want the latest mod cons, which they won’t always get with an old property. This increased demand makes the location more desirable which contributes to increased capital growth for your property.

Benefit #2 – Construction Quality

Have you ever bought an old investment property in Australia, only to find that you have to spend thousands of dollars on renovations? It’s not an uncommon problem. Properties wear out over time. Fixtures need replacing and appliances need maintenance. This is all money coming out of your pocket.Depreciation Calculator

Yes, you can claim tax deductions in Australia for some of this work. But you may not want to deal with the hassle.

A new property allows you to avoid those problems. There are stringent regulations in place to ensure all newly-built properties meet certain standards. They have to be built to a certain quality level, plus they must be energy efficient. This means you can feel certain that the construction quality of a new building will be high. As a result, you don’t have to spend more money on making improvements.

Benefit #3 – Lower Prices

A lot of people will tell you that it’s almost impossible to get a new property at a low price. Developers know the value of their properties and won’t sell for anything less.

This may be true when trying to buy a new property after the developer has already sold most of their stock. However, it discounts the potential savings you could by getting in early.

Keep your ear to the ground so you can find out about upcoming development work. If the houses are in a desirable location, you should try to get in as early as possible. Many developers sell their new properties for less than they’re worth to investors who make early offers. If you’re among that group, you’ll have a great property that cost you less than it should have.

Benefit #4 – You Attract More Tenants

Depreciation Quote ScheduleWe touched on this point earlier, but it’s worth coming back to. Tenants want properties that offer the latest appliances. They also want to pay as little as possible on their utility bills.

Buying an old investment property in Australia sometimes means that you can’t offer these things to your prospective tenants. The fixtures and appliances may be out of date, which lowers the demand. The property may also not be energy efficient. In the end, you have to charge less rent than you may wish so that you can attract tenants.

That shouldn’t be a problem with a new property. The developers will have installed modern fixtures and appliances, which attract more tenant applications. You don’t have to pay for renovations, plus, you can charge higher rents.

Benefit #5 – You Get a Blank Slate

Let’s assume you aren’t buying the property as an investment. Instead, you want to live in it yourself. If you buy an established, older property, you’re going to have to deal with the previous owner’s choices. You may have to spend a lot of money to change things until they’re just the way you like them.

When buying a new home, you have more choice. For example, you can discuss your preferences with the developer to ensure the home is built to meet your needs.

The prospect of having a blank slate appeals to many buyers. Plus, you get to enjoy the other benefit’s we’ve mentioned if you do decide to take on some tenants.

Five Property Negotiation Tactics To Save You Money

Property Negotiation Tactics

Spend Less with the Right Tactics

Information goes a long way when you’re buying an investment property in Australia. Without information, you can’t prepare for the negotiations. This is when you sit down with the seller to try and find the right price for your investment property in Australia.

However, the information you have isn’t the only weapon in your arsenal. There are plenty of other tactics that you can employ to get a good deal. With that in mind, we’ve come up with five hot investment property tips for beginner negotiators.

Tip #1 – Learn as Much as You Can About the Seller

You may think the state of the property market would make it impossible to negotiate a good deal. If property prices are going up, it’s easy to assume that all sellers you meet will ask for more money.

However, this line of thought doesn’t take the seller’s situation into account. You need to find out everything you can about the seller when buying an investment property in Australia. For example, do you know the reason why the seller is getting rid of the property? If not, then you need to find out. Depreciation Quote Schedule

Many people sell because they’re in distressed situations. They may be in financial difficulties, or need to sell quickly to fund a new purchase. You can use this to your advantage and negotiate a better deal. After all, a motivated seller is one who will listen to lower offers.

Tip #2 – Sweeten the Deal

This ties into our first tip. Sometimes, a seller wants something really specific, which will make your bid for their investment property in Australia more attractive.

Consider the following example. The seller is currently going through a divorce. It’s a heartbreaking and emotional situation, but they really need to sell their property before the divorce is settled. As a result, that seller may be looking for a buyer who can help them settle the sale quickly, so they can get on with the rest of their life.

That’s where you come in. If you limit the terms attached to the transaction, you can speed up the process. That gives you some leeway to negotiate a lower price with a seller who wants to get rid of a property quickly.

Tip #3 – Get Pre-Approval on a Home Loan

Depreciation CalculatorSellers love serious buyers. If you enter negotiations knowing that you don’t yet have the money to make the purchase, you’re going to sour the seller to any offers you might make.

This means it’s best to get pre-approval on a home loan before you try to buy an investment property in Australia. Lodge your application and ask your lender to provide proof of the pre-approval.

You can then take this into your negotiations. Having pre-approval shows that you’re a serious buyer who wants to move forward. This will make the seller more willing to negotiate terms with you, which could be your pathway toward making a lower offer that saves you some money.

Tip #4 – Make the Right First Offer

The first offer you make on your investment property in Australia is crucial. Go too low, and you may insult the seller so much that he or she stops taking you seriously. Make a high offer, and you may end up spending more than you need to.

This is where your research is going to help. Find out how much similar properties in the same area are selling for. You can use this to get an approximate figure for the value of the property. Compare this to the seller’s valuation to ensure you’re both on the same page.

From there, you need to make your offer. It’s usually best to offer somewhere between 5 and 10% less than the seller’s valuation. This shows you’re a serious buyer, while giving yourself some wiggle room if the seller comes back to you with a higher figure.

Tip #5 – Don’t Mention Your Budget

Remember that your seller’s agent is going to try and extract as much information as they can from you. After all, they want to secure the highest possible price for their clients.

Talking to the seller’s real estate agent can offer you more information. However, it can lead to you giving away information that the seller could use against you.

The key is to not let the seller know how much you’re willing to spend. If they have that figure, negotiations are going to start at a much higher price than you had hoped for. Play your cards close to your chest, while still making offers that show you’re a serious buyer.

How To Invest On a Low Income

Invest On A Low IncomeHow to invest on a low income.

YOU have to be a millionaire to be able to invest in property, right? Wrong.

Contrary to popular belief, anyone can be a property investor. And in fact, it’s those who aren’t particularly wealthy that should be stepping up and onto to the ladder to improve their financial position going into the future.

But if you’re on a low income, how do you get that foothold? The first thing is to adopt the right mindset – ‘I think I can’ should be your mantra.

The next thing to do is get creative when it comes to finding opportunities by looking outside your local area or sourcing different finance options.

At the end of the day it’s all about getting into the market, but make sure you consider your situation carefully to ensure you can afford it before jumping in.

The most important thing is to set your goals in the context of a long-term plan… and make sure you stick to it, taking one step at a time. Property is a long-term game, so don’t expect to buy and sell quickly and become rich.

Here are some quick tips to help low-income earners get into the market:

 

Sure, we’d all love to own an inner city pad. Imagine sitting back aDepreciation Quote Schedulet your next family barbie telling everyone about your trendy property in Sydney’s Surry Hills? You can just see the look on everyone’s face!

The reality is, however, that very few people can afford those types of properties. And often they don’t have the best growth potential, so while they might be great to boast about, they don’t make for the greatest investments.

The best way forward for low-income earners is to start small. Buy the right property to set you on the path to financial freedom – that is, an investment you can afford with all the fundamentals required for growth. Focus on the profit. That might mean buying an apartment in a middle-ring suburb of a capital city or a house in a regional area.

Once you get into the market and acquire some equity, you’ll have the ability to grow your portfolio, as long as you can service more debt.

 

Using existing equity to buy again – that is, leveraging – is the key for any investor to grow their portfolio.

Your own home can be the best source of equity, but if you’ve just made your first purchase you might have to patiently wait until the property grows in value.

 

Property is a great way to build wealth, but you need money to make money, right? Well, yes. If you don’t already have a property with existing equity to leverage off you’ll have to save a deposit.

But if you aim to buy a more affordable property in a growth area the deposit required will be far less than that for an expensive inner-city property.

Set a budget, and more importantly, stick to it. Make sure that budget includes putting aside some savings every week – even if it’s just $10.

Also look for ways to increase your income, such as selling unwanted items on eBay, setting up a home business, even perhaps doing letterbox drops in your free time. You may have to make some sacrifices in the short-term to get ahead.

Once you have a deposit and you make a purchase, ensure you always have surplus savings in the kitty to cover you if something goes wrong.

 

We’ve all heard plenty about ‘rentvesting’ lately, the buzz word that refers to an increasing trend by which people are choosing to rent in an area they want to live, and instead buy an investment property.

This is a great option for those on a low income looking to break into the market. Buying an investment property you can rent out will help you get into the market – and stay in it – for a smaller outlay of money. If you choose carefully and maximise your deductions you might even be able to break even or end up with more money in your pocket at the end of the day.

 

They’re not easy to find nowadays, but if you can find a cash flow positive property – or at least one as close to neutrally geared as possible – it will help you get into the market on a lower income, as you won’t have to dig as deep into your savings to keep the property.

Be aware that these types of properties may not give you as much capital growth down the track (see our earlier blog on ‘Should you buy for capital growth or rental yields’), but it will help you to get a foot in the market.

 

Staying at home with mum and dad longer can help you save money to put towards a deposit for a property. You might also be able to bring forward your inheritance by getting a monetary gift  Depreciation Calculatorfrom mum and dad, or they might even be willing to go guarantor for you.

 

When it comes to investing, going it alone can be tough. To ease the financial burden consider finding a partner to invest with. Joint ventures can give you greater borrowing power and help you hold the property by having another person to share the costs. If you go down this path make sure you draw up an appropriate partnership agreement spelling out all the rules and regulations.

 

Rather than struggling through the year and holding out for a decent income tax refund at the end of June, you can apply to have the amount of tax withheld from your income reduced. Effectively this means you’ll get your refund throughout the year rather than waiting. This is perfect for low-income investors, as it will help you hold property by alleviating financial pressures throughout the year.

 

If you’re on a low income, inevitably it will be harder for you to get a loan and to prove to a lender you can service it. To assist in getting finance, ensure you keep your credit rating up. Pay your bills on time, keep your credit card debt low, prove you have the ability to save.

When is a Good Time to Buy an Investment Property?

Building Insurance Valuation Report

A lot of people buy property when interest rates go right down. Like now, there are a lot of people buying because interest rates are low. Everyone goes out and buys and that creates more demand as well. And who would not want to buy if you can lock in interest rates and borrow at 5% for five years?

Depreciation Quote ScheduleBut for me, I don’t want to rush. Sometimes I tend to sit back and wait when the market is hot. I’ve learned that sometimes being patient with your money is good. You don’t have to buy something every year. It might be better to save up for 10 years and then come and pounce when other people are not in the market.

Sometimes when the rate goes up to 9% and no one can afford to buy, I’d rather buy then and have enough money and not have to worry about having a big debt or fighting with other investors. You don’t want to be in so much debt when rates go up again.

I don’t want to buy when there are 100 people going to auction against me. I’d rather buy when there are not a lot of buyers.

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