Archive for category: Investing

Buying or Building a Home? Look Before You Leap

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excavator in front of a house under construction

Buying a home is the largest financial commitment most people make during their lifetime, so it makes sense to spend some time researching every aspect of home ownership before making any decisions. Many potential buyers make the mistake of looking for their ideal property first, bypassing the initial planning, which may not be as exciting as house hunting, but if done well, saves a lot of anxiety later.

Carefully Check Your Finances

The most important step is to take a realistic look at your financial situation. Whether you are building or buying an existing property, a mortgage is a necessity and one that is likely to take many years to pay off. It is not enough to look at your current income and assume that it will be sufficient to cover the mortgage and expenses. You need to ensure you can meet these commitments over the term of the loan.

Include ALL Costs in your Budget

You should also remember that whether building or buying, there are additional costs to be met before any property settlement takes place. These costs should be carefully researched and included in your budget. Government stamp duty, building inspection and conveyancing fees, moving costs and connection fees for utilities like water and power are just some of the likely costs to budget for. However, there could also be some government grants and concessions available to you depending on your situation.

Keep Comprehensive and Accurate Records

You should keep records, either paper-based or digital, of every aspect of your journey to home ownership. Over the weeks and months of the search until you finally move in, you will speak to real estate agents, building experts, legal experts, local government employees and others. You will gather quotes, copies of contracts, building plans and other documents which you may need for future reference. It is quicker and more efficient to keep it all in one location.

Only Deal with Experts

Remember also to get expert advice, especially if you are new to purchasing property. As you start working your way through the process, you will have dozens of questions, and while some may be easy to answer, others will need investigation and the opinion of people with relevant qualifications. Getting the right advice first up will save a lot of problems later.

Our real estate agents here at Bunbury Real Estate have the training and experience to find the perfect block of land, house or apartment for our clients. We are members of the Real Estate Institute of Western Australia and we have received many industry awards for our professionalism over a period of years. Our staff are ready to assist you in your property search.

Why is Property Such a Popular Investment Choice?

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With interest rates at historic lows and no sign of any substantial upward movement in the immediate future, leaving large amounts of cash in bank accounts seems to be a lost opportunity. Prudent investors know this and are always looking to put their capital to work.

Spoilt for Choice

There is no shortage of choice when it comes to deciding what types of investment should be included in an investment portfolio. Shares are always popular, some such as art and antiques. Bitcoin is now a wild card except for those who understand it and there are many other contenders. Then why is it that property investment continues to be one of the most popular options in the country?

Property Investment is Easy to Understand

Perhaps the answer lies in its simplicity. Granted that once you get into the detail some effort and knowledge is required, but generally speaking, all that is involved is finding a property, buying it, handing it over to a property manager who finds a tenant to pay the mortgage, then sitting back and waiting for the equity to build. That is something that most people can readily understand.

Of course, there are some fundamentals that make property more attractive than other investments. Historically, apart from a few downturns such as the 2007-2009 GFC, property in Australia has consistently performed well over time. It is also less volatile than the stock market, for example, and delivers secure, long-term gains.

Generous Tax Deductions Make Property Attractive

Investors with rental properties are also able to take advantage of generous tax deductions which is a considerable part of the appeal, especially for ordinary people. The deductions reduce their taxable income, creating generous tax refunds that they can use, along with the equity in their other properties, to increase their investment portfolios.

Some Investors like to be Hands-on

Many investors also like to have a reasonable amount of control over their investment decisions, which can be difficult in the case of a share portfolio or some other investment type that requires a professional level of competency. Where the investment is residential property, the investor may decide to manage the property themselves, while others prefer to use a property management service. Either way, they can still be involved at whatever level of interest they choose.

This has generally been the experience of our property managers at Bunbury Real Estate. Once the required tenancy documents have been signed, some clients like to be kept fully updated with every issue affecting their properties. Others prefer to review the regular statements we provide and only have contact when something unusual has occurred with their property. We are happy to oblige in either instance.

Is There a Knack to Successful Property Investment?

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two people holding sold sign

In a national property market that appears to defy all common sense, first-time investors are looking for some guidance before they take that first step. Residential property prices are at an all-time high, and interest rates are also at an all-time low. Understandably they are torn between the two extremes.

Do they take advantage of low interest rates and buy now at top prices? Do they wait to see if the market drops and take the risk that prices won’t climb higher, pricing them out of the market? What if they buy now and current market prices take a massive dive? They are then locked into a huge mortgage on a property that has lost significant value. How will that affect their overall financial position?

There is so much conflicting advice, and past property booms and busts have shown that even the experts can get it wrong. However, many successful investors believe that, just like any other important undertaking, planning is the secret to negotiating the property market and its quirks and variances.

Most investors already in the market started their investment plan by looking for a property that offered capital gain. The rental income paid most of the mortgage, and the expenses generated by the investment were claimed as a tax deduction. Their plan was to wait for the market to rise, thus creating equity. When there was enough equity in the property to cover another mortgage, they purchased another investment property.

The capital growth part of the plan allowed many people to build sizeable property portfolios, but for those looking further to significantly increase their cash flow the next step was to invest in commercial and industrial properties that offered lower capital growth but higher cash flow.

None of this is really a secret, but rather a considered strategy depending on the needs and goals of the individual investor. The most important part of the plan is to select the right type of property. This involves careful investigation of the properties on the market, and most importantly, their location. All this is time consuming, especially for the investor who is starting out and still needs to work to pay the bills.

This is why the best part of the plan for an investor is to find a real estate company whose sales representatives know the market. Here at Bunbury Real Estate, our professional sales agents have many years of experience at finding suitable properties, negotiating sales contracts, and assisting our long-term clients to build their property portfolios. Contact us if this could be you.

How Property Market Trends Affect Pricing

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property market trends

In a depressed property market, the biggest frustration for sellers is that they won’t be able to sell their home unless they sell at any price. However, once the market starts to move in either direction, it is essential to monitor the trends before changing the price. It also equally important to seek professional advice when pricing your property.

Check Market Trends Before Changing Pricing

It is the same situation in the rental market. Most lessors look to the end of any tenancy as an opportunity for a rent increase. However, if the rental market is depressed and vacancy rates are high, good tenants are hard to find. Again, monitoring the property market is vital before tinkering with rental prices.

Does Supply and Demand Really Rule?

Like most sectors of the economy, movements in real estate are driven by supply and demand. According to market economic theory, as a commodity becomes scarce, prices rise. This prompts more suppliers to enter the market to satisfy demand, which in this instance is real estate. As prices continue to rise beyond the capacity of the market to pay, demand weakens, suppliers leave the market and prices fall.

Swings and Roundabouts

Some markets are much more volatile than others, with large swings back and forth depending on trading conditions. Some parts of our agriculture industry, for example, can have trends that range from high to low in one or two growing seasons. Thankfully, the trends in the real estate industry are more long term. But this does not mean that we can ignore the market.

As both selling and letting agents, our ability to respond to property market trends is part of our service . The staff at Bunbury Real Estate keep up to date with property market statistics. This allows us to advise both our clients if they need to adjust their rents or sale prices.

Additional Advice to Keep Everyone Informed

We also like to clarify to clients that there is no Australia-wide property market. Even within the same state, there are differences between regions. For example, the market in a capital city will be different from an inland market with corresponding differences in pricing. It would be unrealistic for a seller in a regional town to expect the same price for a comparable property near the beach.

The current overall market trend in all states shows strong buyer activity and low levels of quality housing stock. Along with low interest rates, improving business and consumer confidence, a growing economy and COVID vaccinations being rolled out, our industry should be stable for some time.

Are You Considering Future-Proofing Your Investment Property?

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building house rolled up house plans

Property investment across the country is still generally sound, despite the difficult year just gone. As a society and an economy, however, we have learnt the hard way that we should always be prepared for the unexpected. We should always have a Plan B – just in case.

Short-term vs. Long-term Tenancies

Residential property investors have generally had a steady cash flow as the demand for rental accommodation has been strong. Indeed, they have not usually been forced to choose between short and long-term tenancies as both options have been available. However, the times are changing.

Flexibility a Key Benefit

There are some advantages to short-term tenancies for owners. Flexibility is a key benefit. The property can be used by friends and family for short periods between tenancies. Bad tenants can be moved on quickly. If a lucrative long-term opportunity comes along, the owner can move back to a long-term arrangement.

Higher Rental Returns; Less Wear and Tear

Short term rentals often attract higher rental returns, especially in competitive locations. There is less wear and tear as the properties are inspected, cleaned and repaired after the end of each tenancy. Also, the owners have the flexibility to sell the property at any time as they’re not locked into a long-term tenancy.

Our professional property managers at Bunbury Real Estate work hard to ensure that our property owners maximise their rental returns – both short- or long-term rentals. Every property is given the same care and attention. All tenant references are thoroughly checked.

Long-Term Rental Income Security in Uncertain Times

None of these benefits are as important as security for some investors, especially in these uncertain times. Many owners are relying on the rental returns to pay the mortgage on their investment properties. They prefer the stability of long-term lease agreements with a set date. This allows them to plan their cash flow as the rental income comes in at a constant rate. They also are not vulnerable to off-season variables that may see their properties vacant for weeks at a time.

Fewer Costs, Simpler Management Arrangements

In addition, owners have fewer costs as long-term tenants usually pay for utilities. Properties are not being advertised every few weeks or months. Owners are not refurbishing or paying clean-up costs as often as short-term rental owners. Long-term owners are also not interacting regularly with their property managers.  For them, this arrangement makes managing their investment simple and stress free.

Is Buying an Apartment That Has Not Been Built a Good Idea?

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Apartment living is increasing in popularity in our capital cities and some of the large regional centres. With demand showing no sign of slowing in the short term and with stocks of new and older apartments in short supply in some areas, home buyers and investors are turning towards buying off-the-plan.

Pay a Deposit, Sign a Contract and Wait

For those unfamiliar with this method of buying real estate, the prospective buyer selects the apartment they want from plans and artist impressions of the completed product. They pay a deposit and sign a contract to buy an apartment that will be built in the future or is in the process of being built. At this point there is no completed physical property to be inspected.

Fixed Price Protects Buyers from Price Rises

There are upsides to this way of buying but there are also downsides. Starting on a positive note, when buyers sign the contract the price is fixed, protecting them from price increases that could occur in a rising market by the time the building is completed. Also, buyers pay a reduced deposit, and as they do not settle the transaction until construction is completed, they have extra time to sort out their financials.

Stamp Duty Concessions and Rebates

There are also savings on stamp duty, as in most states, if the buyer signs the contract before construction starts, stamp duty is only levied on the value of the land, not the entire contract price. In Western Australia, the Off-the-Plan Duty Rebate Scheme offers a rebate of 75% on the duty paid on residential multi-tiered apartments, subject to certain conditions.

What Goes Up Could Come Down

On a negative note, one of the downsides to buying off-the-plan is the possibility that after buyers have signed the contract, the market could fall substantially, and unless it recovers before the building is finished, those buyers could be forced to settle on an apartment that has fallen in value.

What If the Developer Can’t Finish the Project?

Another downside is the possibility that the developer may go into liquidation before the project is finished. Like any major purchase, buyers should exercise due diligence over the financial stability of the developer. This is one of the biggest risks in buying off-the-plan. If this happens, buyers may lose their deposits, so it is worthwhile to investigate the reputation of the developers.

Our staff at Bunbury Real Estate are experienced in sales and property management, and coupled with comprehensive local knowledge they are well positioned to find the right property for every client. They have many apartment options to offer clients looking to buy, as well as providing advice to existing apartment owners who want to rent out their apartments and need up-to-date appraisal information.

What is the Best Name for a Dwelling? Home, of Course!

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Regardless of whether you are a tenant or a property owner, everyone wants a place to call home. As the mix of dwelling types becomes more varied, there has never been more to choose from. Where once it was either a free-standing house or a flat, now we have the duplex, the townhouse, apartments, units, flats, and finally from the USA, the condominium.

Renters Just Want the Right Property

Actually, only the word arrived from the USA, as here in Australia, we have had strata title properties for some time. Strata title is another name for a condominium. For renters, this means nothing. They just want a property that suits them, so they will happily call any of these dwelling types their home.

Ownership is the Key for a Landlord or Buyer

The situation is completely different for a landlord or buyer. A landlord is in the property market to invest, earn income, increase equity, and build wealth. A buyer may also be in the market for these reasons, but additionally, to own their own home. For them, it is all about ownership.

Here at Bunbury Real Estate, we do our best to help our clients find whatever type of property they want. Our sales professionals have a wide range of properties to show potential buyers, and our property managers are eager to help renters find their perfect dwelling, whatever type that may be.

An Apartment Block Described

In an apartment block, typically all the dwellings within the building are owned by a single entity or a company, which rents them to tenants. The company has total control over the complex and establishes the rules the tenants live by in their individual apartments. The company employs a property manager who lives in the building and is responsible for the maintenance of the individual units, as well as rubbish collections, security and enforcing the rules.

What is a Condominium?

Condominium blocks, on the other hand, are owned under the strata title system. When a person purchases a unit or apartment within the condominium, they own their individual lot and a part of the common property that everyone uses, such as the stairwells, gardens, common driveways, and recreation areas.

The common property is managed by the body corporate, an entity that is formed by the owners of the individual lots. Owners of a strata title property own and maintain everything inside their apartment and pay an annual fee to the body corporate for the maintenance of the external facilities.

The Difference is Ownership

The question of ownership and not the name of the property type is the key to making the right decision about purchasing property. Potential buyers should do their own research to protect their investment or contact our professional sales staff for assistance.

An Investment Property Needs Careful Management

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If you have just purchased your first investment property, you may be feeling a little overwhelmed now that you have officially become a landlord. There are quite a few important decisions that now need to be made. Getting them right will mean the difference between enjoying a carefree income producing asset or struggling month-to-month to pay the mortgage.

Lots of Advice Available for the New Landlord

Fortunately, there are resources available that offer good advice to the beginner which, if taken, will remove much of the stress and work, and the first piece of advice is that you must treat your investment property as a business. It is not your home, so keep emotions in check, be objective and prepare it for letting with a neutral décor so that it appeals to most tastes.

Do You Know Your Rights and Responsibilities?

Now you need to know and understand your rights and responsibilities under the relevant legislation. Your property should always be in a condition suitable for occupation, with all fixtures and fittings safe for use by tenants. It is also their home, so even though you own the property, you must give advance notice of inspections as required as per legislation.

Some Things Need Immediate Attention

There are certain situations that, by law, must be dealt with immediately. Matters such as electrical faults, blocked plumbing and non-functioning hot water systems are essential services that must be in good repair. As the property owner, you must be proactive about repairs and maintenance. You should also have advised the tenant the importance of notifying you about maintenance issues.

There is Work Involved in Finding a Good Tenant

You will need to advertise for tenants, conduct interviews, check their references and find the time to show prospective tenants through the property. You will also need to do some market research to set a rental amount that will attract good tenants but still cover your costs, so you get the best value out of your investment.

If this is already sounding like an impossible task, there is a solution. Here at Bunbury Real Estate, we offer a professional property management service staffed by experienced people who look after your property like it was their own. They source reliable tenants, ensure all the required tenancy agreements are fully completed, arrange for any repairs and maintenance, perform regular property inspections and report back to you, the owner, when required.

Because they know the market, they can also provide advice about the latest rental price movements. They do the advertising when it comes time to find a new tenant, then they manage all correspondence and direct contact with the tenant, relieving the property owner of the many time-consuming tasks involved in managing a rental property.

Important Tips When Buying Your First Home

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You are investing hundreds of thousands of dollars when you purchase a house. When it is your first time, the task seemed especially daunting. It’s tempting to just purchase the first house you see that you like. As a first-time home buyer there are a lot of things for you to consider in order to minimise your investment risk. You need to know what the requirements are for first-home buyers and what to expect during the buying process.

Here are some things first home buyers need to know to prepare them mentally, emotionally and financially for the buying process:

Important factors to consider

These are the things you need to consider when purchasing your first home to ensure that you are making the right decisions.

Lifestyle – Ask yourself these questions to help you find the home that best fits you. How do you live day to day? What are your future plans? Are you going to upsize or downsize in a few years? Do you want your home  to be located close to amenities and services? How far from schools or shops are you willing to live?

Financial situation – Calculate the total amount of your repayments and related costs before taking the plunge. Save as much as you can for your deposit to reduce your monthly mortgage payments as much as possible. When calculating how much to borrow, estimate your current expenses, potential mortgage repayments and related costs such as water and council rates, and determine if your income can fully cover all these expenses.

Moderate your expectations – Getting into the property market is already an accomplishment, so don’t be frustrated or discouraged if the house you’ve been dreaming about is out of your reach. You would probably be one of those many people who purchase not just one house in their lifetime.

Do your research – Find out important facts about the property such as how much it was sold earlier, what changes had been made to it, what type of zoning it is covered by, etc. Check from the council whether there are major developments planned for the surrounding areas that could affect the value of your property. It also doesn’t hurt to be updated on the local news affecting the area where your property is located.

Grants available to Australian first-home buyers

There are several financial assistance products available when you purchase your first home.

First home buyers grant – Eligible first home buyers can avail of a grant when they buy or build their new home that will be used as their primary place of resident.

REBA $2,000 home buyers assistance – Eligible home buyers are entitled to a grant of up to $2,000 for the related costs of buying their first home, whether established or partially built, made through a certified real estate agent. The highest purchase price requirement for the Home Buyers Assistance Account (HBAA) is $400,000.

First home super savers (FHSS) scheme – With the closing of the First Home Save Accounts, the Federal Government launched FHS, which allows first home buyers to save for their deposit within their super fund.

Stamp duty concessions – Stamp duty is part of what you pay when buying residential property. Those who are eligible for the First Home Owner Grant can also claim a concessional rate of transfer duty if the dutiable value of the residential property and land is up to $530,000 or $400,000 for empty land.

Steps for Purchasing a Home

You have to know what to expect from the home buying process if you have decided to go ahead with it. Preparation is the key to avoiding hassles, stresses and delays that might derail the entire transaction. Here are the basic steps you can expect from the buying process:

Find a home – There are many ways for you to find what properties are for sale, including listings from real estate agents, online listings, and even driving to areas where you desire to live. Friends, family and corporate connections can also let you know if a property that may interest you goes up for sale.

Secure financing – But not before checking what type of home loans as well as first home buyer grants are available to you. Do your research and shop around because because your mortgage interest rate will heavily impact the final amount you will pay for your home.

Make an offer – Your offer will be presented to the seller’s agent by your real estate agent, who will also help you come up with the amount of the offer. Once your offer is accepted, the legal process of buying property has now started, including providing a good-faith deposit and the shift into escrow.   

Get a home inspection – Have an experienced professional inspect the property you are buying even if it appears perfect. Knowing the overall condition of the property helps you in the negotiation process and gives you a sense of security knowing you’d be making the right decision for your prospective investment.

Finalise transaction or move on – It’s time to close the deal if all went well with the seller, or if the inspection didn’t find any major problem in the property. If it is the opposite, then move on to another better-suited property for you.

Things are not quite over even after you have closed the deal and you have moved all your belongings to your new place.

It is important to learn the buying process beforehand to lessen the stress as you’re going through with it and to help you get that dream house at a price that you can afford.

Rental Applications Being Knocked Back? Check This Out

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Finding a suitable rental property to make it your home is difficult enough without the added stress of the application process. Getting it right means being able to put your feet under the dining room table in a place you know is yours for the term of the rental, while getting it wrong means starting the search all over again.

Get the Process Right in a Competitive Rental Market

If you are struggling to have your application considered, especially when there are several people applying for the same property, it is time to take a closer look at your approach. The rental market is very competitive. So, just like the job market, you need to have everything covered to give yourself the best chance.

To help you master the process, we have a few suggestions that may help. Here at Bunbury Real Estate, we have an application process that is typical for the rental industry. We are property managers with rental choices to suit a wide range of lifestyles and budgets.

Take the Time to Get Your Documentation Right

Having all the required documentation available for us is one of the most important things to get right. Applicants who have everything we have asked for are the easiest to process, and it is even better if you go the extra mile and have everything copied and presented in a folder for us to start your tenant file. This also applies to any housemates who will be sharing the property.

Punctuality and Good Manners are Remembered at Inspections

We often open rental properties at specific times to allow prospective tenants to view them. This is very time consuming for us, so we remember tenants who arrive on time. Punctuality is a courtesy in every industry and ours is no exception, as are visitors who are pleasant. The initial inspection, before even being accepted as a tenant, is not the right time to demand repairs or changes.

Dress to Impress

You may be surprised at our next suggestion, but again, just like a job interview, it helps to dress the part. We don’t expect people to dress in formal wear to view a rental property but looking dirty and dishevelled does not leave a good impression. When you show up neat and tidy, we know you are treating the application process seriously.

Follow Up Contact Indicates Genuine Interest

Finally, if you have put in an application and not heard anything after a couple of days, there is no harm in contacting the rental agent and offering to supply extra documents or references to indicate your interest. If they are tossing up between your application and another candidate, receiving a courteous contact from you could just be the thing that makes up their minds.