Let’s look at 3 common property investment options.

• Renovating for Profit

One popular property investment strategy is to purchase a property for a lower price than market value and then renovate it. Ideally, the renovations should improve the value, which allows the investor to sell it for a profit. This strategy is commonly known as ‘flipping’.

• Positive Gearing

Another option for using property investment to build wealth is positive gearing. This is where the rent amount you receive from the tenants in the property is greater than the costs you incur to own the property. Essentially, your rental income incurs a profit overall, so you’re generating passive cash flow.

• Negative Gearing

Negative gearing is the term used when the costs of owning a property outweigh the rental income you receive. Any outlay you contribute towards covering the shortfall in costs can be tax deductible, which helps to reduce the amount of tax you pay each year.

So, which property investment strategy is right for you? Let’s look at each option in a little more detail.

Property Flipping

Firstly, let’s look at the strategy of ‘flipping’ a property. When you’re looking to buy a property with the intention of flipping it for a profit, there are many factors to consider. This process is often used to generate short term monetary gains, usually to then reinvest into a similar project and repeat the process.

Flipping involves buying a property that you already know needs renovating just to bring it up to standard. It’s important to research the value of similar homes that have already been renovated in the area. You’ll also need to take into account what type of renovation work is required to get the property up to scratch and the approximate costs to complete those renovations.

When you have an idea of the approximate value your completed property could achieve, you’re in a better position to work out your total budget for the project and whether it’s likely to be profitable or not.

It’s recommended that you engage the services of a qualified Building Inspector to make sure there are no hidden surprises in the property you want to buy that could blow your renovating budget out of the water.

The main features to consider for your renovation project are the bathroom and kitchen, as these are likely to have the most positive impact on the overall sale price.

The renovating and flipping process can be fun as well as challenging. Planning ahead and managing time and costs is also very important. Holding the property for too long can eat into profits, and having insufficient funds to create the outcome desired can also be detrimental to the bottom line.

Positive Gearing

The next option involves generating passive cash flow from your rental income. Property investors who use positive gearing to their advantage prefer to own and hold the property for a period of time.

There are several ways to find or create positively geared rental properties. One option is to pay down the mortgage outstanding on an investment property until the rental income outweighs the costs of owning and managing it. Another option is to put down a large deposit on the property at the time of purchase to ensure the rental income covers all your costs.

Of course, there are ways to buy positively geared properties without having a large deposit or without waiting for years to pay down the mortgage. The key is to have a solid understanding of the rental demand and market values in the area you’re considering buying into.

Know what the rental yields are for similar homes in the area and negotiate for a competitive interest rate on your mortgage to keep your repayments as low as possible. In the current market with an extremely low cash rate, this could be something to consider. The advice of a financial planner to assist is always recommended.

Finding positively geared properties isn’t impossible, but it can be challenging. This is an investment option that is perhaps better suited to an experienced investor.

Negative Gearing

Negative Gearing is the property investment option for people who do not have either the time, money or inclination to follow the first two options.

For many people, the process of buying a negatively geared investment property is usually to borrow 100% of the property purchase price and associated costs. This is usually an option for home owners, as they have the opportunity to secure the new investment loan against equity in another property.

When you borrow the entire purchase price and all the costs of your new investment property, it tends to mean the rental income you receive won’t quite cover all of your costs. The result is a shortfall that requires you to contribute an amount of money each month to cover. The shortfall amount is then used as a tax deduction from your salary or wages, which effectively helps to reduce the amount of tax you pay.

Over time, the amount of rent you receive from the property should increase, which reduces the amount of shortfall you need to cover. Of course, if the rental income increases far enough, your negatively geared property could become positively geared over time.

No matter what investment strategy you use, it is important to find property that will generate the greatest deductions. In most cases, new properties tend to offer more deductions than established properties.

Correct mortgage and tax structures are also important considerations, as you have the opportunity to maximise the effectiveness of the property. The goal is to achieve the positive geared scenario and then generate passive income as the tax deductions diminish.

All of these options for building wealth through property investment are great, but finding the right one means getting the right advice.

To work out the best property investment option for you, call us on 1300 832 554 or fill out and submit the “Enquire Now” form on this page and let us help create a wealthier YOU!

MORE INFO:
Glenn Loveday
Sales Manager
e: gloveday@nieuvision.com.au

– – – – – –

Disclaimer: We recommend that you seek independent financial and taxation advice before acting on any information in our articles and newsletters. They contain general information only and have been prepared without taking into account your personal objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances. Your full financial situation will need to be reviewed prior to acceptance of any offer or product. Interest rates are subject to change without notice. Lenders terms, conditions, fees & charges apply.

The post 3 Ways Property Investment Can Build Wealth appeared first on Nieuvision.

The post Perth Property Forecast 2020: Top Suburbs and Market Outlook appeared first on Nieuvision.

When investing in property, having a well-researched risk management plan is essential.

Traditional property investment is not generally considered a high-risk investment.

Investors generally believe that researching location and establishing trust structures is all they need to do before investing in property. However, most investors fail to create a well-constructed risk management plan; investing in property  without a plan is risky.

Here are some essential risk management strategies to consider when purchasing investment properties.

Risk Management Strategies For Property Investing

Understand The Numbers

Investing in property without fully understanding the numbers is a recipe for failure. Knowing your numbers is imperative because it allows you to analyse the risk factors involved.

Once you know the financial risk, you can adequately assess the viability of purchasing a particular property.

Create a Strategy

Plan your property portfolio, purchasing properties without a proper strategy is unwise.

Your investment portfolio plan should include the number of properties you want to buy, is it financially viable?

How much you plan to spend, loan to value ratios, profit, and loss, expected cash flow for each property. Include taxation, time projections, interest rates, etc. You should review and adjust your strategy annually.

Financial Buffers

Think about it like this, when you buy a car, having some extra money in the bank to cover unexpected expenses is essential. Likewise, when you invest in property, it is crucial that you have some additional money saved to cover unexpected costs. Investing in property without financial buffers is risky business.

Location

The location should undoubtedly be part of your risk management strategy. When searching for potential locations, you should be looking for areas that balance cash flow and capital growth.

Also, make sure the property prices fall in line with your budget; make sure you are looking for locations with properties mid-range prices. Pricing is vital because when you invest in property, it is capital growth that will help you to build wealth.

Diversification

Diversification is critical, plan to purchase properties in different locations. Do not put all your eggs into one basket. Gaining knowledge about property cycles is necessary here.

Research

Conduct extensive research on the location you wish to purchase a property. Delve deep into infrastructure development, population growth, unemployment rates, property prices.

Speak to local business owners, make your projections for the next 10-15 years. Just because purchasing a property in a particular area looks good now does not mean that it will be a good idea in the next 15 years.

Do extensive research to make sure you are making the right decision.

Insurance

Planning for insurance is an essential risk management strategy. Do not just focus on the standard insurance plans such as landlord or content insurance. It would help if you also looked into Life insurance and income protection insurance too.

Advice

If you need further assistance, seek professional help. Trying to do everything on your own is unwise,  especially when you are a new property investor.

In conclusion, plan, plan, plan!

You simply cannot build a profitable property portfolio without planning. A risk management plan should include various smaller plans to create a comprehensive property investment risk management strategy that will minimise risk and safeguard you when unexpected issues arise.

Seeking the support and advise of a professional property investment advisor is always a good idea.  Property investment is a relatively low risk investment in comparison to other forms of investment. However, it is still essential for you to seek advice in areas that you lack knowledge and understanding.

Creating a concise, well put together risk management strategy will give you a clearer understanding of how the property game works, and it will minimise uncertainty and risk.

The post Risk Management Strategies For Property Investors appeared first on Nieuvision.

The Melbourne property market experienced the most significant quarterly decline in ten years. By the end of 2018, the Melbourne real estate market dropped by -4.7%.

The NAB residential property index highlights that property investors are losing interest in the city and as a result of this and the decline in Sydney’s housing market, Australian house prices have dropped by -2.7% in the last year.

Considering the overall state of the property market in 2018, how will 2019 fare? What is the overall market outlook for Melbourne in 2019?

What Happened in 2018?

After five years of steady growth, Melbourne’s property market experienced a sharp decline. Here are some of the possible reasons why the figures dropped:

• Credit restrictions particularly for property investor loans
• Reduced foreign investment
• More properties, fewer buyers
• Clearance rate reduction
• Oversupply of apartment units

Despite the overall decline in the Melbourne housing market in 2018, some outer suburbs held their prices (+6.2%) In comparison, Melbourne’s inner and middle ring suburbs experienced some price reductions with middle ring suburbs declining -5.7% and inner suburbs -24%.

Melbourne Housing Market Forecast 2019

Property experts predict that by June 2019, the median house price in Melbourne will drop to $820,000, approximately 8.4% less than the recorded median for December 2017. Units are also set to experience a decline, with a predicted 3% drop expected.

By June 2021 the median unit price is forecast to be at $545,000, which works out 2% less than the recorded median in June 2018.

SQM Research suggests that one of the factors affecting the property market is the reduction in interstate migration in the past two years.

Migration to Victoria has reduced by 4,000 since 2017. Other factors include bank finance restrictions and weakening foreign investment.

Expected Price Changes in 2019

Some property experts have predicted price drops of -9% to -6% in 2019. Here are some of the factors that might affect property prices in 2019.

-9% decline to -6% decline if the cash rate stays the same, slow economy and Labor government elected.

-11% decline to -6% decline if interest rates rise by 0.20 % and Labor government

-3% decline to 0% decline if 0.50% interest rate reduction and Labor government.

If a Labour government is elected, their planned negative gearing repeal policy  could have a significant impact on the property market.

BIS Oxford Economics predicts median unit prices to drop -3.6% by 2020.

Top Melbourne Suburbs to Invest in 2019

It is certainly not all doom and gloom for the property market in Melbourne. These are just some of the top suburbs to carefully consider investing in 2019.

• North Melbourne
• Collingwood
• Ringwood
• Croydon

Growth is more likely on the outskirts of the city, for example, Werribee is up 17.86%, and Officer was up 30.55% in the past year.

Infrastructure development and expensive housing in the city center is luring first time buyers to Melbourne’s outer belts.

Lending restrictions, reduced population growth and weakening foreign investment are all factors affecting the Melbourne property market currently.

However, although further decline is expected in 2019, there is still hope for first time buyers and potential investors in the outer Melbourne suburbs.

Property analysts and major banks have recently modified their predictions for market growth in Melbourne, advising property buyers to tread with caution in 2019.

The post Melbourne Property Forecast 2019: Top Suburbs and Market Outlook appeared first on Nieuvision.

Perth is a picturesque city overlooking the Indian Ocean; it makes a beautiful place to live for young families, retirees and young professionals alike.

With the property market experiencing a downturn in Sydney, Melbourne, and other major cities, Perth has also undergone a slight decline; however, property pundits believe that the market will experience a steady upturn in 2019 and beyond.

Perth Property Forecast 2019

With reference to the QBE Australian Housing Outlook for 2019-2021, the overall prediction is that Perth’s property market should experience some notable growth halfway through 2019 and through to 2021.

There are some crucial  things to consider here such as:

• APRA credit restrictions
• Reserve Bank could decide to raise interest rates if the markets are stable in 2020
• Trade conflict between the USA and China over Iron ore could directly affect Perth’s housing market because Perth’s iron ore industry has recently seen an improvement.
• If the Labour government passes a Negative Gearing Repeal, this might have an impact on rent prices.

Regardless of the issues mentioned, property experts predict that Perth’s property market will experience a positive upturn in the next two to three years.

Perth’s Property Prices in 2019

QBE’s predicts that Perth’s housing prices will drop -1.7% halfway through 2019, increasing +1.9% at the start of 2020, and 4.8% in 2021. The median house price in Perth will level out at $550,000.

These figures indicate a 5% growth between 2019 and 2021. With the mining industry growing at a steady rate, more and more investors could be setting their sites on Perth in the next two years.

With a decline in the property markets in Sydney and Melbourne, property experts predict that the Perth property market could be one of the fastest growing markets in 2019 and 2020.

Unit Oversupply

When the mining industry saw an upturn in previous years, there was a significant demand for unit style housing. However, when the industry experienced a sharp decline, the need for units drastically declined.

As a result, there has been a sharp unit price slump, with prices falling -5.4% in the past year. Prices are set to increase by approximately 2% by 2020.

The last year has seen a 1.0% population growth rate increase; also with an imminent mining industry revival, the oversupply problem could well be a thing of the past.

Best Suburbs To Invest in Perth 2019

House prices are relatively low in Perth at present; however, with forecast growth over the next two years, Perth could be a viable place to invest in property over the next two to three years.

Which suburbs should property investors be setting their sights on?

Stirling and East Fremantle

Stirling and East Fremantle experienced 1.9% growth whereas inner-city Perth experienced a -0.9 % decline. Outer Perth suburbs dropped -2.6%. Properties can be purchased for under $450,000.

Other suburbs to watch:

-Cottesloe

-City Beach

-Kardinya

-Coolbellup

-Bedford

-Kelmscott

-Harrisdale

With the impending mining industry upturn and steady population growth in Perth, it could experience some notable increase in the next two years.

Property investors should keep an eye on the factors mentioned in this article that could have a direct impact on the property market such as interest rates, the trade conflict between the USA and China and possible policy changes.

That being said, Perth is looking like a viable place for property investors to set their sites on.

The post Perth Property Forecast 2019: Top Suburbs and Market Outlook appeared first on Nieuvision.

Hobart, the capital city of Tasmania, has gained a significant amount of attention from potential investors and first-time house buyers in the past three years. The quaint scenery and quirky architecture and steady economic growth has made Hobart an attractive choice for property buyers.

The market downturn that affected Sydney, Melbourne and other Australian cities had little effect on the capital city of Tasmania. Hobart has experienced the most rapid growth in property prices in recent years, and it still maintains a relatively affordable median house price.

Considering the current market climate, what does 2019 have in store for Hobart?

What Happened in 2018?

Despite the market decline in other parts of Australia, Hobart remained mostly unaffected in 2018. It experienced notable growth, with a strong rental market and steady population growth, Hobart avoided much of the issues that plague Sydney and Melbourne.

QBE’s Australian Housing Outlook 2018-2021 states that Hobart’s median house price was $481,000 in June 2018, a 10.6% increase since June 2017.

The most notable growth happened in Brighton, a 17.3% increase in the past year.

Hobart City recorded a lower growth rate of 6.3% from 2017-2018.

The rental market recorded vacancy rates of 0.7% in June 2018, the same as in 2017.

Hobart Property Market Forecast 2019

Property experts predict that growth will continue in 2019. However, Hobart could experience a slight property market growth reduction in the next two to three years.

QBE Australian Housing Outlook predicts a +8% price growth for 2019-2021, thus bringing the median house price to $520,000. The median unit price is expected to increase to $420,000 which is a +9% rise.

Forecasted figures may vary depending on political climate, economic growth, and bank interest rates. Here are some of the factors that might affect Hobart’s property market in 2019.

+5% – +9% growth if the cash rate remains the same and the economy slows down, and Labor government

+4%- +7% and a 0.20% interest rate increase, no change in cash rate and Labor government

+5%- +9% with a 0.50% rate reduction by banks, and a Labor government

If Labour  government is elected in 2019, this could harm the property market; however, as it stands, Hobart’s property market looks relatively healthy.

Top Suburbs To Invest in Hobart 2019

As a potential property investor, understanding the best areas to invest your money is crucial. Here are some of the suburbs to consider when thinking about investing in Tasmania property.

Focus on affordable suburbs north-west of the city such as Glenorchy and Moonah. These areas provide good vacancy rates and strong rental returns. For example, Glenorchy’s rental yields are 5.4% currently, and the median house price is $365,000.

The outer ring suburbs are often the best choice because they offer the most substantial growth potential and they are less costly.

Kingston is a decent option if you are looking South of the city, with strong price growth, affordability, and 4.7% rental yields, it is a viable choice for potential property investors.

Lindisfarne is also a suburb to watch in 2019, North-east of the city, it provides, excellent living conditions, and affordability. As well as healthy rental yields of 4.6%, unemployment and crime rates are relatively low as well as good schools, shops, and efficient transport links, Lindisfarne is another excellent choice for potential property investors in 2019.

The post Tasmania Property Forecast 2019: Top Suburbs and Market Outlook appeared first on Nieuvision.

The property market in Brisbane is set for a healthy start in 2019. With property values dropping in big cities like Melbourne and Sydney, Brisbane’s property values seem to be steadily rising as more young families are moving to South East Queensland.

Steady economic growth, infrastructure improvement and falling unemployment makes Brisbane an attractive option for new and established property investors.

For future reference, Brisbane is forecast to see a 13% property price growth by 2021. House prices are set to increase by a steady 4% in 2019. Although the overall forecast for the Brisbane property market is looking good, there are lots of things to consider here.

The property market in Brisbane has seen dwelling prices increase 0.3% at the end of 2018, and with brand new apartment complexes like Queens Wharf and Howard Smith Wharves, Brisbane is looking like a desirable place to invest or set up home.

The value of apartment units is set to even out in the first quarter of 2019, and then increase by 3% by year-end. The forecast shows that by 2020, apartment units should benefit from another 3% increase.

Continuous population growth in the South East should contribute to housing demand and property value growth. Brisbane house prices are attractive and affordable in comparison to Sydney and Melbourne, with more and more families migrating to Brisbane to experience a more cost-effective way of life.

BIS Oxford’s three-year predictions imply that Brisbane will experience strong growth in the property market over the next three years. With a 13% increase to a healthy median of $620,000.

Brisbane’s property market is expected to continue to see steady growth over the next year as other property markets in Australia experience a steady decline.

Brisbane median house price is significantly lower than that of Sydney or Melbourne making it far more affordable for young families, investors and those migrating from other parts of Australia. 12.7% of immigrants looking for property in Australia are settling in Brisbane.

Properties in Brisbane’s inner and middle ring suburbs give property buyers more bang for their buck, with healthier long term capital growth prospects.

Best suburbs in Brisbane for property investing:

Strapine

Strapine’s 12-month growth is currently sitting at 8%, with its median price at $421,500 with a 2.3% annual growth. Majority of the properties are houses, and the average rental rate is $380 per week.

Ferny Hills

Ferny Hills’ 12-month growth is currently sitting at 1%, with its median price at $545,000 with a 2.8% annual growth. The properties in the Ferny Hills area are typically houses, and the typical rental rate is $460 per week. 

Kedron

Kedron’s 12-month growth is sitting at 8% currently, the median house price is now $735,000 with a 3.7% annual growth. The typical properties are houses, and the average weekly rental rate is $460. 

Oxley

Oxley’s 12-month growth is sitting at 9% currently, the median house price is currently $585,000, with a 3.5% annual growth. The average weekly rent is $410.

Steady economic growth, improvements in infrastructure and a decline in unemployment makes Brisbane an attractive option for potential property owners and investors.

The post Brisbane Property Forecast 2019: Top Suburbs and Market Outlook appeared first on Nieuvision.

The Sydney property market enjoyed ten years of steady and unobstructed growth; however, 2018 saw a slight softening of the market. The overall consensus is that 2019 will see much of the same. What is the general forecast for the 2019 Sydney property market?

The period of steady decline in the Sydney property market saw:

• Credit restrictions
• Less foreign investment
• Increasing bank funding costs
• Expensive housing
• Oversupply of apartment units in some places

2019 Forecast

The median house price in June 2018 was $1,103,50, a 7.6% decline since June 2017.

Outer and Western suburbs experienced a 2.8% drop, in addition to this, vacancy rates increased from 1.8% to 2.5% in June 2018. There was a 7.4% decline for Sydney dwellings by October 2018.

2019 Predictions

Property experts SQM Research have predicted an underwhelming softening of the Sydney property market in 2019 and beyond.

An overall property pricing crash is not expected. They highlight a steady national economy, stable population growth and low unemployment to indicate that a significant property pricing crash is not on the cards for Sydney.

QBE’S Australian Housing Outlook has predicted a fall in prices between 2019 and 2020. Their predictions indicate that 2019 should see an 11 percent decline in prices with the median prices dropping -5.4% between 2019 and 2020.

CoreLogic highlights various factors that could affect overall property prices in Sydney in 2019:

-9% decline if there is no cash rate change, Labor government May 2019 and a slow economy

-11% to -6% drop if 0.20% interest increase and Labor government

-6 % to -3 % drop if cash rate stays the same, slow economy and Liberals stay in power in the upcoming election

Property analysts have predicted that Labor’s planned repeal of negative gearing policy could harm property prices.

Best  Sydney Suburbs To Invest in 2019

Eveleigh

Dubbed the next Silicon Valley, Eveleigh is a trendy inner-city suburb with lots of investment potential. Up and coming tech innovation projects will lead to new job creation and startups setting up shop in the area. With brand new apartment projects, art center and hip cafes, Eveleigh is the perfect suburb for young families, professionals, and creative communities alike.

Waterloo

Waterloo is set to become a hot zone for property investors, with brand new apartment developments, local parks, art galleries, trendy shops, cafes and restaurants, a possible Metro line could be in the pipeline. Waterloo is certainly looking like  one of the suburbs to watch in 2019.

Brookvale

Brookvale offers relatively affordable housing, close to beaches. There are plans to transform Brookvale into a bustling place to be, with new bars, cafes and new residential developments on the cards. The transport system is efficient, and things are looking up for the Brookvale area.

Baulkham Hills

Baulkham Hills is a family-focused suburb with lots of investor potential. 20% of the suburb is rented, which is excellent news for potential property investors. The brand new Sydney Metro Northwest rail line which is due to open in 2020 will add value to the up and coming suburb, making it one to watch in 2019 and beyond.

The  general consensus for the 2019 Sydney property market is that property buyers will most likely have more buying power with softening of the market set to continue, there is no indication that there will be a total property price crash in Sydney.

There is still lots of investment potential in the suburbs with continued infrastructure development, 2019 is set to experience a steady price decline overall, so it is still a case of buyer beware.

The post Sydney Property Forecast 2019: Top Suburbs and Market Outlook appeared first on Nieuvision.

The post Melbourne Property Forecast 2020: Top Suburbs and Market Outlook appeared first on Nieuvision.

The post Sydney Property Forecast 2020: Top Suburbs and Market Outlook appeared first on Nieuvision.