Thursday, May 31, 2012

Article of Interest

From: Linda [mailto:linda@ljgrealestate.com.au]
Sent: Friday, 1 June 2012 2:27 PM
To: Linda
Subject: Article of Interest

Article of Interest for Valued Friends and Associates of LJ Gilland Real Estate Pty Ltd as follows:-

 

Image001

HOMEBUYERS and real estate investors are being warned to watch out for the hidden traps that may be lurking in their potential purchases.

Leaky showers, cracked ceilings and self-opening doors and among the signs pointing to bigger and more costly "nasty surprises", the Association of Building Consultants says.

Spokesman Chris Short says understanding a building's condition and the likelihood of future repairs is vital when assessing a property purchase and managing a mortgage.

"Many homes are tidied up for sale, with the pre-sale spruce ranging from a basic clean through to bogging cracks, repainting, retiling and re-grouting, and even new floor coverings," Short says.

"The makeover might look good, but it also masks what might be more sinister problems such as termite damage, salt damp, structural issues, unlicensed and dangerous electrical work, and more.

"For example, a leaky shower might seem harmless on the surface but if the leak is allowing water to flow into the soil next to your home, it's likely to attract termites."

Short says building inspections can be particularly valuable for investors who will not be living in the property they buy.

"You need to know it well so that you're clear about urgent maintenance requirements to meet your obligations as a landlord - such as ensuring smoke alarms are hardwired - and the cost of long-term maintenance," he says.

Property academic and author Peter Koulizos says beginners should always consider a building inspection.

He adds to make sure the report is a written one, rather than a verbal agreement.

"Some of my students have been able to negotiate the contract down by the repair amount or they have just pulled out," he says.

Koulizos says when entering any property, potential buyers should take in a deep breath.

"If there is a musty smell, it's a sign of salt damp," he says.

Another thing to check is the perimeter of the house and make sure there are paths surrounding it.

"You can minimise cracking by keeping the moisture content of the soil fairly constant," Koulizos says.

"Paths around homes are not just there for decoration."

HIDING A BIGGER PROBLEM?

* Cracks in ceilings and walls are hallmarks of footings sinking or rising, which causes the walls to flex.

* Other signs are doors out of square in their frames, self-closing and self-opening doors.

* Leaking hot water services, rainwater tanks and airconditioning pipes can create moisture that attracts termites.

* New floor tiles installed over old tiles can trap moisture between the tile layers.

* Cracked tiles and mould at the shower base and plaster bubbling on the wall in the room next to the bathroom are also signs of moisture.

* Any repair work to the building's paths can provide an entry point for termites.

Source: Association of Building Consultants

Read more: http://www.news.com.au/money/property/prevent-a-nasty-property-surprise/story-e6frfmd0-1226368607135#ixzz1wVpG6zCT

Best Regards,

Linda & Carlos Debello

LJ Gilland Real Estate Pty Ltd

http://twitter.com/GillandDebello

http://au.linkedin.com/lindajanedebello

http://www.facebook.com/pages/LJ Gilland Real Estate Pty Ltd

Confidential email:- The information in this message is intended for the recipient named on this email.  If you are not the recipient please do not read, copy, distribute or act upon the message as the information it contains may be privileged.  If you have received this message in error, please notify the writer by return email.  Thank you very much for your assistance in this matter and your co-operation.  Should you wish not to received research and interesting subject which the writer has contained in the email for your empowerment, please notify the writer of that as well as he/she only has your best interests at heart with thanks.  Have a great day!

Image002

Market value, not landlords’ hopes, should determine rent: McGrath

Market value, not landlords’ hopes, should determine rent: McGrath

RBA to cut rates...

RBA to cut rates by 25 basis points next week and reduce cash rate to 2.75% by year-end: Westpac

By Larry Schlesinger
Thursday, 31 May 2012

Westpac expects the Reserve Bank to cut the cash rate by 25 basis points next week (June 5) to 3.5% with further rate cuts in July, August and one in the fourth quarter to bring the cash rate to a record low of 2.75%.

Westpac had previously expected the current easing cycle, which began in November last year, to end at 3.25% but now expects a much deeper cycle of rate cuts due to the deteriorating global picture.

Taking into consideration the gap betweeen the cash rate and bank mortgage rates, Westpac chief economist Bill Evans says a move to 2.75% in the official cash rate is likely to see the cash rate somewhere between 100bps and 145bps below neutral (curently asssessed as 4.1% by Westpac) - meaning an average standard variable mortgage rate of between 6.05% and 6.5%.

"In the three previous easing cycles the official cash rate has bottomed out at 150bps (2008/09); 125bps (2001) and 50bps (1996/97) below neutral.In those periods the standard variable mortgage rate bottomed out at 5.8% (2009); 6.05%(2001); and 6.7% (1997).

"The contrast with 2009 is important. Despite the cash rate falling below its GFC trough, we expect the standard variable mortgage rate will bottom out well above the 2009 level," he says.

The cash rate reached a previous low of 3% in April 2009 according to RBA records going back to 1990.

Evans says the two extra rate cuts are based on the banks assessment that “the global environment – read Europe - has deteriorated even further since we revised down our call for the low point from 3.75% to 3.25%.

“In turn this deterioration is expected to have a more severe impact on confidence in Australia than had earlier been expected.

“The stance of policy is currently only mildly expansionary despite the official cash rate being at 3.75%, its lowest level outside the GFC,” says Evans.

Evans says Westpac does not favour a 50 basis point cut scenario in June.

“The decision to cut by 50 basis points in May was mainly driven by direct concerns around the domestic economy.

“To us, there appeared to be an element of catch up with the Bank holding steady in February-April when the domestic case for a cut was strong.

“The decision next week will be built around the impact that the deterioration in global confidence will have on the Australian economy.

“Since the Board meeting in May US 10 year bond rates are down from 1.9% to 1.6% and the Australian equivalent is down from 3.6% to 2.9%.

“However, there are a number of key risk events over the next few weeks (Greek elections on June 17 for example) which will be critical for global confidence.

“We expect a more orderly approach to addressing these issues and thus a more ‘considered’ 25 basis points move.

 “However nobody can be particularly confident in gauging the Bank's meeting-by-meeting strategy for dealing with these issues,” says Evans.

What Goes On in the Garden When You Aren't Watching

Subject: What Goes On in the Garden When You Aren't Watching

This is beautiful.......be sure and watch closely (around 2 min 40 sec)
and check out the baby bat under its mother. Unreal.

If you never knew what goes on in the garden when you
aren't paying attention. Watch this—some of the finest photography you
will ever see.

God's amazing creation!

 

 

 

From the Experts

Open inspection or by appointment? - The Experts | Switzer

 

Linda J. Debello Licensee, LJ Gilland Real Estate Pty Ltd

Tel: (07) 3263 6085 | Mobile: 0409 995 578

www.ljgrealestate.com.au

FacebookTwitterLinkedInFlickrPosterousBloggerFacebookfoursquareYouTubeXINGSlideShareWordPress
Contact me: Skypeljgilland

Follow teststamp on Twitter

WordPress

My latest post:RP Data Some balance returning between buyers and sellers article of today’s date 29 May 2012 Some balance returning between buyers and sellers Key vendor metrics such as the aver...

Share on FacebookShare on Twitter

  Get this email app!  

My QR VCard

Please consider your environmental responsibility. Before printing this e-mail message, ask yourself whether you really need a hard copy.

Open inspection or by appointment? - The Experts | Switzer

Open inspection or by appointment? - The Experts | Switzer

ANY ADDRESS - ALL OVER THE WORLD

This is unbelievable – Now everyone can know where Toogoom is!

Much faster than Google Earth.

  After opening the link below, type in the address you want slowly, one letter or number at a time, then pause, letter by letter, space by space, and watch each time where it takes you.
 

 
 http://showmystreet.com/

 

Wednesday, May 30, 2012

Cost can change, even in a fixed price building contract

Why the cost can change, even in a fixed-price building contract

By Jo Chivers
Thursday, 31 May 2012

There can often be some misunderstanding around a fixed-price contract.  If you don’t know a builder, then there can also be a little mistrust as you look over the tender. Am I being overcharged?  Is everything included?  Will there be many variations?

Today I opened an email that made me smile and really feel grateful for such a wonderful builder we are working with on our development projects.

The email came from the office of my builder. It related to a three-villa project under construction. It had two variations attached to it; one for the site preparation and the other for slab piering.  I’d been overseeing the works with the site manager so I was expecting the variations but weren’t sure on the exact cost they’d come in at.

“Variations are changes to the original contracted work, which involve either an addition or reduction in the scope or value of work,” so the Master Builders Assoc describes.

So you’ll always find some items marked as provisional in your builder’s contract, because you can’t always plan the entire “scope or value of work” required when developing.

In this builder’s contract this clause was clearly included:  “Provisional sum is the estimate cost of labour and materials; it includes an amount for the builder’s margin. If the cost is more than the allowance, the difference including builder’s margin will be added to the contract price. “

Back to our three-villa project variations.  The first one covering the site preparation was for tree removal.  The builder’s tender covered vegetation clearing but from the time Property Bloom located the site, ran our analysis, designed the project, lodged the development approval and construction certificate and the client had her construction loan finalised and we could start to build, the vegetation had grown to a rather large tree.  We did get a quote from a tree lopper to clear it, but we decided that it would be cheaper for the builder’s excavator to push it over and clear it as part of the site preparation. So we did expect a little increase to this provisional cost but wouldn’t know until the excavator submitted his invoice to the builder. It ended up being a little over $1,000 for this work.

The other variation was for under slab piering.  Once work was completed, we knew that we hadn’t needed to use the entire provisional allowance in the builder’s tender.  When on site with the concreter, I could see that the depths he was drilling to were not as deep as expected and so there were less lineal meters of piering required.  For this work our client was receiving a credit as the provisional allowance was over-estimated.

I needed to let my client know that there had been some variation to the build cost.  After all, she had signed a fixed-price contract a few weeks earlier, but I had made a point to explain the items marked provisional in her contract.  Usually provisional items are:

  • Disposal of stormwater – even with an engineer’s plan, this may vary during construction
  • Retaining walls – the square meters of retaining often can’t be totally confirmed until the site is cut
  • Piering to under the slab – dependant on how deep they may need to drill to hit solid support
  • Site preparation – excavation – cut and fill.  There can be more fill required to bring in or take away

The conversation I had with my client was easy. She was coming out in front with the credit on the piering more than covering the variation on the site clearing.  This is the kind of outcome we strive for, but it doesn’t always work that way.

In property developing or home building, there can often be a degree of disappointment once under construction as issues arise.  Mostly this comes down to the developer or home owner’s expectation that the costs won’t change.

The more developments or home builds you manage, the more issues you become aware of. But if you can go into it knowing there is a degree of risk that you must take, then you won’t be disappointed if an issue does come up.

No one can really know what will happen once you start work, but as project managers, it’s our job to manage the issues in the most effective way so that we minimise costs and the valuable time in may take to sort out the issue.  And when it goes the other way and a credit is issued, then that’s a wonderful feeling.

Jo Chivers is director of Property Bloom, which manages property development.

 

 

 

Related Topics:

Cost can change, even in a fixed price building contract

Why the cost can change, even in a fixed-price building contract

By Jo Chivers
Thursday, 31 May 2012

There can often be some misunderstanding around a fixed-price contract.  If you don’t know a builder, then there can also be a little mistrust as you look over the tender. Am I being overcharged?  Is everything included?  Will there be many variations?

Today I opened an email that made me smile and really feel grateful for such a wonderful builder we are working with on our development projects.

The email came from the office of my builder. It related to a three-villa project under construction. It had two variations attached to it; one for the site preparation and the other for slab piering.  I’d been overseeing the works with the site manager so I was expecting the variations but weren’t sure on the exact cost they’d come in at.

“Variations are changes to the original contracted work, which involve either an addition or reduction in the scope or value of work,” so the Master Builders Assoc describes.

So you’ll always find some items marked as provisional in your builder’s contract, because you can’t always plan the entire “scope or value of work” required when developing.

In this builder’s contract this clause was clearly included:  “Provisional sum is the estimate cost of labour and materials; it includes an amount for the builder’s margin. If the cost is more than the allowance, the difference including builder’s margin will be added to the contract price. “

Back to our three-villa project variations.  The first one covering the site preparation was for tree removal.  The builder’s tender covered vegetation clearing but from the time Property Bloom located the site, ran our analysis, designed the project, lodged the development approval and construction certificate and the client had her construction loan finalised and we could start to build, the vegetation had grown to a rather large tree.  We did get a quote from a tree lopper to clear it, but we decided that it would be cheaper for the builder’s excavator to push it over and clear it as part of the site preparation. So we did expect a little increase to this provisional cost but wouldn’t know until the excavator submitted his invoice to the builder. It ended up being a little over $1,000 for this work.

The other variation was for under slab piering.  Once work was completed, we knew that we hadn’t needed to use the entire provisional allowance in the builder’s tender.  When on site with the concreter, I could see that the depths he was drilling to were not as deep as expected and so there were less lineal meters of piering required.  For this work our client was receiving a credit as the provisional allowance was over-estimated.

I needed to let my client know that there had been some variation to the build cost.  After all, she had signed a fixed-price contract a few weeks earlier, but I had made a point to explain the items marked provisional in her contract.  Usually provisional items are:

  • Disposal of stormwater – even with an engineer’s plan, this may vary during construction
  • Retaining walls – the square meters of retaining often can’t be totally confirmed until the site is cut
  • Piering to under the slab – dependant on how deep they may need to drill to hit solid support
  • Site preparation – excavation – cut and fill.  There can be more fill required to bring in or take away

The conversation I had with my client was easy. She was coming out in front with the credit on the piering more than covering the variation on the site clearing.  This is the kind of outcome we strive for, but it doesn’t always work that way.

In property developing or home building, there can often be a degree of disappointment once under construction as issues arise.  Mostly this comes down to the developer or home owner’s expectation that the costs won’t change.

The more developments or home builds you manage, the more issues you become aware of. But if you can go into it knowing there is a degree of risk that you must take, then you won’t be disappointed if an issue does come up.

No one can really know what will happen once you start work, but as project managers, it’s our job to manage the issues in the most effective way so that we minimise costs and the valuable time in may take to sort out the issue.  And when it goes the other way and a credit is issued, then that’s a wonderful feeling.

Jo Chivers is director of Property Bloom, which manages property development.

 

 

 

Related Topics:

A Life's Journey

All of life is a journey which paths we take, what we look back on, and what we look forward to is up to us. We determine our destination, what kind of road we will take to get there, and how happy we are when we get there.” - Unknown While

Monday, May 28, 2012

RP Data Some balance returning between buyers and sellers article of today's date

29 May 2012

Some balance returning between buyers and sellers

Key vendor metrics such as the average time on market and average level of vendor discount remain at elevated levels but have been showing some modest improvement over recent months.

The level of vendor discounting and the average time on market are important vendor metrics to understand as they provide an insight around selling conditions in the marketplace. Vendor discounting is simply the difference between the price at which a property is initially listed for sale and the price at which it ultimately sells for. Time on market, on the other hand, is the difference between the date at which a property is first advertised for sale compared to the contract date of a sale.

Both measures are taken across private treaty sales only and are across just those properties that have sold. Given this it provides a good indication of conditions to those vendors that are focused on successfully selling their home.

As the first graph shows the level of vendor discounting for houses has been trending slightly lower over recent months. Across the combined capital cities, vendor discounting is recorded at -7.2% for houses and -7.1% for units. The vendor discounting measure for houses is higher than it has been in recent years while for units it is the same as it was at the same time last year.

Across individual capital cities, vendor discounting levels for houses are lower than at the same time last year in Perth and Darwin but higher elsewhere. Discounting levels for units are the same as last year in Sydney and lower in Brisbane, Perth and Darwin. In Melbourne, the level of vendor discounting is much higher than it was at the same time last year.

The average number of days it takes to sell a house across the capital cities was also trending lower over the second half of 2011. Typically there is a spike in the time it takes to sell a home early in the year and it has eased by March however, this year’s data is not reflecting these conditions for houses. The average number of days it takes to sell a house was recorded at 77 days in March 2012 and it was 51 days for a unit. Both measures were higher than the 65 days and 47 days recorded respectively at the same time last year.

At an individual capital city level, the average time on market is lower than at the same time last year for houses in Brisbane, Perth and Darwin. For units, the average time on market is currently lower than 12 months ago in Brisbane, Perth and Darwin. In Sydney, the average time on market is relatively similar to that at the same time last year while in Melbourne it is taking much longer to sell property than it was last year.

The improvement in vendor metrics in Brisbane, Perth and Darwin and the weakening conditions in Melbourne are reflective of the overall market conditions across these cities and highlighted by the amount of stock currently available for sale across these cities. In Brisbane, total listings are just 2.3% higher than a year ago, in Perth they are -6.4% lower, in Darwin they are -16.4% lower and in Melbourne they are 36.1% higher.

The lower levels of discounting and average time on market in Brisbane, Perth and Darwin reflect improving market conditions in those cities. On the other hand, the significant increases in both measures across Melbourne reflect the cooling conditions across that market.

Overall, the elevated volume of stock available for sale reflects the low levels of demand for housing credit. Ongoing weakness across the housing market is likely to result in the average level of vendor discounting and the average time on market remaining at above average levels. Although this is likely to be the case we have in recent months seen the amount of stock available for sale decline and the volume of sales stabilise, this may result in some further improvements in vendor discounting and time on market.

Best regards,

Linda and Carlos Debello

http://www.ljgrealestate.com.au

http://twitter.com/GillandDebello

http://au.linkedin.com/in/lindajanedebello

http://gillandrealestate.wordpress.com/

http://www.facebook.com/pages/LJ-Gilland-Real-Estate-Pty-Ltd/

Confidential email:- The information in this message is intended for the recipient name on this email.  If you are not the recipient please do not read, copy distribute or act upon the message as the information it contains may be privileged.  If you have received this message in error, please notify the writer by return email.  Thank you very much for your assistance in this matter and your co-operation.

Low-rise receiver sales help drive 49% increase in Gold Coast apartment sales over March quarter: Colliers

Low-rise receiver sales help drive 49% increase in Gold Coast apartment sales over March quarter: Colliers

Google & Property Update for special interests

Dear Valued Friend and Associate,

The following is for your perusal and information with kind regards.

http://slidesha.re/K5yrAD

http://slidesha.re/Kw2z4k

Best regards,
Linda and Carlos Debello
http://www.ljgrealestate.com.au
http://twitter.com/GillandDebello
http://au.linkedin.com/in/lindajanedebello
http://gillandrealestate.wordpress.com/
http://www.facebook.com/pages/LJ-Gilland-Real-Estate-Pty-Ltd/

Confidential email:- The information in this message is intended for the
recipient name on this email. If you are not the recipient please do not
read, copy distribute or act upon the message as the information it contains
may be privileged. If you have received this message in error, please
notify the writer by return email. Thank you very much for your assistance
in this matter and your co-operation.

Sunday, May 27, 2012

[ljgillandrealestate] Noteworthy Article for your perusal and feedback

Dear Friends & Associates:-

The following is for your empowerment and information.  We look forward to a continued win win relationship with you in the future.

Buying is just a small part of residential property investment

By Cameron McEvoy
Monday, 28 May 2012

In my view there are three stages for property investors: research and due diligence, then the offer and purchase process, and last of all the ongoing management and capital maximisation of the investment property. What I find interesting, and what I am writing about today, is how different people place varying hours of their time into these stages, and how this can be a cause for concern for the less informed among us. So let's look at each of these stages and get a feel for what is involved in them:

Research and due diligence. This is where you must first identify your objectives. By this I mean you ask yourself the “big” questions about your broader life objectives, such as:

  • What are my long-term life goals? How much money do I need to retire on?
  • What kind of investment risk profile do I have?
  • Is property investment for me? Do I have the time, dedication, and longevity of commitment to stick to it?

And then hone in to get to the “little” questions, about the specifics of what you're looking for in an investment property, such as:

  • Apartment, townhouse, or house? Off the plan, or pre-existing?
  • Do I want to live near my investment to keep an eye on it? Or am I OK for it to be interstate or international?
  • Do I want a “set-and-forget” approach, or something more hands on and high demand (but with greater potential for capital gain)?

With the above assessed you then need to commence market research (assessing suburbs and property types and measuring them against hard metrics, trends, data, etc), due diligence (lots of time spent here, crunching numbers, working out long-term holding costs, capital trends and so on). Once this is done you will then be armed with all your spreadsheets and formulae to hit the pavement and inspect. You actually won't need to inspect that many properties, because you'll already have done all the research leading you up to know exactly what you want.

The difference and net effect of this is like comparing two children who each have saved up pocket money for a chocolate bar. The first doesn't know what he wants and goes into the shop and is inundated with too much choice. He rapidly and nervously picks a random sweet, not knowing if he'll like it or not, simply because there were a mass of other kids buying out all different kinds of candy bars and he didn't want to miss out. He ends up with a Snickers bar, only to open it, take a bite, and realises he is in fact allergic to peanuts. The other child has already figured all that out; she knows exactly what she is allergic to, what tastes good, and what will satisfy her taste. She also knows that the bar she likes is very popular. When the shop opens at 9am, she charges in with all the other kids but takes a fraction of the time, buys the candy bar she'd preselected when she was already at home, and enjoys every bite.

2) Making an offer and purchasing. This is where would-be buyers go through the offer process, negotiate the deal, have their investment property “team” (Mortgage broker, lender, solicitor/conveyancer, accountant, financial planner, tax depreciator, strata officer, and most importantly, mentor) on hand, ready to hit the “green-means-go!” button once the offer is accepted.

3) Ongoing property management and capital maximisation There are many things that will keep you busy when it comes to this area, with each one of these requiring a chapter to cover them better. So I'll just list the main ones:

  • Finding a reputable managing agent
  • Tenants moving out and sourcing quality new ones
  • Attendance of strata meetings, building maintenance, and occasional council disputes
  • Improvements, renovations, maintenance, repairs
  • Tax depreciation and annual tax and income management

Getting the most out of your investment property is vital. This is because the return you see from your property can vary hugely, due to a list of unforseen changes to your life. For example, your personal income changes. Few working Australians actually earn the precise same amount of income each year. This needs to be taken into consideration in your overall tax assessment. And what if you don't work or study for a year? Lose your job? Or get a big $50,000 salary increase? This alone will change the dynamic of your investments' potential to net you solid returns.

Notice how little I wrote about stage two, compared with the other two stages? This should tell you something about the amount of time you invest in each stage. When I acquire properties I tend to spend my time investment (remember “time is money” in any investment or business undertaking) in the other stages, so my time schedule looks more like this:

Image001

Versus less informed investors whose time distribution looks more like this:

Image002

As you can see, the “buying” stage should actually be the least time-consuming part of the overall investment process! Sounds weird to say it, right?

So, while some investment property gurus are fast to tout the “you make your profit when you buy, not sell” mantra as a rationale to dedicating so much time to buying process, what they actually mean is that the profit is made in the research revelations leading up to the purchase of your property. Prior research/due diligence should take up the bulk of your time, followed by ongoing management, which can take 10, 20, 30, or even 40 years if your strategy is a more long-term “buy-and-hold” one. Certainly something to keep in mind when preparing to purchase.

Watch this space; next time I'll put the ”offer acceptance and purchase” process under microscope and list most of the hoops you'll need to jump through, one by one, when purchasing the property itself. This might help to relax you and take some of the stress away that we all face when going through the buying stage.

Cameron McEvoy is a property investor and maintains a blog, called Property Spectator.

Research your property purchases thoroughly, as a mistake will cost you for years

By Tim Mansfield
Monday, 28 May 2012

The age-old real estate adage of “You make your money when you buy, not when you sell” is as true today as it ever was.

As human beings we often ignore this tip and fall into the trap of buying without doing our homework first. The problem with this is that you may do exactly what the seller is hoping you will do – pay a price above the market value of the property.

The economy, market forces and other factors make it difficult to calculate the time it will take to recoup the cost of a premium you have paid, but even if you paid 10% over market value it could take two or more years.

Astute home buyers and investors do extensive research before they make a decision to buy. They will have established a market value in their heads, carefully balanced out the pros and cons, put their emotions to one side and made an informed decision on the maximum amount they are willing to pay.

There is an important element called “potential” involved in property purchases.

It is not just what you see physically when you inspect a property but also what you believe can be done in future to improve it. This forms part of what adds value for you as a buyer and is particularly important when you decide to sell.

There are three key questions that buyers always need to ask:

1.    What is the seller’s motivation? The answer to this question helps to understand the urgency of the sale (or not) and impacts on the price the seller is willing to accept at any given time.

2.    How long has the property been on the market? This one helps to understand the reasons the property had not sold. Is it overpriced? Does it have major defects? Or has it just gone stale and the seller is now open to any reasonable offer as other buyers have shied away?

3.    What is the market value of the property? Doing your own research helps establish a value in your own mind based on recent comparable sales and current listings in the same area.

Of course the decision to purchase a property needs to be finely balanced between the buyer’s needs and wants. We would all love to own a home with a swimming pool, but do we really need one?

If you are a property buyer and have ticked all the above boxes before you purchase you will have the satisfaction of knowing that you are ahead of the game for years to come.

If you are time-poor or feel you don’t have the experience to buy a home or investment property yourself, engage a buyers’ agent. They have many years of know-how in successful property transactions and will take the stress and strain away from you. Their job is to act independently for you in your best interest and get you the best possible purchase price.

In New South Wales buyers’ agent fees vary from agency to agency but generally they charge an amount ranging between 1% and 3% of the purchase price. Every case is different and depends on a number of factors including the scope of the buyer’s brief (wish list), the resources involved, the geographic location, market conditions, etc.

The fee paid for a successful purchase should be regarded as an investment and it is always money well spent.

A final thought: "As the vendor will engage an agent to negotiate the highest possible price, why shouldn't the buyer engage one to negotiate the lowest?"

T Mansfield is a 30-year global  veteran in the real estate industry and Founder and CEO of Sydney-based buyers’ agents . 

Best regards,

Image003

 

Linda J. & Carlos Debello, LJ Gilland Real Estate Pty Ltd

Tel: (07) 3263 6085 | Mobile: 0409 995 578 & 0400 833 800 http://www.ljgrealestate.com.au

 

LikeLike View this on the websiteView this on the website

Get your own Posterous Space | Unsubscribe Instant notifications are on for this group: Instant Notifications On

Noteworthy Article for your perusal and feedback

Dear Friends & Associates:-

The following is for your empowerment and information.  We look forward to a continued win win relationship with you in the future.

Buying is just a small part of residential property investment

By Cameron McEvoy
Monday, 28 May 2012

In my view there are three stages for property investors: research and due diligence, then the offer and purchase process, and last of all the ongoing management and capital maximisation of the investment property. What I find interesting, and what I am writing about today, is how different people place varying hours of their time into these stages, and how this can be a cause for concern for the less informed among us. So let's look at each of these stages and get a feel for what is involved in them:

Research and due diligence. This is where you must first identify your objectives. By this I mean you ask yourself the “big” questions about your broader life objectives, such as:

  • What are my long-term life goals? How much money do I need to retire on?
  • What kind of investment risk profile do I have?
  • Is property investment for me? Do I have the time, dedication, and longevity of commitment to stick to it?

And then hone in to get to the “little” questions, about the specifics of what you're looking for in an investment property, such as:

  • Apartment, townhouse, or house? Off the plan, or pre-existing?
  • Do I want to live near my investment to keep an eye on it? Or am I OK for it to be interstate or international?
  • Do I want a “set-and-forget” approach, or something more hands on and high demand (but with greater potential for capital gain)?

With the above assessed you then need to commence market research (assessing suburbs and property types and measuring them against hard metrics, trends, data, etc), due diligence (lots of time spent here, crunching numbers, working out long-term holding costs, capital trends and so on). Once this is done you will then be armed with all your spreadsheets and formulae to hit the pavement and inspect. You actually won't need to inspect that many properties, because you'll already have done all the research leading you up to know exactly what you want.

The difference and net effect of this is like comparing two children who each have saved up pocket money for a chocolate bar. The first doesn't know what he wants and goes into the shop and is inundated with too much choice. He rapidly and nervously picks a random sweet, not knowing if he'll like it or not, simply because there were a mass of other kids buying out all different kinds of candy bars and he didn't want to miss out. He ends up with a Snickers bar, only to open it, take a bite, and realises he is in fact allergic to peanuts. The other child has already figured all that out; she knows exactly what she is allergic to, what tastes good, and what will satisfy her taste. She also knows that the bar she likes is very popular. When the shop opens at 9am, she charges in with all the other kids but takes a fraction of the time, buys the candy bar she'd preselected when she was already at home, and enjoys every bite.

2) Making an offer and purchasing. This is where would-be buyers go through the offer process, negotiate the deal, have their investment property “team” (Mortgage broker, lender, solicitor/conveyancer, accountant, financial planner, tax depreciator, strata officer, and most importantly, mentor) on hand, ready to hit the “green-means-go!” button once the offer is accepted.

3) Ongoing property management and capital maximisation There are many things that will keep you busy when it comes to this area, with each one of these requiring a chapter to cover them better. So I'll just list the main ones:

  • Finding a reputable managing agent
  • Tenants moving out and sourcing quality new ones
  • Attendance of strata meetings, building maintenance, and occasional council disputes
  • Improvements, renovations, maintenance, repairs
  • Tax depreciation and annual tax and income management

Getting the most out of your investment property is vital. This is because the return you see from your property can vary hugely, due to a list of unforseen changes to your life. For example, your personal income changes. Few working Australians actually earn the precise same amount of income each year. This needs to be taken into consideration in your overall tax assessment. And what if you don't work or study for a year? Lose your job? Or get a big $50,000 salary increase? This alone will change the dynamic of your investments' potential to net you solid returns.

Notice how little I wrote about stage two, compared with the other two stages? This should tell you something about the amount of time you invest in each stage. When I acquire properties I tend to spend my time investment (remember “time is money” in any investment or business undertaking) in the other stages, so my time schedule looks more like this:

Image001

Versus less informed investors whose time distribution looks more like this:

Image002

As you can see, the “buying” stage should actually be the least time-consuming part of the overall investment process! Sounds weird to say it, right?

So, while some investment property gurus are fast to tout the “you make your profit when you buy, not sell” mantra as a rationale to dedicating so much time to buying process, what they actually mean is that the profit is made in the research revelations leading up to the purchase of your property. Prior research/due diligence should take up the bulk of your time, followed by ongoing management, which can take 10, 20, 30, or even 40 years if your strategy is a more long-term “buy-and-hold” one. Certainly something to keep in mind when preparing to purchase.

Watch this space; next time I'll put the ”offer acceptance and purchase” process under microscope and list most of the hoops you'll need to jump through, one by one, when purchasing the property itself. This might help to relax you and take some of the stress away that we all face when going through the buying stage.

Cameron McEvoy is a property investor and maintains a blog, called Property Spectator.

Research your property purchases thoroughly, as a mistake will cost you for years

By Tim Mansfield
Monday, 28 May 2012

The age-old real estate adage of “You make your money when you buy, not when you sell” is as true today as it ever was.

As human beings we often ignore this tip and fall into the trap of buying without doing our homework first. The problem with this is that you may do exactly what the seller is hoping you will do – pay a price above the market value of the property.

The economy, market forces and other factors make it difficult to calculate the time it will take to recoup the cost of a premium you have paid, but even if you paid 10% over market value it could take two or more years.

Astute home buyers and investors do extensive research before they make a decision to buy. They will have established a market value in their heads, carefully balanced out the pros and cons, put their emotions to one side and made an informed decision on the maximum amount they are willing to pay.

There is an important element called “potential” involved in property purchases.

It is not just what you see physically when you inspect a property but also what you believe can be done in future to improve it. This forms part of what adds value for you as a buyer and is particularly important when you decide to sell.

There are three key questions that buyers always need to ask:

1.    What is the seller’s motivation? The answer to this question helps to understand the urgency of the sale (or not) and impacts on the price the seller is willing to accept at any given time.

2.    How long has the property been on the market? This one helps to understand the reasons the property had not sold. Is it overpriced? Does it have major defects? Or has it just gone stale and the seller is now open to any reasonable offer as other buyers have shied away?

3.    What is the market value of the property? Doing your own research helps establish a value in your own mind based on recent comparable sales and current listings in the same area.

Of course the decision to purchase a property needs to be finely balanced between the buyer’s needs and wants. We would all love to own a home with a swimming pool, but do we really need one?

If you are a property buyer and have ticked all the above boxes before you purchase you will have the satisfaction of knowing that you are ahead of the game for years to come.

If you are time-poor or feel you don’t have the experience to buy a home or investment property yourself, engage a buyers’ agent. They have many years of know-how in successful property transactions and will take the stress and strain away from you. Their job is to act independently for you in your best interest and get you the best possible purchase price.

In New South Wales buyers’ agent fees vary from agency to agency but generally they charge an amount ranging between 1% and 3% of the purchase price. Every case is different and depends on a number of factors including the scope of the buyer’s brief (wish list), the resources involved, the geographic location, market conditions, etc.

The fee paid for a successful purchase should be regarded as an investment and it is always money well spent.

A final thought: "As the vendor will engage an agent to negotiate the highest possible price, why shouldn't the buyer engage one to negotiate the lowest?"

T Mansfield is a 30-year global  veteran in the real estate industry and Founder and CEO of Sydney-based buyers’ agents . 

Best regards,

Image003
 

Linda J. & Carlos Debello, LJ Gilland Real Estate Pty Ltd

Tel: (07) 3263 6085 | Mobile: 0409 995 578 & 0400 833 800 http://www.ljgrealestate.com.au