April 2018 Seminar Special!
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April 2018 Seminar Special!
HOW TO GET STARTED ON THE INVESTMENT LADDERBob 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 2017Greg Watson presents:
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
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 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.
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!
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