How to Get the Best Value From Your First Rental Property

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Are you thinking seriously about buying your first investment property, or have you just purchased one and you are in that first flush of excitement? Residential property is still one of the most popular methods of building wealth in Australia. However, there are a few things you should be aware of to avoid making the most common landlord mistakes.

An Investment Property is not a Hobby

At first, many investors think of their property as a hobby or a side-bet against possible future insecurity. From day one, you must look at this property as a business. Take it seriously and access the right resources to support the large sum of money you have committed if you want the property to achieve its full potential.

Keep it Maintained

The next mistake, and a frequent one, is to skimp on repairs and maintenance. New landlords often try to build early cash flow by not replacing things like worn floor or window coverings, leaking taps or shabby bathrooms. Good tenants will pay a higher rental for a comfortable living environment, and maintenance increases the value of the asset.

Personal Relationships with Tenants

This can be a tricky one, especially if you intend letting to a relative or friend. If your relationship is a close one, your tenant may take advantage of it by falling into arrears with their rent, or objecting to a legitimate rent increase. Remember the earlier advice that an investment property is just like a business and you need to treat it as such.

Delegate Property Management to Professionals

There is a way to keep the tenants you know personally at arm’s length and that is to engage a property management agency. Looking after an investment property requires knowledge of tenancy laws and the ability to select quality tenants. Do-it-yourself landlords have high vacancy rates because they don’t have the professional systems in place to manage their properties effectively.
This is something we see first-hand all the time. Bunbury Real Estate employs experienced property managers who understand the tenancy legislation and know the local rental market. We have systems in place to reference check prospective tenants, advertise our rental properties to the widest possible market and do regular inspections. Our management fees are also tax deductible.

If You Don’t Have an Accountant, Get One!

Now that we have mentioned tax, you will get the best value out of your investment if you get a good accountant, preferably one who knows property. Accountants know the legitimate tax deductions applicable to investment properties, as well as the intricacies of negative gearing and depreciation.
Follow these few guidelines and you will enjoy owning an investment property so much that you will soon be buying another one.

Housing Market Recovery Attracts Buyers

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As we are now halfway through 2017, the real estate picture in Western Australia is becoming much clearer. The experts are touting this as a transition year for the state, with most of the past reductions in housing prices now behind us. From an overall point of view, investors priced out of the market in the eastern states are looking here for opportunities. At the same time, local buyers are returning as confidence in the general economy also returns.

Low Prices Will Not Be Around Forever

If you have been sitting back looking at the market and wondering if you should step in or stay out, those who know the market well are advising to buy now, as prices will not stay at these levels for much longer. Whether you are a looking for a home to live in or for an investment property, the advice is to look for areas close to schools, transport, shopping and employment to get the best value for money.

Take Advantage of Incentives – They Won’t Be Around Forever

Prices are still low so housing is more affordable and interest rates remain at record lows. The First Home Owners Grant has been increased until the end of the year, and the income threshold for low deposit home loans has also increased, making it easier for first time buyers to enter the market.

Our Advice for First Home Buyers

This is all good news from our point of view as real estate agents. Here at Bunbury Real Estate we have done our best to assist our clients during the difficult times, and we are looking forward to doing the same in what we hope is a long-running, rising market. However, we do have some words of advice for new players, especially those looking for their first home to occupy.

While you are right to study the market in order to understand how it works, it is not the only thing you should be considering. If you were priced out of buying your dream home, but now it is within reach, there will be a certain amount of emotion involved in this search.

Be Clear About Why You Are Buying

Buying a home and buying an investment property are two different types of decisions. The investment property is a considered, calculated move to build wealth, while buying a home is putting down roots, establishing yourself in stable employment and perhaps preparing to start a family. It has a permanence about it that will most likely influence the type of property you are looking for.

Most people in the real estate industry believe that this is the right time to buy. With this opinion supported by market data, you should be asking, not about the market, but why are you buying? Once this is clear to you, we can help you find the right property for your needs.

Do Your Research to Get the Right Property

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If you are a potential new investor who is looking at property as part of your emerging investment portfolio, you are in good company, especially if residential property is your target. This type of investment has never lost its appeal, continuing to prosper through recessions, growth periods and changes of government.

The worst mistake you could make at this point is to think of buying property as a short-term prospect. Building wealth through property is a medium- to longer-term prospect and, if done wisely, it is usually successful.

PO box Rental Return or Capital Gain?

As a new investor, you need to make an informed decision, and the best way to do this is to ask yourself several key questions. “Am I looking for rental return or capital gain?” This should be your first question, as the answer will determine the type of property you purchase.

High rental return will help you meet the mortgage payments, but may not give you capital gain. Capital gain will give you the equity to buy your second property, but if the property has a low rental return, you will need to contribute to the mortgage payments from your own income. Get a rental appraisal for  an accurate picture of the property’s potential.

PO box How is the Local Market Performing?

This is a question we are often asked by people looking to buy in our area. At Bunbury Real Estate, we pride ourselves at having up to date information about developments that will have an impact on local housing prices. We know how unemployment in the area, for example, will affect tenants’ ability to pay their rent. We know if there are any major projects being considered for areas that will bring growth and job opportunities. These are the type of issues that people look at when thinking about investing in any area, and we can help by being on top of housing prices at our location.

PO box Is There Much Competition?

This is another question we can help to answer for the new investor. An area that is saturated with investment properties, either family homes or apartment dwellings, reduces the likelihood of good rental returns. A first-timer may do better in an area where there is high demand for rentals and a shortage of suitable housing. A local agency like ours can pinpoint this much more accurately than one that is operating, for example, from interstate.

PO box The More Questions, the Better the Outcome

There are many other questions that a first-time investor should be asking of their accountant and mortgage broker, but those about the properties themselves are best asked to the local real estate agency. We always have time to answer any questions so when we sell a property, the buyer is happy with the outcome.

Thinking of Buying Property? Make Sure You Have Your Reasons Clear

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Buying property is such a big financial commitment that most buyers think long and hard about the reasons for taking such a step. This is important because these reasons determine the borrowing strategy, the type of property they choose, and the location in which they purchase.

First-Home Buyer Trends

First-home buyers, for example, are usually on a limited budget and they are looking for a home or unit to occupy. If they are single and busy with work and social commitments, they are more likely to purchase a unit than a free-standing home. Usually they are not interested in spending their spare time tending gardens and doing maintenance.

Young Families Need Space

First-home buyers with a young family need more space and are more likely than the singles to opt for a three or four-bedroom home on a small block where children and pets have room to play. Of course, not every buyer is looking for their first home, so there are several other reasons for the ongoing popularity of real estate.

At Bunbury Real Estate, we see all kinds of people who are looking to buy property here for all kinds of reasons. Our professional sales team listens to their clients and are skilled at assessing their needs. We will not waste their time taking them to inspect properties that have none of the features they are looking for.

Second and Third Homes – Space Chasers, Carers, Down-sizers

In the non-first-home buyer category, we deal with people with a range of needs. Clients may want to owner-occupy their second or third house as their family grows. They may need space for an elderly family member who needs care, or for someone with a disability. We are seeing more older clients than ever who are down-sizing from the family home into a comfortable unit or apartment as they increase their social activities and retreat from the upkeep of a large property.

The Small Investor

We have not forgotten the investor in this review. Our region has many investment opportunities for sole investors, investment groups and SMSFs (self-managed superannuation funds). The residential property market is attractive to investors because of government tax incentives such as negative gearing, but it is not the only type of property to pique their interest.

The Tycoon

Experienced investors look at commercial and industrial properties that are showing a regular income from long-term tenants. They are usually more interested in steady cash flow over a longer timeframe than holding their investments for a short-term capital gain. Developers look for large parcels of land for subdivision, usually for housing, in long-term projects.

All Enquiries Welcome

The area at Bunbury serviced by our office has many opportunities for all types of purchasers and we welcome all enquiries and inspections.

How Sellers Can Botch the Outcome of Their Own Auction

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You have spent several weeks getting your property ready for auction. Every inch of it has been washed, cleaned, polished and renovated where needed. The fences are straight and true, paths and driveways swept, there are no weeds hiding in the garden beds and the lawn is immaculate.

Is Everything Really Under Control?

After putting in this effort, what could go wrong? Quite a lot, especially if you, the owner, interfere in the auction process itself. Most people don’t do this deliberately, but they can easily upset the process and make the job of the agent much harder than it needs to be.

As selling agents ourselves, we have seen otherwise promising auctions undermined by owners with just a few careless words or actions. Our agency, Bunbury Real Estate, works with sellers to get the best price for their property in the current market. We give our sellers accurate appraisals of the value of their properties, using the most up-to-date information.

A Well-Prepared Property with a Realistic Reserve Should Sell

This brings us to the first issue that can cause problems. While sellers should approach auction day with positive expectations, they must also be realistic. A well-prepared property backed by a professional marketing campaign and reasonable buyer interest could be expected to sell at an auction.

The pre-auction buying market will already have indicated a price point, and it is this figure that the seller should be considering when setting a reserve. Agents generally ask for feedback from inspections, including asking people what they think is a fair price for the property. We certainly do, and we take this information back to the sellers so they can consider the comments before deciding on their reserve price.

Keep Your Cards Close to Your Chest

We all like a chat between friends and family, but in this instance, the one piece of information sellers should not be disclosing is the price they want. Nothing spreads faster than a rumour, and the last thing we want is genuine buyers deciding not to attend the auction because they heard the price was too high.

No Sale at Auction? Stay Cool

What if the seller has done everything right and the auction was a dud? Maybe it was a football grand final day or the weather was terrible and kept the buyers away. We tell our clients to remain calm as often; the properties sell a couple of weeks later for a good price. It is just the next phase of the sales campaign.

It All Comes Down to Money

The top reason for a property not to sell is the price. Whether you choose an auction or sale by private treaty, the wise old saying still rings true for every commodity. An item is only worth what the market will pay for it, so follow your agent’s advice and spare yourself the anxiety.

Don’t Let Your Unoccupied Property Drain Your Finances

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If you have one or more investment properties, it is vital that you keep the vacancy rates as low as possible, given the locations and local market conditions. An unoccupied property is a drain on the financial resources of the owner, is more likely to be vandalised and becomes an insurance issue after a specified period.

Getting a Property Leased Quickly Needs Several Approaches

Finding quality tenants quickly in any kind of market is not something that can be achieved with only one strategy. It takes a concerted effort using several different approaches that, when combined, gives the owner the best possible chance of securing a long-term lease.

When we manage a property on behalf of a client, this is the approach we take. At Bunbury Real Estate we use current rental data to keep in touch with the local market and the latest marketing techniques to advertise our properties. We also keep our property owners up to date so their rental price expectations match the market conditions.

Use Accurate Data and Set Firm Targets

This means rental appraisals must be accurate. Data that is months old is not a true reflection of what is happening now. If, for example, the market is slowing down, we need to be advising our clients on current data, or they will be expecting a rental price that was achievable six months ago, but not now.

Getting a property occupied quickly also means setting targets and acting on them. The number of enquiries within the first couple of days the property is advertised is a reliable indicator of how much work will be required to get it leased. If there is little or no interest and we know the property is overpriced, we request a rent reduction from the owner. This usually brings in enough tenants for us to reference check and recommend.

Advertise Any Changes

This brings us to the next important change. There is little advantage in reducing the rent if we don’t advertise it. People who are watching the property but have not enquired may respond to this drop, so featuring it in our major advertising is critical.

Long Gaps Between Leases is a Cost

Our most important strategy is the relationship we have with the property owner. This includes giving good advice and finding reputable tenants. When an owner is reluctant to reduce the rental price, we remind them that every day the property is vacant is a cost to them. An extra $10 or $20 a week will be eaten up in costs if the property is not quickly leased.

If you are self-managing your investment property and losing money between leases, give us a call. We will use our knowledge to get your property leased quickly for the best price in any kind of market.

What Would Make You Sell Your House?

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For previous generations, buying a home was a once-in-a-lifetime event, and selling it a reluctant response to something that left no other choice. As the workforce became more mobile, and social changes redefined the family unit, the notion of a “forever” home was challenged. Home owners are now willing to sell their properties for a range of reasons as diverse as they are practical.

Moving up to Something Bigger

Up-sizing and downsizing are the opposite sides of the same coin, that is, the desire to have just the right amount of space for current needs. The typical home owner who sells a property to move to a bigger one will usually have a growing family who need their own bedrooms, or be caring for elderly parents or perhaps running an expanding home-based business.

Free up Cash by Downsizing

Downsizing is usually a lifestyle decision by older people whose families have grown up and left the family home. They no longer need the extra space or the work involved in keeping a large property clean and well-maintained. Selling up and buying something smaller also frees up much needed cash, which is useful in later life.

We have helped clients to both up-size and downsize, but these are not the only reasons people decide to sell their homes. Real estate is very much a people-centred industry, and here at Bunbury Real Estate experience has shown us that almost every decision to sell is driven by some change in personal circumstances.

Changes in Work Circumstances Trigger Sales

Work, for example, is a major part of our lives and very important to our financial and personal wellbeing. Many sales are a result of changes in work circumstances. We have worked with clients who needed to sell because they were moving interstate to a new job, which is always exciting. Sadly, we have also helped clients who needed to sell because they had lost their job and could not manage the mortgage repayments.

Relationships and Family

A change in relationship status that triggers a property settlement is another personal circumstance that will cause homeowners to sell. A separation or divorce is a common reason for contacting our agency to list a property. So, too, is the need to be closer to family during such a difficult time.

Not the Old Neighbourhood?

Sometimes the change is just one of personal preference. This typically happens when a neighbourhood that has been home for many years, changes to a completely different demographic. For some long-term residents, it just doesn’t feel like home anymore, and they sell their property and move to somewhere that better suits them.

Whatever the reasons, we are always available to help people find their perfect place, whether it is an apartment, a duplex, a free-standing house or semi-rural property.

Does The Ability To Read The Market Guarantee Success?

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To be successful in real estate requires the patience to research the market and the available properties, the financial knowledge to raise the necessary capital to purchase property and the ability to make an informed decision at the right time. If this all sounds like a big task, it probably is, but ordinary people have been buying and selling real estate for decades and many of them have become very wealthy in the process.

Is Real Estate a Cyclical Risk?

Some have, unfortunately, had the opposite result. They may have just missed the bottom of the market, waited too long to buy, and paid a premium price, then cashed in when the market was still climbing, leaving thousands of dollars on the table. They may have lost their nerve at a crucial time in the real estate cycle or have been unable to raise the capital when the market was at rock bottom.

Whatever the reason for success or failure, those who love dealing in real estate continue to take calculated risks to have a place in the market and a piece of the action. The professional sales staff members at Bunbury Real Estate have a range of properties for sale now in the local area that would suit first home buyers, investors, large families or small lot buyers.

Is a Cautious Decision Always the Best One?

We would also recommend caution before making any decisions. Dabbling in real estate to make quick returns and looking for a long-term home are two entirely different scenarios. The first one has no attachment to what is purely a business decision, while the other has invested emotions, hopes, dreams and some fears, along with their money.

Buying and Selling for Different Reasons Makes Comparisons Difficult

The home buyers are looking to put down roots, and if, when they decide to sell, there is a nice profit involved, that is a bonus. The Dabbler is looking for excitement, the thrill of the chase and the possibility of a quick and lucrative turnover. They are both in the market but for completely different purposes, and for this reason, cannot be compared with each other.

Technology Provides Ready Access to Data

What the Dabblers have in their favour in this age of technology is ready access to mountains of data that shows how the market is performing. Does this make it easier to predict the market highs and lows? Possibly, but events that happen far from our shores now influence our financial markets and, therefore, our real estate markets in ways that are sometimes surprising, even for experts.

What we can all agree on is that real estate is still an exciting industry to be involved in, but whether buying or selling, think before you act is still good advice.

Looking To Buy An Apartment? Here’s Some Good Advice

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Buying property is a major financial commitment, so it is surprising that many people start the search for their ideal home without having made some important decisions beforehand. How it will be financed, the size of the deposit, the location, desired features, whether it will be a free standing property or an apartment are all decisions that should be driving the search process.

What is a Strata Title?

If the choice is made to buy an apartment, buyers unfamiliar with the concept of strata title should seek out knowledge about this type of ownership. The best decisions are informed ones so people looking at just the advantages of group living should also consider any disadvantages, to ensure that they are happy with the final choice.

Know What You Want Before You Start Looking

Apartment living suits many people for a range of reasons, but before rushing off to buy the first one you see, take some advice from our experienced sales people at Bunbury Real Estate. Make a list of the things you absolutely must have in an apartment, the things that would be nice but are not essential, and most important, what you definitely don’t want.

This helps everyone involved to focus on the target and reduces the frustration buyers feel when inexperienced selling agents take them to properties that are never going to be suitable. Having said that, also consider the possibility that the perfect apartment may not be available right where you want to live.

Can you Compromise to Get What You Want?

To prepare yourself for this eventuality there are a couple of strategies to consider. Realise that you may have to compromise. Look through your list of absolute musts to see if there are a couple of things you could live without. At the same time, go through the things you don’t want and imagine what it would be like if you had to live with one of them. It might not be so bad, and could give you the keys to everything else you desire.

Great Apartment – Poor Management. Is this a Problem?

Ask questions about the strata management of the building. This is important but is often overlooked by over-eager buyers. The apartment might look perfect and have everything you want, but if the complex itself is poorly managed, there could be problems maintaining and using the common areas, or financial issues with the Council.

Inspect the common areas as well as the apartment itself, because once you have purchased, you are also a part owner of these. Is the pool clean, are the parking areas marked, does the fencing need attention, have the lawns and gardens been maintained, are the stairwells and lifts clean?

Be Informed and Enjoy the Chase

We can help you find your perfect apartment, but if you are well informed and clear about what you want, you will enjoy the searching process just as much as finally moving in.

Clean Up Your Property For The Best Sale Price

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Every property owner wants the best price possible when they list their home for sale. The properties that sell the quickest for the best price usually have something about them that makes them stand out. A great position, extra space, special features, proximity to transport and employment, and a property that is immediately liveable are the attributes most sought after by buyers.

It is the last attribute that seems to escape the notice of some sellers. As property agents ourselves, we are constantly amazed at the state of some properties we are asked to list for sale. While we understand that everyone has the right to live in their home the way they want to, there are some things that should be done before they ask our staff at Bunbury Real Estate to present it for inspection.

Easy Changes Have the Most Impact

Often the changes needed to get the best price are the easiest to do, so we offer some suggestions for sellers who need a bit of guidance. The first thing to do is increase the street appeal. Mow the yard, weed the gardens, clean the paths and driveways with a pressure hose, trim trees and shrubs that overhang or obstruct the front of the house.

A Clean Exterior and Some Minor Repairs Work Wonders

Now that the house can be seen clearly from the road, does it need cleaning? Wash the walls and windows, clear out the gutters, do minor repairs such as replacing damaged insect screens, broken steps or unstable hand rails. If it still looks shabby, a coat of paint in a modern colour scheme will have buyers stopping at the front gate to look further instead of just driving by.

The “Wow” Factor for the Interior

Now to create a “wow” factor once they get through the front door. This means starting with clean floors, walls and windows. Again, paint is the cheapest way to improve the interior of a dwelling. It covers the stains that won’t wash off, and by using the latest light reflecting colours, any rooms that need extra light will immediately get a lift.

Replace Anything Worn, Torn or Shabby

If the floor coverings are stained or ripped, replace them. Dirty, shabby or faded curtains should be taken down and disposed of. Replace them with the latest blinds. There are so many different styles now available that even the humble roller blind will be an improvement on old curtains.

Kitchen and Bathroom – A Quick Respray

Kitchens and bathrooms are more expensive to rework, but replacing old kitchen appliances with new stainless steel ones has an immediate impact. If money is an issue, respraying the cabinets, bench tops, tiles and bathroom fixtures, and installing new tap wear may be enough to finish off the upgrade.

Neat, clean, tidy, no pests or unpleasant smells, no rubbish in the yard – that is all it takes to get the best price.