5 Common Mistakes Made By First Time Property Investors

Buying your first investment property requires research and planning. Too often the choice is made for the wrong reasons, which can be difficult to reverse, if at all.

These are the five most common errors:

Buying a property based on the suggestions of friends or family

Many factors need to be considered such as capital growth and rental return potential, as well as the longer-term prospects for the investment and the area that it is located in. This is not a quick return opportunity and should not be purchased that way. Most Real Estate Institutes in each state provide resources helpful to first time investors such as the long-term performance of suburbs in terms of capital growth as a start.

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Selecting the wrong investment loan product

There are many types of investment lending and each have a unique offering that may or may not suit the first-time investor. Professional advice needs to be sought from a Mortgage Broker to understand the investor’s unique financial situation and needs, also considering the longer-term nature of the purchase and then offering a wider range of options to suit. Principal and Interest loans compared to Interest Only or Fixed Principal and Interest Loans, there is no one product suits all and advice is key.

Going it alone, not seeking the support of a quality property manager

Some first-time investors try to seek out the ideal tenant by themselves and manage that transaction ongoing. A quality property manager would know how to thoroughly check references and be the professional go-between to avoid direct conflicts with your tenant. They know the laws to protect you and the tenant, and are best equipped to deal with an unreasonable tenant request. Plus, the cost associated with the professional management of your property is usually tax deductible.

The property was selected as it suited the owner, but was not purchased to suit a potential tenant

Is the location near public transport? Have you considered local services such as schools, shops, doctors, dentists, vets? If you are prepared to allow pets, is the fencing suitable? Are the kitchens and bathrooms in good working order? Lastly, is the yard and garden low maintenance?

Is there an oversupply of other rental properties in the area?

The price might have been right because there are a lot of properties without tenants in the area, or an oversupply of apartments. If this is the case and you still want to buy, the above four tips become even more relevant to make your investment stronger, different, resilient.

Using your home to buy other assets or renovate

Should you use the equity you have built in your home when you want to buy a car, or upgrade furniture, even renovate, or is a personal loan a much better option?

Certainly, if you have a redraw capacity on your loan that is enough to do what you need (i.e. either buy a car, refurnish or renovate) that is a far easier option than filling in loads of forms to update your financial position to the lender, or even look for a new lender and compare prices.

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In many redraw situations you don’t even need to speak to a person at all, your internet banking system may allow the transaction to go ahead and will even advise you if an adjustment of instalment is required.

Home Loan interest rates are usually half the price or more of Personal Loan rates, so it can be a far cheaper option, consider the 3 to 5% versus 9 to 11% of Personal Loans.

There are also minimal or no fees for redraw with most lenders, but if instead you need to fully rewrite your home loan or take out a personal loan, that can be a very different picture, and those Lender forms need to be completed.

So, it seems that using redraw can be a cheaper and convenient way to get what you need, but what do you also need to consider when going down this path?

  • By adding a car cost or any other cost to your existing home loan, be it by redraw or full rewrite, you can extend that part of the loan far longer than it would have been if written by personal loan which is usually between 5 and 7 years. Now that might appear to be great, as your home loan instalment has not changed or will not change much, but do you really want to pay your car out over 30 years? You will be paying far more interest off that way. Your mortgage broker can help with a strategy to combat this.
  • Some people find it easier to have those debts separate so they really know what they owe and don’t need to guess if the car has been paid off yet or not. Your mortgage broker has access to several person loan options and you need to find the most suited deal for you.
  • If not using redraw and considering a rewrite of your home loan, you might not have the equity in your home that you think. Usually the lender will consider revaluing your property and if values have gone down, you may not have as much to draw against? But, not all lenders are the same and not all valuers, again your mortgage broker has many different lenders and non-lenders to choose from, best seek their advice.

There are many ways to approach this situation and your mortgage broker can help with all the options available to you. This can be a great way to build your asset value, but advice is the key.

Home security tips over the holiday season

For many of us, the Christmas / New Year break is the best time of the year to get away for that well-earned rest.

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Unfortunately it’s also a busy time of year for the less scrupulous elements of society, who are just waiting for an opportunity to take advantage of empty homes.

The last thing you want after a relaxing family vacation is to get home and find that you’ve had an unwelcome visitor – yet that’s a reality that thousands of Australian households face every year over the seasonal period. So it’s best to take some time before you head off to make sure that your home is properly secured and protected.

Gallagher, Harcourts’ insurance partner, has put together a checklist for Harcourts clients to help review your home safety.

John Apter from Gallagher said, “The Christmas period is the worst time of the year for home break-ins. Sadly, many people don’t spend enough time to secure their homes before they go away – even when a few minutes’ activity can make a big difference. It’s a cliché but prevention really is better than cure.”

Here are 10 tips to consider:

  • Let your neighbours know that you’re away. They can collect your mail and keep an eye on your home
  • Cancel any regular deliveries, such as the newspaper. Uncollected newspapers are an obvious sign that the home might be empty
  • Make sure that all of your doors, windows, gates etc are properly locked and secured. If you have an alarm make sure that it’s turned on – the same with any sensor lights
  • Don’t make it easy for the bad guys by leaving out anything like ladders and tools that can make it easier for them to get into your home
  • Make it look like someone is home. Consider using timer switches so that some internal lights or even your TV are switched on from time to time, or have your neighbour park their car in the driveway
  • Don’t tell the world that you’re away through social media posts. Do all of that when you come back!
  • Consider connecting an answering machine to your home phone so that the phone doesn’t ring out.
  • Disconnect any unnecessary electrical devices that don’t need to stay plugged in – particularly Christmas lights
  • Don’t leave spare keys under the mat or hidden somewhere obvious – burglars know where to look
  • Make sure your insurance is in place and up to date

Why hold open homes when selling?

How can you prepare for an open home? Your sales consultant will do all them marketing necessary to attract the maximum number of visitors to your open home. However, when you have them there, you will want to ensure you present your home in the best possible light.

Open homes are one of the most effective ways of marketing a property and attracting interest from a wide variety of buyers. Some of the many advantages are:

• You have plenty of time to ensure your property is tidy and ready for inspections
• You can control the viewing times
• Open homes can create plenty of activity, even in a slow market
• Interest and activity can trigger urgency with buyers
• The sales consultant’s time is put to best and most effective use; They will have the opportunity to talk to numerous people about your property
• Comments from open home visitors can provide feedback on price, presentation, sales appeal, etc

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Here are 10 quick tips on how to make your property “open home ready”:

1. Declutter – an overcrowded room looks unappealing and smaller than it actually is.
2. Clean. No one likes the idea of living with other people’s dirt. If your home smells and looks clean, you are creating a great environment for viewers.
3. Keep decorations simple and don’t display family photographs. You want buyers to visualise their own things and family in your home, not yours.
4. Make each room count. Give each one a purpose so that your viewers can see how they could use it. Don’t leave any room as a storage place for your possessions.
5. First impressions count and last. Think about the first aspects that potential buyers will see – like fencing, the letterbox and the driveway.
6. Remember the small things count too. Check light switches to make sure they work. Fix any doors or cupboards that don’t close. Fix leaky taps.
7. If you can, give your walls a fresh coat of paint. Choose neutral colours so as to not individualise your property.
8. Fresh flowers and soft music playing in the background give a good impression.
9. If cold outside, have a fire going or heaters on.
10. Fresh coffee on the stove, vanilla in a slightly warm oven or on a hot element, or aromatherapy oil burners give a very inviting smell and can sweeten stale and musty homes.

Is Your Backyard Ready for Summer?

Spring season is upon us and Summer will be here before you know it!

For most areas longer nights and warmer days are ahead. Now is the time to focus on your home’s exterior. If you’re listing, it’s your home’s first impression! Or, perhaps, you just want to kick back and enjoy being outside this summer!  Whatever your reason may be, here are some helpful tips that will add some extra love to your home’s exterior.

Plant the Seed

Set the scene with flowering plants and shrubs. Spend the next month planting seeds and laying mulch, rock, or stone. End of Winter and early Spring is ideal for warm-season flowers to be seeded outdoors. Keep in mind, you will want to clearly mark the areas where you plant your seeds so you can easily spot weeds.

Get Ready to Entertain

Long summer nights and warm weather means entertaining! A great entertainer’s backyard requires planning. Often, we place barbeques arbitrarily in our backyard and forget to use them. A well-planned barbeque area should have three components: a kitchen, a dining area, and a seating area. To easily entertain guests while cooking, place these three spaces together, regardless of how big your backyard area is. Get creative! Incorporate a deck, fountain, swing, etc. to make it feel like a true summer escape.

Protect and Shade

The hot summer months can wreak havoc on an outdoor deck and furniture. Check your backyard for any wood that needs to be revarnished and purchase a cover for your barbeque and patio furniture. This will protect against the sun or any summer storm damage. Provide ample shade for plants that may not withstand direct sunlight, and place potted plants in wet sand to keep them cool as temperatures rise.

Which Market Are You In

The average time it takes to sell a home indicates the market climate. It is very important a seller understands which market they are in and the average time it is takes to sell a property. Ask your sales consultant about the current market in your location.

There are three types of market climates:

A seller’s market

There are lots of buyers and very few homes for sale. High demand for property is in the seller’s favour as properties spend less time on the market and sale prices rise due to scarcity.

To all sellers this is the “golden time” when they can be firm on their price and the conditions of the sale. If Buyer number 1 is not prepared to pay the price, Buyer number 2 and 3 will.

A buyer’s market

Often there are literally hundreds of homes for sale and very few buyers. High demand for buyers is in the buyer’s favour as properties stay on the market much longer and sale prices reduce to compete for buyers. Here the buyers have a field day as they know they can bargain hard and set the conditions of the sale. Should Seller number 1 not accept his offer, then seller number 2 or 3 down the road will be happy to accept.

A balanced market

Numbers of buyers and properties for sale are about equal. Neither buyer nor seller has an advantage as properties are not languishing on the market or being snaffled up.

What does all this mean if you are in the market for a residence for yourself?

If you are consecutively selling your property to buy another for yourself, it doesn’t matter in which market you find yourself. You either buy and sell ‘high’ in the ‘sellers market’ or low in the ‘buyers market’. For you buying or selling matters only to move around to suit your individual living needs. The property market should not concern you and all the jargon about Buyers – or Sellers market should be forgotten. Just find the property you love.

Three Tips for Currency Transfers

Spring is the busiest time of year in the world of real estate. If you’re planning to take advantage of the buzz and buy or sell an overseas property, taking a minute to consider currency could make a big difference.

According to Harcourts currency exchange partners TorFX, taking these three steps can really help you get more for your money.

Keep an Eye on the Markets

As you typically need to move money abroad when buying/selling international property, the exchange rate you secure for your transfer can have a huge impact on how much you pay or receive. Even a small difference in the exchange rate can add up to thousands, so picking the right time to make a transfer is crucial.

By staying up-to-date with the latest exchange rate movements, you’ll be able to plan your currency transfer effectively and make your money go further.

Avoid Transfer Fees

While some currency transfer providers charge a fee for moving money abroad, others will move your money for free, so you’ll make immediate savings.

Explore your Options

Buying or selling an overseas property can be a lengthy process, and as the currency market is always moving you might find that exchange rates have shifted significantly by the time you’re ready to make your currency transfer. By exploring options like forward contracts, where you can fix the exchange rate for up to two years ahead of making a transfer, you can protect your funds from any negative shifts in the currency market.

Have a chat with your Harcourts sales consultant if you’d like to find out more about your currency transfer options. Blog contributed by Tor FX and the information has been provided for general information purposes only and must not in any way be construed or relied upon as personal advice. Trading involves risk of loss and may not be suitable for you. Please ensure you obtain and read the TOR FX Financial Services Guide and Product Disclosure Statement prior to utilising our products so that you are fully informed regarding the key risks and cost.

Settling into your new neighbourhood

Buying a new home often means moving to a new suburb, city or even country. It may be a new location you chose simply because you loved it, or it maybe it’s where you need to be for work or family. Whatever the reason for your change in location, it can be a little daunting finding ways to get to know the neighbourhood and have it start feeling like home.

Here are a few ideas for breaking the ice suggested by the Harcourts’ Facebook community, along with a few others we’ve come up with as well.

  • Ask the experts: A good place to start finding out what’s good in your new ‘hood is to ask the real estate agent you purchased from. In the course of buying you would have talked to them about the big things like nearby schools, or transport routes. But they’re experts in their local area so they’re also a great resource to ask about everything from finding the best coffee and great parks and playgrounds, to the best local shops and restaurants.
  • Walk the walk: Spend a weekend or two getting lost. Take to the streets on foot and just wander around. You’ll see much more than you would from the car so you’re much more likely to uncover the neighbourhoods hidden gems – and you’ll quickly get your bearings for where everything is. If you’re in a large city you don’t know then do the same on a larger scale in your car and you’ll quickly learn the best driving routes and how all the suburbs fit together.
  • Talk the talk: While you’re walking stop and have a chat or even just a passing “hello” to any of your neighbours you come across out and about or working in their garden. It’s a relaxed way to break the ice. Once you’ve found that café serving great coffee, make it your regular and get chatting to the staff, or strike up a conversation with the local shop owners.Once you start finding a few local favourites you’ll start to meet some of the same faces each visit.
  • Knock on the front door: The best way to meet people is the most direct. It can be a little intimidating but it is a great way to meet your neighbours, especially those closest who you’ll see most often. If you want an icebreaker take them a small gift like a cake, or invite them over for a drink. Or use the old classics like ask to borrow some milk for your first cuppa – and be sure to return it with interest.
  • Be seen: The opposite of heading next door to meet the neighbours is to just be visible and approachable in and around your property. If you’re mowing the lawns or gardening in the front garden just be aware of who’s outside as well and give them a wave and a hello.
  • Be cool after school: If you have school-aged children, get involved in school activities, sports and events. It’s a great way to help your kids settle in and you’ll quickly become part of the school community. The same is true for sports clubs.
  • Hook yourself up: Spend some time finding and reading local newsletters, newspapers, community Facebook groups, supermarket community noticeboards, and websites such as Neighbourly. They’re a great place to find out about local events, organisations in need of volunteers, or even on-going projects such as community gardens and working bees; all great places to meet people and start getting involved. Good luck getting to know your neighbourhood!