Property Strategy Goal 3: Buying or building to keep as an investment and purchase another property in two to five years

In our last blog we talked about one of the goals you may have within your Property Strategy ‘Goal 2: Buying or building to sell in the next two to five years’ and we highlighted some important things to consider when buying a property that you want to resell in a short period of time.

But what if you don’t want to sell and you want to use this property as a stepping stone in building an investment portfolio? Again this strategy gives you some options in regards to the type of build, which may include a traditional family home, a townhouse, or a block of one or more units, but with an investment property it’s all about the Return on Investment (ROI).

One of the first things to consider when looking at purchasing a property to rent out in the future is any ongoing costs such as property management fees, strata payments and council rates. Will these costs take too much away from your ROI? Can you foresee any considerable increases?

Factor in any upkeep and repairs that may be required on the property. Keep in mind that you’ll be living in the property first so you can to do any repairs yourself before you rent the property out.

Building or buying a house and land package may be a good option here in order to minimise maintenance costs and maximise taxation minimisation strategies. Discuss these with your accountant.

Location is always key for an investment property, so do your research and go where the vacancy rates are consistently low, considering the proximity of the property to essential services like public transport and schools.

Often a large backyard is not a consideration for renters. If your home will become an investment property in the future then a large backyard only adds to maintenance costs and is unlikely to add to the rental return. But consider an outdoor living or alfresco area are they are very popular these days.

It’s also important to consider whether the property will be negatively or positively geared. Do you have the extra funds required to negatively gear your investment?

Living in a property, and then moving into another and renting your first buy can be a great way to start your investment portfolio and will be a stepping stone on the path to a bigger property strategy. So make sure you’ve considered how all of your decisions will impact on your ability to rent your home in a few years. Some sacrifices may need to be made in the short term in order to maximise your return and fulfil your property strategy. 

Property Strategy Goal 2: Buying or building to sell in the next two to five years

In our last blog we talked about one of the goals you may have within your Property Strategy ‘Goal 1: Buying or building to live in the home for five years or more’ and we highlighted some important things to consider around your longer term preferred lifestyle.

Your Property Strategy is your plan for current and future property goals. So what if your goal is to turn your property over quickly to fit with your career strategy, your growing family or value you’ve added to the property?

If you are buying or building a property with the intentions to sell within a few years, consider what type of home you should purchase. You have a number of options which may include a traditional family home, a townhouse, or a block of one or more units.

As this purchase is a stepping stone within your Property Strategy you should consider how your decisions will impact on your ability to sell in a relatively quick timeframe. Some sacrifices may need to be made in the short term in order to maximise your return.

If you choose to buy or build a traditional home, in most instances 4 bedrooms will provide a better sale return than a 3 bedroom home. This may mean sacrificing a 2nd living space if your budget does not allow for both. There are ways to maximise your investment and still meet your lifestyle requirements. If you only require 3 bedrooms and prefer two living areas, consider converting the 4th bedroom into a rumpus room or lounge with bi-fold doors, then it can still be used as a 4th bedroom as required.

Alfresco areas are very popular these days as Australians love the outdoor lifestyle. This can be a design element that can add good balance between lifestyle choice and investment decision.

Consider whether any upgrades are “nice to haves” or “have to haves”. Items such as 900mm ovens and cooktops, stone benchtops, wool carpets, high ceilings etc are nice to have and add to the quality of your lifestyle but the costs of these upgrades can quickly add up and are likely to reduce your profit margin when it is time to sell.

Townhouses or units generally offer a good return if they are modern, low maintenance and in the right location. Make sure you do your research and talk to agents about what’s selling and where.

You can keep focused on your goal of selling your property quickly and enjoy living there. Don’t forget it’s a stepping stone and every property gives you insight into what you want in your next home.

Our next blog will outline tips for growing your investment property portfolio:

Goal 3: Buying or building to keep as an investment and purchase another property in two to five years 

Property Strategy Goal 1: Buying or building to live in the home for five years or more

In our last blog ‘The Importance of having a Property Strategy’ we talked about how it’s crucial to plan for your current and future property goals.

If your goal is to live in the home you are buying or building for at least five years, there are some important things to consider around your longer term preferred lifestyle prior to beginning the buying or building process.

It can seem overwhelming to choose where to start, so make a list of what you need (what you can’t live without) and what you want (the nice to haves) and make sure you consider:

  • How close the property is to amenities like schools, transport, shops, parks or bike tracks? Remember advice like ‘buy the worst house in the best street’
  • Checking with local council to research development plans scheduled for the area (e.g. new roads, railway stations)? Will they add to your property value or against it?
  • Is this a property that has scope for improvement, renovation or extensions to cater for a growing family? Is the back yard big enough? Is there room for a pool?
  • Is the area experiencing growth? A boom in apartments, cafes or shopping outlets?
  • Ensuring you know how much you can spend and do your budget before starting to search to avoid disappointment. We all want the harbour view, beach cottage or mountain hideaway but what can you really afford and how much can you borrow? Talk to your finance broker.

If you are building or considering renovations in the future, it’s important to ensure you do not over capitalise on the property for the area in which you are building. In most instances the real estate market will only bear a certain level of sale price for a certain area. Do your research first and be careful that you don’t spend more on a property than houses in the local market are selling for. Speak to a real estate agent, research the internet to see what properties are listing and selling for, and make sure that the figures add up. Ideally whatever you are investing into the property should provide a return when you do go to sell.

But as this is going to be your long term home, it’s important to remember your lifestyle should take precedence over considerations such as resale value and rentability, as these will be offset by the value a better lifestyle provides.

Look out for our next two blogs outlining tips for:
Goal 2: Buying or building to sell in the next two to five years
Goal 3: Buying or building to keep as an investment and purchase another property in two to five years

Geelong real estate seminar covered property development

This morning’s Property Success seminar held at John Doe Cafe in Geelong was another outstanding success with a record number of attendees despite the very fresh Geelong winter morning!

This month’s special guest was property developer Tony Anile. Tony’s experience in property development extends over 30 years. In that time Tony has successful completed developments of all shapes and sizes. Continue reading

Build a new home or buy an established home?

A lot of people understand how to buy a house.  You go and look at houses, and you look for something you like, and you buy it, but what about if you decide you’d like to build a new home? When you’re building a house, how do you know what you’re getting, what’s the process? Why would you build over buying an already established house?

A lot of investors do think that established property is the only way to go, but there is the opportunity through new homes and house and land packages, and there are some definite advantages of buying a new home or a house and land package over buying established.

The obvious one is stamp duty. On a typical house and land package of around $350,000 or $300,000, you might be saving around about $7,000–$8,000 in stamp duty.  When you are building a new house you are only paying stamp duty on the land. The house hasn’t been built when you purchase it, so you’re actually not paying any stamp duty for it.

There’s a good saving there.

First home buyers, for example, will get the first home buyer grant, but as an investor, you also have the opportunity to get fantastic depreciation schedules on new homes, and if you talk to your accountant about that, I’m sure they’ll be able to tell you about how that can offset the savings against your tax, so there’s that advantage as well.

Often we find with house and land packages, that we can build those or put those together for around about 10 to 15 percent less than what it might cost to buy a comparable established property in that area, so you’re taking on a buying property that immediately has 10 to 15 percent equity in it. So that’s another advantage of it. Of course, having a brand new home can also be an advantage over established, because you’re going to have less maintenance costs, so it’s going to cost you less to hold that property.  So there are definitely a number of great advantages to buying house and land packages when you’re looking at investment.

Here at Aspiron we have a number of house and land packages available and, our motto is connecting people with properties, so our goal is to help as many people as possible achieve their dreams through property, whether it be established homes or house and land packages, we have access to those and can put together the best outcome for an investor looking to get into the property market.

Give us a call, pop onto our Facebook page or our website, all of details are there. Give us a call and we’re happy to get together, no obligation, chat over a coffee or a cup of tea.

Learn How to Subdivide and Develop Property at July’s Breakfast Seminar

Learn how to make money by Subdividing and Developing Property
with our very special guest. Tony Anile has been doing it for over 30 Years

In this month’s seminar we will be discussing HOW to Subdivide and Develop property.

If you’ve ever thought about subdividing or developing real estate, you really won’t want to miss our next Property breakfast seminar, to be held on Tuesday the 9th of July at John Doe Cafe in Geelong. We are very excited to announce that we have a special guest speaker.

Tony Anile, has over 30 years experience subdividing and developing property throughout Victoria, Tony will be there to answer all your questions and to impart his knowledge about developing property as well as discuss the various aspects that you need to know including the pitfalls to look out for and the planning requirements you need to know in regard to successfully subdividing and developing property.

To Book a ticket to our next Property breakfast seminar, click on the How to Subdivide and Develop property here, check out our Facebook page or our You-Tube Channel.