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April 2018 Seminar Special!
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April 2018 Seminar Special!
HOW TO GET STARTED
ON THE INVESTMENT LADDER
Bob Weaver presents:
Investment choices
Money in the bank
Low risk shares
High risk shares
Bonds
Investment properties
Firstly we need to understand what an
investment property is.
This is not your family home
It needs to meet the needs of the market
It needs to be financial viable as an investment
It needs to meet the requirements of The Residential
Tenancy Act
It needs to not be a drain on your finances
What type of rental is the best investment.
2 bedroom, 3 bedroom, 4 bedroom.
Weatherboard, hardiplank, brick
Unit
Cross lease
Fenced
Garage or car port
This will all depend on the requirements of the rental
market but in most cases we are back to return versus
purchase cost.
What do I mean by it is not your family
home
Your choosing a property that will make you money in
the medium to long term
Get advise from a property management company
before purchase
Find out what the market needs
Work out your rates of return
Check the insulation of the property a report not just
yes it has batts in the ceiling
Residential Act requirements
Insulation report on the property
Recommendation of a meth test
Correct working smoke alarms (10 year photo electric)
Heating in the property
Action to reduce mould and mildew
Any health and safety concerns
Basic property check list
Check all windows and doors open and close
Assess the age of the water cylinder
Check the shower pressure
Check the state of the electrical wiring
General condition of the outside of the property
Weatherboards, hardiplank etc
Check spouting and drains
So the property looks good what about
the financial viability
Rates of return
Gearing
Mortgage broker
Insurance broker
What can I borrow?
The general rule of thumb is to borrow up to 65%. So
you require 35% equity
That can be equity in your own home
There are lenders who may lend slightly more but at a
greater interest rate
There are interest only loans but these tend to be only
for 3-5 years after which the capital of the loan needs
to reduce
Interest rates in the region 0f 4.2% to 4.5%
Rates of return Gross & Nett
For your gross return divide the annual gross income of
the property into the value of the home
For nett return deduct the expected expenses from the
gross income before doing your sum
For nett return remember to include an amount for
repair and renewals and at least one week vacant
Gross rate of return
Purchase of 3 bedroom home for $300,000
$370 per week rent. Multiply this by 51 weeks (this is
allowing 1 stand down week)
Gross income $18,870
Divide $18,870 into $300,000 gives 6.29%
Nett return is personal to yourself
Capital growth will become a significant bonus when
sold
Negative Gearing??
Negative gearing is wording used when the amount
you earn from your property is less that what is costs
you
This is a bad thing right!!!!
Not necessarily. It would depend on the current state of
the property market in your area
But it does increase the risk factor and we would
always recommend ensuring positive gearing
How Negative Gearing can work
Now this just explains negative gearing and happens
more in big cities
Cost of your expenses for the property including your
mortgage $21,500
Income $18,750 Loss over 2 years $2,750
Property market is increasing 10% per year so over two
years for a $300,000 that would increase By $60,000
over the two years
So final gain is $57,250
Ring fencing rental losses
The government is proposing ring fencing rental
losses
This means you will no longer be able to offset tax
losses from your rental property from your other
income
So tax is currently paid against your net income and
you have been able to reduce the net tax payable by
adding rental losses
The Bright Line Test
This is the Taxation Act
This is a regulation for residential properties only
Income tax is to be paid on gains made when disposing
of residential property
This has been extended from 2 years to 5 years.
Confused?? Contact your accountant
So what next?
Engage the services of a property manager !!
You now have one of your most valuable assets it
needs protecting
Do not see your property manager as a drain on your
income but as a resource to increase it
The Powerful Benefits of a Property
Manager
They will tenant the property for the maximum amount
possible
Maintaining the property
Relieving the owner of the stress of management
Ensuring your income stream is maximised
Keep you on track with the Residential Tenancy Act
April 2018 Seminar Special!
HEALTHY HOMES
GUARANTEE ACT 2017
Greg Watson presents:
Historical
Context
Range of Laws
Housing Improvement Regulations 1947
Residential Tenancies Act 1986
The Building Act 2004 and Building Code
Real Estate Agents Act 2008
Health and Safety at Work Act 2015
Residential Tenancies (Smoke Alarms and
Insulation) Regulations 2016
Healthy Homes Guarantee Acts 2017
Healthy
Homes
Guarantee
Act 2017
Healthy
Homes
Guarantee
Act 2017
Supports the creation of
Regulations and Standards in
relation to:
Heating
Insulation
Ventilation
Moisture ingress
Draught stopping
Drainage
Healthy Homes
Guarantee Act 2017
The exact requirements are not in the Act, but
will be set by the Government before 2019.
Many landlords will already meet these
standards and will not have to change anything.
For those that need to upgrade their properties,
government grants (of up to $2,000) for installing
heating and insulation will be available.
Healthy
Homes
Guarantee
Act 2017
Allows requirements around:
What must be installed and
provided
Inspections, maintenance or
replacements
Quantities, locations, condition,
types and technical
specifications
Healthy
Homes
Guarantee
Act 2017
The government has announced that
landlords, public health specialists,
building science experts, and
industry representatives will all have
the chance to be involved in creating
the new minimum standards.
Healthy Homes
Guarantee Act 2017
The law requires landlords to
guarantee that any new tenancy from
July 1, 2019 must be either properly
insulated or contain a heating source
able to make the home warm and dry.
All tenancies must meet the new
standards by July 1, 2024.
April 2018 Seminar Special!
t