Author: casey

In just under 3 years my partner and I have managed to purchase 7 properties in total and add a granny flat to one of the existing properties! Majority of these purchases have been in the Brisbane property market and diversifying now into the Adelaide market.

We are rentvesters, we rent where we wish to live and purchase property nationwide to ensure that we are taking advantage of the markets that are primed for growth. These areas have higher yields, also primed for rental income growth. This allows you to build a portfolio quickly.

Purchasing in your own backyard is one of the biggest mistakes that you can make when investing, looking nationwide you are able to target areas with lower purchase prices, higher yields and areas that are earlier in their growth cycle. This approach in building our portfolio has allowed it to grow so quickly.

We invest in the exact same type of properties and locations that we help our clients invest in! This is powerful as we put our money where our mouth is! Leveraging a professional that practices what they preach, means that they believe in the locations and areas!

How did we get 7 properties and build a granny flat in less than 3 years? This is a combination of discipline, focus and ensuring that there is a consistent cash surplus and having an impenetrable mindset blocking out all the negative noise. The first four properties that we purchased were with cash deposits ranging from a 5% deposit plus costs to 12% deposit plus costs! Yes that is right, not 20% deposits!

In your accumulation phase as soon as you have available equity or cash you want to leverage this  to purchase more assets!

The three most recent purchases have been secured using equity from existing properties! This is the power of selecting the right areas, primed for growth where the assets perform well and grow in value, this equity now created can be leveraged back up to 80% or sometime more depending on the lender to purchase more high performing assets.

You then have further assets, and a larger asset base appreciating in value. This compounding affect is super powerful!

You will never save your way to financial freedom, and you won’t pay off your owner-occupied property to achieve financial freedom!

The total property portfolio value is approximately 4.2 million dollars currently.

We understand that achieving financial freedom means leveraging off cash and equity as soon as it’s available. We will continue to leverage up to 80% LVR on existing properties to cash out funds for further purchases in the accumulation phase.

Time in the market is key and blocking out the negative noise is a must!

If I listened to the negative noise, I wouldn’t have purchased my first property at the start of covid in March 2020 or we wouldn’t have made 3 purchases in the last 5 months all while rates increase and the main stream media project fear and doom and gloom.

Those who can think long term, block out the noise and realize there is never going to be the perfect time to purchase will do extremely well.

We haven’t come from wealthy families; we weren’t born into money. We stayed consistent, put in the work and ensured we had a consistent cash surplus. That cash surplus was then put to work to purchase higher performing assets that grow in value and pay us rental income.

These purchases were made through a structured system to ensure they will perform well long term and be the foundational properties within our portfolio. We didn’t cut any corners and treated this as a business.

If you want to know in far more depth how we achieved this, jump across, and download my E Book –Taylored Guide to Property Investing.

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Australian property is one of the most talked about topics there is.

Since the rate rises that commenced in the first half of 2022 mainstream media have projected doom and gloom that continues to scare individuals.

Many are sitting on the fence waiting to see where rates end up and are falling for the negative sentiment the media are intentionally trying to create. Fear for mainstream media is viewership and that is what they thrive off to be successful.

There are many factors that they ARE NOT talking about. These factors WILL see price growth continue in a number of locations around Australia!

Since the rate rises we have had clients achieve 20% growth in this time, we understand the true fundamentals at play.

Let’s discuss a couple of these factors now, and why this will mean growth in the future.

Australia’s Population is increasing

It is estimated that the Australian population will grow to 31,433,00 by 2041! The Australian population forecast for 2023 is 25,981,000. This means another additional 6 million people! These additional 6 million people will need to live somewhere, and with an already massive shortfall of properties this will result in high demand, with low supply levels.

High demand and low supply levels leads to one thing… GROWTH!

Massive construction delays and increase to construction costs

Due to the massive increase to construction costs there are many developers that have gone bankrupt, or they are holding off on planned construction due to their margins being affected.

This means that new builds and further supply being added to the market will be lower than anticipated.

This again is only going to affect the supply being added, yet the population growth still occurring. Low supply, high demand. This will only lead to one thing…. GROWTH!

Percentage of investors

According to the ATO there are approximately 2.05 million property investors in Australia. Just 8% of the Australian population are property investors with the population at 25 million currently. And 71% of those investors hold just one investment property.

This statistic right here is part of the reason why vacancy rates are at all time lows and why rental income is increasing! Only 8% of the population are providing rental properties for renters!

Landlords can help solve this issue, and if you can separate yourself from the majority you’re going to do extremely well!

National housing vacancy

As per SQM research as at December 2022 the national vacancy rate is 1.3%. This level is considered a crisis and due to the supply being so low with demand being high this is pushing rental income growth higher!

Now if the population continues to grow as predicted and mentioned above, and construction is delayed or pushed back this vacancy rate is going to remain low.

This means as an investor you will have a high amount of demand for the product you are offering to the market, reducing vacancy periods and attracting a high quality tenant with many options. Not to mention the rental income growth that you’ll receive, creating passive income long term.

Vacancy rates are a precursor for growth. As rental income increases more renters will become purchasers. This creates more sales activity and demand pushing prices higher.

In summation, these are just 4 factors that will see growth into the future. If you couple this with having a strategy in place and targeting the right city in their growth cycle, you are going to increase the performance and results! This is super powerful as it will result in creating that equity you are able to leverage into further purchases!

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If you have been listening to the media and letting what they project influence you, you’re being brainwashed! They are pushing the narrative that every market in Australia is going to correct and go backwards! This is simply not the case and they really are just a bunch of liars. Creating fear to attract views.

You don’t even need to listen to anything I have to say, all you need to do is simply focus on and listen to the data. The data does not lie! It is important to not focus on one month of data, this is not a fair representation on what is happening. Looking at trends over a 6 month period really highlights what is occurring.

Taylored Property Wealth is a Buyer’s Agency that focuses on investment properties that are primed for growth with strong yields. We get these results from completing in depth data and research and due diligence. This allows us to get the results that we do for clients.

The suburb below aligns with clients goals of strong yields and capital growth.

Let’s take a look at one of the suburbs that we are currently investing in for clients.

This suburb is a beach side suburb and has continued to perform this year. Many properties in this area selling within the first weekend, showcasing the market is still strong and the demand is still there. That is why this suburb is continuing to see growth despite multiple rate rises this year.

The suburb in question had a median price point at the end of January 2022 of $398,000. Appreciating to $452,000 at the end of July 2022.

13.56% growth in a 6 month period. The median value increasing month on month despite multiple rate rises and negative sentiment in the market place. Now combine this with purchasing well on the way in and buying under market value and you’re receiving massive growth!

If you are letting fear cripple your decision to take action and sitting on the fence when you could be buying your losing capital growth and paying more when you decide to purchase!

If this suburb does another 13% growth in the next 6 months the median price point will be $510,000. Now factoring in further rate rises this year your borrowing capacity will be less than it is today. The time to get into the market is NOW! Stop selling yourself short!

Median price as per Core Logic January 2022

 

 

Median price as per Core Logic July 2022

If you want to purchase a high quality investment property and smash it out of the park reach out to us at info@tayloredpropertywealth.com.au.

We want to speak with action takers!

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Today we are talking about what a $500,000 investment property can look like in 15 years’ time. Yes 15 years’ time because property isn’t a short term play it is always long term. You won’t get financially free overnight.

Now let’s say that today we purchase an investment property for $500,000 and that property is rented out achieving a 5% gross rental yield.

This would be $480 a week on the $500,000 asset when purchased.

Now let’s say that the rental income increased on average 3% each year for the 15-year period.

Let’s say also that the 15 years has passed, and the property has achieved just 4% capital growth on average per year for the 15 years.

That $500,000 purchase is now valued at $900,472. The rental income that the property is now generating per week is $748.

What would that look like in terms of the cashflow? Well let’s break this down as well.

Rates in the 1970’s averaged 7.54%, 2020 they averaged 3.11%. Let’s assume an average interest rate of 5%, and let’s assume that the property was purchased with a 20% deposit. The debt on this purchase being $400,000.

Repayments per month would be $1,667. $20,004 annually. $400,000 @ 5% interest only.

Now remember the weekly rental amount increased 3% on average per year. The annual rental income after the 15 years is $38,896 ($748 a week).

All of a sudden, your yearly rental income is $18,892 above your minimum repayments. Considering other annual costs/maintenance etc you would still be left at least $10,000 in passive income per year.

We haven’t even factored paying any of the debt off. With the debt remaining at the $400,000 and the property now worth $900,472 we have still affectively lowered the Loan to Valuation ratio to 44%. With a LVR of 44% you are going to have discounts on your interest rate due to the low-risk position to the banks.

As an investor discipline is a huge asset! Discipline as an investor result in good cash management. If you were able to save the additional cashflow in an offset account, you would effectively still manage to pay down the debt if you made the minimum interest only payments on the $400,000.

Once you become a sophisticated investor and you can get multiple purchases like this under your belt you may purchase a property or two knowing full well, you’ll hold them for 15 years and sell them to help pay down remaining debt on your foundational properties within your portfolio. You’ll have selling costs and capital gains payable but that’s a topic for another day.

If you break property down like this, it is not as scary as the mainstream media make it out to be that’s for sure! It’s also super important to note that these numbers are conservative.

We have seen huge growth in the last 12 months from a capital growth point of view and rental income growth point of view. 30% growth per year is not sustainable long term for capital growth and 20-30% growth in the last 12 months for rental income growth is also not sustainable.

If you can get time in the market though these results will ensure you have growth above these conservative figures. Your data, research and due diligence when selecting a property is crucial, using a Buyer’s Agent to make sure you get it right is just as an important investment as the investment property itself.

Buy well, hold property long term and there are massive rewards at the end of a 15-year period!

If you would like to be one of the select few clients that our Buyer’s Agency Taylored Property Wealth work with each month please email us at info@tayloredpropertywealth.com.au.

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We have seen the Reserve Bank of Australia increase the cash rate over two consecutive months. This increase has come quicker than anticipated. It is crucial to be mindful of where you are getting your information and data from.

The mainstream media are a bunch of pelicans and spreading misinformation.

This information creates fear, doom and gloom to get views. Individual organizations will release information that will draw eyes and attract free publicity. A vicious cycle of other journalists then rewriting this information to generate the same doom and gloom for views. Very similar to them projecting all the negative sentiment around Covid, once everyone was sick of that they had to move on and target something else.

The media started to make this negative noise in February 2021. If you were to listen to what they were saying and made the decision not to purchase, you would have missed out on massive gains in the property market over the last 16 months. They stated ‘The property boom has ended’.

May 2021 they stated ‘Housing boom slows as waves of homes hit the market’, ‘Signs of cooling in home frenzy as price growth slows’ ‘The pace of growth loses steam in April’. The list of this goes on, yet throughout all this noise certain markets have continued to perform and do anything but what the media are saying.

Factors I keep banging on about:

• Lenders asses a borrowers lending capacity with a 3.00% buffer on the interest rate they receive for the applicable product. i.e if the rate is 3.00% they are assessed with a 6.00% interest rate.
• Vacancy rates are at historic lows, for investors this means they have experienced between 20-30% increases to their rental income in the last 12 months, mitigating a rate rise. These rises will be expected to continue due to the low vacancy rate environment.
• Borrowers where their properties have seen large growth in their portfolio can negotiate a lower rate has their overall Loan to Valuation Ratio has decreased. Lenders offer lower rates for a lower LVR position due to the risk being lower.
• Australian’s have historic high savings off the back of the last two years of covid. Therefore, having higher than normal cash buffers in place means many borrowers are up to 2 years ahead on their payments.
• Investors are typically able to claim the interest as a tax deduction for an investment property (you should speak with your accountant)

ANZ report in April 2022 stated ‘We expect unemployment will continue to fall reaching a low of 3.3% later this year. We expect wages to continue to accelerate… That means the impact of higher interest payments will be offset by higher household incomes’

‘Interest rate hikes do not always lower prices. House prices rose by more than 50% during the tightening cycle of 2002-2008 – or an average of 8% per year’

‘We expect any correction in housing prices to be a moderate one, especially when compared with the rapid housing price growth over the past two years’

‘70% plus of our mortgage portfolio is ahead of repayments. People behind on their home loan are just 0.7%. A third or all ANZ mortgagors are 2 plus years ahead’

‘Household savings and small business savings are at record levels. People have put money aside for a rainy day. They’ve paid down their most expensive debt. Credit card balances are way down’

‘Even the most vulnerable borrowers (those who took out a loan when interest rates were record-low) would be able to absorb that comfortably (3% buffer)

If we take a look at the period of time between 2002 and 2008 this will showcase that interest rates DO NOT affect price growth. It’s also important to note we are in a similar time period now as between 2002-2008 as per the 18 year property cycle.

Price growth is created from a variety of factors, not just one factor alone being interest rates.

Interest rates between 2002-2008 increased 22 times, from 6.3% to 9.5%. Throughout this period whilst rates were rising property growth occurred in many regions and capital cities.

4 of the capital cities growth listed below between 2002-2008.

• Brisbane: 127% capital growth
• Adelaide: 103% capital growth
• Melbourne: 66% capital growth
• Sydney: 26% capital growth

Looking back over the past 50 years it’s important to analyse past interest rate cycles and growth cycles.

Interest rate rises were extremely common throughout the 1970s and 1980s. We’ve all heard people talk about how they were paying 17% interest rates in the 80s.

The standard variable rate home loan rose from 6.5% in 1970 to 17% in 1990.

Although rates were increasing fast between this period the median home value increased in every location across Australia.

The cost of the standard house in Sydney increased from $18,000 in 1970 to $147,000 in 1990.

Hobart increased from an average of $11,000 to $83,000.

Price growth is driven by multiple factors and not just interest rates. Here is a list of factors below contributing to the boom:

• A stronger than expected economy
• Lower than predicted unemployment
• State and federal stimulus measures
• The build-up of savings during the pandemic
• Historic low vacancy rates, pushing rents and prices higher
• Pent up demand leading to rising sales activity
• Low listing levels in comparison to rising buyer demand
• Exodus to affordable lifestyle
• Increased infrastructure spending
• Return of ex-pats to Australia in large numbers – This creating a further increase to demand
• Belated entry of investors to compete with owner occupied properties
• The recent uplift from foreign buyers (Australia is a safe haven)
• Safety of bricks and mortar (less volatile then crypto/shares)
• Low-cost finance

Reasons that will generate more pressure and see the boom continue:

• Continued spending on infrastructure
• Return of investors to the market in large numbers as well as foreign investors
• Reopening of international borders and resumption of overseas migration to Australia in addition the return of international students

Those who can take a holistic approach and look at all factors and block out the noise that mainstream media are projecting will take advantage of the massive opportunity right now!

If you want to take advantage of this market and purchase a high quality investment property, please reach out to us at info@tayloredpropertywealth.com.au and we would love the opportunity to see how we can help you on your property journey.

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Typically, individuals invest in property to build their wealth and to set themselves up for the future with more freedom, flexibility, and choices. With this objective in mind, it is crucial to treat investing in property as a business. This means following data and research and basing your decision around the numbers and location, not using emotion.

Follow the data and you’ll start to feel the growth, performance, performance!

Below are some of the common pitfalls of investing based on emotion rather than data. These mistakes can be the difference between getting closer to your long-term goals through capital growth, or not.

• “I don’t like how the property looks and I wouldn’t personally live there”. When presenting properties to clients, some of the objections/concerns we get are around the aesthetics of the property, which equals responding with emotion. Just because you wouldn’t personally live in a property, doesn’t mean someone else wouldn’t. People have different likes, interests and circumstances, and what you dislike about a property could be what someone else loves about it.

 

• “The property doesn’t have any gardens” – Whilst a plain yard isn’t as visually appealing, this will mean the property has lower ongoing maintenance, being a positive to the cashflow of the property. You are reducing your likelihood of having to pay higher fees to a gardener to keep the gardens managed/maintained. Tenants don’t want a property where they must spend their time maintaining the property. Gardens may be important to you with the home you live in, however, this doesn’t affect the desirability of an investment property. Location and other fundamentals are far more important to tenants with respect to the desirability of a property.

 

• “I don’t like the colour scheme” – This one is a simple fix with a simple repaint of the property. This doesn’t need to be completed straight away and can be completed down the track. You may need to use a bit of imagination however you shouldn’t decline a property based solely on the colour of the walls.

 

• “The property needs a major renovation” – A small cosmetic renovation can make a big difference. Sometimes all a property needs is a coat of paint, new carpets and new curtains, which can be far more affordable than a major renovation. Remember you want to add a minimum $2 of value for every $1 spent on the property.

 

• Purchasing your investment property in your own backyard! – What is the likelihood that where you currently live is the most viable option to meet your long-term goals? To invest successfully, you must be open to investing nationwide. This way you ensure you are meeting your criteria for the property. Targeting areas primed for growth, with strong rental yields are two of the most crucial factors to consider when investing in property.

 

• “If I purchase outside of my local area, I can’t check on the property regularly” This is where being a sophisticated property investor and understanding the importance of leverage a high-quality team around you is crucial. A high-quality property manager will be able to market your property to receive the best possible outcome, obtaining strong rental returns with quality tenants. Provide regular inspections and updates with how the property is going and complete annual market research to ensure you are increasing rental income and staying in line with market rent to have the strongest returns possible for your portfolio.

Remember, successful investing is not based on emotion, it is based on data, research and due diligence to identify areas that are going to get you closer to your long-term goals. Looking nationwide is a must to ensure that you can achieve the best possible outcome for your future self.

If you don’t have the time, knowledge or expertise to ensure you invest based on data, research and due diligence then you may need to leverage a Buyer’s Agent. A Buyer’s Agent can assist you to make an informed decision based on fundamentals to help you reach your long-term goals.

If you are looking to purchase an investment property and you want to ensure you get above average results and achieve your long term goals, please reach out at info@tayloredpropertywealth.com.au, we would love to help you succeed.

 

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When it comes to property investing, one of the most important aspects is selecting an asset that is going to achieve capital growth in the short term, so that you can leverage this growth/equity to purchase another property sooner.

Many people believe that if an area has performed well over the last 10 years, that it will perform similarly over the next 10 years. They also believe if a property hasn’t performed well over the last 10 years, that it isn’t going to perform well over the next 10 years. It’s important to remember that one individual market can’t always be on the up, it will have periods of huge growth, periods of stagnation and periods of correction. This is inevitable, and as an investor you should understand and be comfortable with this. Your mindset must be strong and not let outside noise and fear cause you not to act.

Today, we are going to unpack that myth and analyze past data and use this as a tool to identify the truth. History can arm us with the tools to have an educated idea on what the future performance of different cities across Australia will look like.

Let’s take a look at the following data, this is comparing two different periods of time and the growth that each of the capital cities experienced over these periods of time.

Growth 1993 to 2003.                                                        Growth 2003 to 2013.

     

Now looking at this data you can see that from 1993 -2003 the top performers were Sydney (10.4%), Central Coast (10.1%) and Melbourne (8.6%). It is interesting to note that 2 of the 3 top performers from 1993 – 2003 were last and second last from 2003 – 2013. Sydney with 4.4% and Central Coast with 2.8%.

The top performers from 2003-2013 were Perth (10%), Brisbane (6.7%) and Adelaide (6.5%). It is interesting to note that 2 of the 3 top performers from 2003-2013 were the last and second last in terms of growth from 1993 to 2003. Adelaide with 6.9% growth and Brisbane with 6.1%.

When analyzing data, it is important to look at a number of different points in time to see if trends are consistent over longer periods. This way we can trust the data and have more confidence in these trends that are showcased over 20-30 years.

Growth 2001 to 2011.                                                          Growth 2011 to 2021.

     

Now you can see from the years 2001 to 2011 the top performers were Brisbane (11.8%), Perth (11.7%) and Adelaide (11.1%). It’s interesting to note again that the three top performers from 2001 to 2011 are now the bottom performers from 2011 to 2021. Brisbane (4.9%), Adelaide (3.7%) and Perth (1.3%).

The top three performers from 2011 to 2021 were Central Coast (9.2%), Sydney (8.4%) and Sunshine Coast (7.6%). Two out of the 3 top performers of 2011 to 2021 were at the bottom from 2001 to 2011. The top 4 performers from 2001 to 2011 were the last 4 performers from 2011 to 2021.

What can we take away from the above data?

This data shows that no individual market is always going to maintain the top spot, and that timing and the position within the property cycle, will determine which location is likely going to be one of the best/worst performers.

Over time, when certain markets perform well, they start to become more expensive than other areas. Individuals in these markets start to reach their borrowing capacity limits and this prevents these markets to continue as top performers as demand decreases and individuals shift their focus to more affordable areas.

Affordability comes into play and the markets that haven’t performed as well recently become the top performers. More individuals focus on the affordability as they can select a similar asset at a far lower cost. These markets see infrastructure spending, population growth and increased demand from investors and owner occupiers.

It’s impossible to time the market to a tee, however, looking at this data we can make more educated decisions around where to invest.

Long term, there is very little difference in terms of growth between the capital cities, however understanding what markets will do well in the short term is crucial. If you can select markets that will perform well in the short term, you are then able to use the capital growth and equity created to leverage into further purchases.

As part of our Buyer’s Agency, Taylored Property Wealth, we are currently focusing on the Brisbane and Adelaide markets. We understand where we are currently in the property cycle and off past data in the short to medium term Brisbane and Adelaide will perform well. They have already experienced growth, and you haven’t missed the ship. There is more growth to take place!

If you have any questions with the information discussed today or you would like to discuss purchasing an investment property, please reach out to us at info@tayloredpropertywealth.com.au.

 

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Sydney and Melbourne continue the trend in regards to a market slow down, housing values rise nationally with 0.6% growth being the lowest rate of growth since October 2020.

Sydney housing values record it’s third consecutive month of decline of 0.2%, with Melbourne sitting almost flat at 0.04%. Hobart recorded it’s first negative month with a decline of 0.3%, being the first decline for the city in 22 months.

The data for the month of April is important to note as half of the capital cities experienced growth above 1%. It is so important to remember the Australian Property Market is not just one market, as much as the mainstream media will continue to try and push, it’s simply just not the case.

Adelaide has taken top spot for the month of April with 1.9% growth, Brisbane second spot with 1.7% growth and Canberra in third spot with 1.3% growth. Perth also saw growth above 1% with 1.1% growth for the month of April.

Based on the rolling quarter data, Brisbane moved through it’s peak in December with 8.5% slowing to 5.7% over the most recent three month period. Adelaide moved through it’s peak in January at 7.4%, slowing to 5.4% in April.

This peak in growth can be expected as the market can’t continue to perform at the extremely high levels that they have, however moving through the peaks in growth does not mean that growth will still not occur.

As we have now experienced an increase to the cash rate of 0.25% bringing it from 0.10% to 0.35%, the capital cities where housing affordability is an issue will likely see a continued correction. Capital cities and locations where prices are more affordable will likely be more insulated from the cash rate rising.

Adelaide and Brisbane are still experiencing stock levels 20% lower than they were 12 months ago and 40% down on the 5-year average across to two cities. Perth is the only other capital city with stock levels being 16.4% down compared to 12 months ago. All other cities have seen an increase to stock levels compared to 12 months ago.

It’s important to understand that the Australian Property Market is not one market. Understanding that this is the case and selecting markets that haven’t completed their growth cycle are key. If you have any further questions around the data for the month of April 2022, please reach out to us at info@tayloredpropertywealth.com.au. Those who take action, understand the opportunities available and purchase in the right markets are going to reflect in years to come and be grateful for the decisions they have made.

 

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We are always talking about what you want to be doing right when purchasing investment properties. Today, I want to focus on some of the things to avoid. Whether you want to purchase one investment property, or want to build a large portfolio, every purchase matters.

Each property purchase is crucial, and this will better serve you moving through to your goals sooner. If you can avoid making the mistakes outlined below, you are going to set yourself up to be a savvy and knowledgeable property investor. 

Timing the market and waiting for the perfect day! 

We get this one all the time; ‘I’m going to hold off, the market is going to go backwards, and I will get a good deal in 12 months’ time.’

If people are waiting for the perfect time to purchase, at that point there will be another reason why they are not ready to purchase, and the cycle continues, and prices continue to rise.

Not having an impenetrable mindset 

Your mindset is a huge factor! Everyone is an “expert” when it comes to property, this can be family, friends, your neighbor, or the bloke you met at the BBQ who is four VB’s deep and is suddenly a property guru. People will project their own fears and beliefs onto you, or their own bad experiences, because they made one of the mistakes listed here today, or the media might be flogging some new angle to create fear, doom and gloom for views.

Follow people who are doing what you want to do, understand what your goals are and what daily actions you must take to get there. Analyze and listen to the data and facts, this will be what tells the truth!

Not purchasing when you have finance in place 

This comes back to taking action. Your finance may come in slightly lower than you ideally wanted, or you let analysis paralysis take over and then you fail to make a decision at all. Find a solution within your budget and get into the market. Time is your friend and if you are completing your data, research, due diligence, follow the numbers and are targeting the right areas, the best time to buy is now.

If you want to purchase a $600,000 property and your finance only allows for $500,000 property purchase, get in and purchase now, and before you know it, the $500,000 property is now worth $600,000 and you have made a solid return.

Buying a brand-new property

Buying brand-new can be a huge trap and developers will suck you into this one. Developers factor their marking costs into the purchase price – this means you are paying for their marketing. Brand new property will typically be on a smaller piece of land where you’re paying more for the building than the land. Land is the appreciating portion of the asset; the building is the depreciating portion. Essentially you have paid more for an asset that is going to depreciate more than appreciate.

In new green field areas, there will also be further releases of land. Growth comes from scarcity; scarcity is low supply and high demand. This will hinder your future growth in comparison to established areas.

This is a large topic on its own, if you want further information on New Property vs Established property email us at info@tayloredpropertywealth.com.au and we can provide a report which will inform you on the differences.

Buying in your own backyard 

Buying in your own backyard rather than looking nationwide is dramatically limiting your opportunity and results. You might have a higher purchase price in your own backyard, it could be in a small regional town that may not perform well long term. The city could have just gone through a huge growth cycle and you’re paying for someone else’s profits.

Looking nationwide means you can target areas that are going to perform well in the short, medium, and long term. This can mean having a positive cashflow property, mitigating your risk and taking the pressure off your lifestyle. When selecting an area primed for growth, you can be in a position to leverage off your equity in a 12 to 18-month period to purchase again and build on your wealth base.

Buying directly next to a highway, main road, train line or shopping centre

 When selecting your property, location is a crucial factor! The suburb is crucial as well as the pocket within that suburb. You want to be in the high-quality pockets that are going to generate the long-term desirability.

Ensuring you attract long term desirability will mean a premium for your rental income in conjunction with higher quality tenants as well as the long-term desirability from purchasers. This will ensure the long-term performance in terms of capital growth.

A property that appeals to the most people will have higher demand, creating more scarcity and ultimately growth from both a capital growth perspective and rental income perspective.

Taking your property advice from family or friends

This one is always challenging. For the most part, family and friends will want the best for you and want to see you succeed. Unfortunately, that isn’t always the case, and they may be envious of your success and convince you not to purchase a property or invest at all. Sometimes your family may tell you not to take action on something based on fear they have for you; this could be based off their own past experiences. The way to mitigate this is having a mentor you can take advice from and support you; your mentor needs to be where you want to be and has huge experience within the area you’re trying to develop and grow. Family and friends won’t always have the best advice and that’s okay, it’s just a matter of recognizing this and leveraging off your mentor instead.

Taking property advice from your mortgage broker

What is a Mortgage Broker’s job? To provide finance for a borrower. This doesn’t include providing information on where to invest or what to invest in.

Some mortgage brokers will have a relationship with a developer and try and push their stock as they may receive a commission, typically for new, off the plan builds directly from a developer. Be very careful and only obtain information around financing from your mortgage broker.

Buy with emotion/mix property investment with owner occupied property 

When investing in property this must be treated as a business, based purely around data, research, due diligence and the numbers to meet your long-term goals. You shouldn’t decide against purchasing a property just because you would not live there yourself or because it has pink and purple polka dot carpets.

When I purchase for myself personally, I like to not physically inspect any properties I purchase until after; this helps allow my emotions to completely stay away from a deal and focus on the numbers.

Your owner-occupied property is not your investment property, don’t mix the two. They have two completely different outcomes, one is where you want to create a home and safe place, the other is to purchase to help you build long term wealth with more freedom and choices in your future.

Take advice from a selling agent 

Not all selling agents understand fundamentals when it comes to long term property performance, don’t get me wrong there are absolutely agents out there that do! Remember that ultimately agents are selling a product, their stock, and it just happens to be property. Many sales agents don’t invest in property.

Sales agents use methods to motivate vendors to sell, prime example is ‘The market has performed well, you want to sell now before the drop’. Growth cycles can occur for many years, and this isn’t always accurate information.

Understanding an individual’s motivation is key to understand the information being provided.

Sell a property in the short term

I’m sure that you have heard someone in the past say, ‘I wish that I didn’t sell that property’. Property is a long-term investment, if you can hold that property for 20+ years and allow time to do it’s thing, you will reap the rewards.

This is where positive cashflow properties are powerful as this allows a property to pay for itself and not burden you financially. Purchase property, hold it long term and let time do it’s thing.

Build a team of specialist around you

You have to spend money to make money. Building a solid team around you is key, this ensures you can leverage each individual’s skills and expertise. Don’t make shortcuts to save a dollar managing the property yourself or buying a property by yourself with no system in place and buying a dud.

Leverage professionals around you, a Buyer’s Agent will ensure you select a property that will perform long term and a high-quality Property Manager will keep the property in check and automate your expenses for the property. Pest and Building Inspector will inspect the property and complete due diligence to reduce risk of something happening to the property in the future.

Not completing data, research or due diligence and having a strategy!

Without a strategy you are going in blind, you then don’t know what numbers you need to generate to achieve your long-term goals. Start with your strategy, identify the property criteria, and then complete your data, research, and due diligence to ensure the property aligns with your long-term goals. The numbers are key when it comes to investing, this can only be done through strategy, data, research, and due diligence.

If you have made some of these mistakes in the past don’t let it get to you. We all make mistakes, it’s part of life. It’s important to learn from these mistakes and not repeat them in the future. If you have any questions around today’s blog please email info@tayloredpropertywealth.com.au.

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