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Watson Seminar Slides April 2018

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April 2018 Seminar Special!

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April 2018 Seminar Special!

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HOW TO GET STARTED ON THE INVESTMENT LADDERBob Weaver presents:

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Investment choices Money in the bank Low risk shares High risk shares Bonds Investment properties

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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

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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.

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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

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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

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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

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So the property looks good what about the financial viability Rates of return Gearing Mortgage broker Insurance broker

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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%

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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

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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

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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

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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

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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

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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

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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

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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

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April 2018 Seminar Special!

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HEALTHY HOMES GUARANTEE ACT 2017Greg Watson presents:

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HistoricalContext 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

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Healthy Homes Guarantee Act 2017

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Healthy Homes Guarantee Act 2017 Supports the creation of Regulations and Standards in relation to: Heating Insulation Ventilation Moisture ingress Draught stopping Drainage

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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.

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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

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Healthy Homes Guarantee Act 2017The 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.

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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.

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April 2018 Seminar Special!

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