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AssetZ Newsletter- Stay informed on current Property Markets and Trends
Tag Archives: property investing
Property Boom will follow year of uncertainty
AT some point this year buyers will start piling into real estate.
First-home buyers, trade-up buyers and investors will collectively decide it’s time to buy and start a fun run towards the market.
The catalyst that will spook the hibernating real estate herd will be a TV news item or newspaper coverage of research that records an upturn in values in the previous quarter.
The migration back to the market will quickly gather a momentum of its own. Media, which devoted this year to gloom stories about property, will switch their focus to “the new property boom”.
People who spent this year living in fear of the Europe crisis, the affordability crisis, the cost-of-living crisis and the what-if-home-values-collapse-like-they-did-in-the-US crisis will rapidly develop a panic urge to buy real estate. The fun run will turn into a stampede.
The what-if-the-worst-happens psyche that galvanised consumers into inaction this year will be replaced by an I-don’t-want-to-miss-the-boom mentality next year.
Sadly, most will have already missed the best opportunities to set themselves up for capital growth.
They say you make your gains in real estate when you buy, not when you sell. That means buying when markets with future potential are at the bottom of their cycles.
In most cases around Australia, that means buying this year, not next.
By the time the research companies get figures that describe the upturn, write their reports and pass the good news to the media, the upsurge will have been gathering steam for six months or more.
In other words, most pack animals will miss the chance to be bottom feeders.
If I had unlimited funds and lots of time on my hands, I’d sign pre-Christmas contracts in the following 25 key locations: Gladstone, Toowoomba, Emerald, Mackay, Brisbane, Tamworth, Gunnedah, Muswellbrook, Newcastle, Sydney, Broken Hill, Bendigo, Ballarat, Warrnambool, Portland, Adelaide, Whyalla, Port Augusta, Ardrossan, Ceduna, Albany, Bunbury, Perth, Geraldton and Kununurra.
There are plenty of other good spots, but I’ve kept the list to 25. They’re all places with affordable options and great growth prospects.
Some places stand out among the possibilities – Adelaide, for example. Sooner or later Australians will realise that we have three boom resources states, not two. South Australia is the third.
The state has multiple billion-dollar mining ventures in various stages of planning or construction, led by the $30 billion Olympic Dam expansion.
Many of the businesses winning contracts from big resources projects will be headquartered in Adelaide, taking on extra staff. Olympic Dam proponent BHP Billiton will also have a bigger corporate presence in Adelaide.
Many of the workers engaged to develop Olympic Dam, the copper mine at Ardrossan and other big ventures will live in Adelaide as fly-in-fly-out or drive-in-drive-out or float-in-float-out workers.
Whyalla and Port Augusta will also receive multi-pronged benefits from the Olympic Dam project and other resources ventures.
Brisbane and Perth, as I wrote last week, are poised to stop the slide in their markets, with growing impetus from the emerging boom in construction related to the resources sector.
There are some compelling growth economies in the regions, and it’s not all mining-related. Key regional cities in Victoria, such as Bendigo, Ballarat and Warrnambool, are beginning to thrive from business expansion, population growth and the ongoing development of infrastructure.
- The Australian December 17, 2011 12:00AM
- Terry Ryder is the founder of hotspotting.com.au
How to Build your Property portfolio and Still sleep at night
Congratulations on wanting to learn how to grow your asset base quickly and safely.
At AssetZ we want to show our clients how you build your property portfolio and still sleep comfortably at night.
This means building a multimillion dollar portfolio without having to worry about where the money is going to come from should there be a small emergency , for example the hot water service breaks down.
The key to becoming a successful property investor is being able to hold the asset over a period of time to allow it to grow in capital growth. We want to ensure all our clients are in a position where they can do this and benefit from a more secure financial future.
Where most property investors go wrong is they only purchase a property and that is it, what you need to do is purchase the property and purchase time.
This is a strategy AssetZ teaches their clients and this is the strategy that allows our clients the security of knowing they have protection on their side.
Now what do we mean when we say you need to buy time?
If a property costs you $350,000 plus$15,000 in stamp duty and fees your total costs are $365,000. Cost is $365,000 to buy the property but remember you also want to be a successful investor and buy time, we would recommend you have a minimum period of 2 years time buffer. This is 2yrs worth of the expected holding cost of the property.
Let us say the holding costs after rental income and tax rebate back is $5,000 per year, this would mean if you wanted 2 years worth of time protection you would need to have access to $10,000 ( 2x $5,000) in available funds or in a line of credit.
This is a very basic principle yet one where the majority of property investors do not follow. The amount of time you buy with each property depends on the individuals comfort level, some people may want 5 years as a buffer period, the important thing is to buy time when you purchase your property.
On average an investment property will become positive geared (income is greater that outgoings) within 3 to 5 Yrs.
As the time buffer is very much tied to the individuals comfort level AssetZ will tailor the strategy to ensure we meet the client’s needs.
Once the appropriate buffer has been determined along with the individual’s budget and risk appetite, an individual strategy is implemented that identifies the right investment property. Ongoing assistance, advice and direct one on one attention is given to each client on how to fund the holding cost of the new property without using any of their own income.
This allows you to build your property portfolio without affecting your day to day cash flow.
So remember, when you buy your next investment property do not forget to buy time with it.
If you need help with this please click here.
Building your Property Empire
My mission here is to help people who are motivated to help them selves by providing you with some insights into property investing and passive income generation. I currently work and educate my clients on how to grow and manage their property portfolio, if you would like to see what I can do for you please check out our website at Assetz.com.au . I have been a property investor for the last 5 years and have become very passionate about educating others on how to do what 96% of Australians don’t do, that is to be financially free. I am also a huge believer in leveraging your time to have money work for you and not you work for money.
Now let us get started on why I like property and why I think every one should be in the business of property investing. The first thing to realise is when you do buy an investment property you are becoming a business owner and you need to treat it like one. Like any smart business purchase you need to make sure the actual numbers stack up to what your actual business plan is. For example it is pointless to buy in a cash flow positive regional town ship that is receiving minimal capital growth if you are after growing your asset base. You would be better served to purchase in a proven area of capital growth and learn how to manage the shortfall each week on the property cost. I have found from my clients once you can treat it like a business it will prevent you from making emotional decisions that may not match your business plan. Instead you need to crunch the numbers and the historical data to make sure it ticks all your boxes, you DO NOT need to have been to the area before you purchase, I have purchased in areas I have never been to or planned on going to. If the numbers all stack up and match your criteria then that is all that matters. We are lucky we live in the hi tech age and can walk down a street anywhere in the country with Google Street view, the days of driving around and wasting your time are over. 
Ok, so I hope by now you realise property is a business and needs to be treated as such. Why do so many of the wealthiest people alive prefer property as the vehicle to financial independance? Put simply the leverage you can gain on property is second to none. For example if you had $100 000 to invest in either shares or property it would look like this. 100k deposit in property could be used to buy a property worth around 660000 if we work on a 80%LVR and 5% for stamp duty and fees etc. You would then be controlling an asset worth $660000 and returning a compound growth of 7% pa. The first year you would receive $46200 in capital growth!! This would then mean your asset is now worth $706200 and grows at 7%pa the next year which is $49434 so as each year passes the asset grows faster and faster.Now I have used the average of 7%pa as this is around the average growth rate in Australia, some years it will be higher or lower then this.
Now if we had the same amount of cash to invest in Shares it would look like this. 100k invested means you control 100k shares( I have done no margin lending as I have also only gone to 85%LVR on the property). Share market moves up 7% and you would earn 7000 in capital growth, not bad but 39200 behind property. Unfortunately the banks do not allow you to borrow the same on the shares as they do on property, I like this for two reasons. Firstly it shows the banks have confidence in our housing market if they are willing to lend high LVRs ( Loan to value ratios) and allows me to control a larger asset base which i receive all the capital growth benefit. I hope this makes it clear why I like property but this is not to say this is the only type of investing I do. To generate large sums of income I also use some other income generating tools, more about them later. If you can not wait check it on my next page Who am I.
What my goal here is to educate you on Property Investing for FREE, I want to make sure you can learn everything I know about Property investing that has enabled me control my multi million dollar portfolio, I don’t say that to impress you but to show you that anyone can achieve what they want to. No one was born knowing how to invest in property or how to manage your properties.I want to show you how to build and manage your property portfolio to enable you to have the life that you want and no doubt deserve.
Your first step is to sign up for my Build your own Property Empire training. This is totally free and no obligation at all, I know you will gain alot of knowledge from these letters and if you put what you learn into practice you will also build your multi million dollar property business. Thanks for spending your valuable time reading this and I look forward to staying in touch with you.
If you can not wait to learn more and would like to start building your empire now then email me at paulreid@assetz.com.au
Happy Investing
Paul Reid.