Author: casey

If you are reading this, then you are probably interested in purchasing a property. Whether that be a single property, or you plan to build a property portfolio. Whatever your goal, money management is a crucial part of the process, without this you will be less likely to succeed. Effectively managing your cashflow can help you save for a deposit and be accepted for a loan. It also shows the lender that you can afford to borrow money and pay it back over time. Learning how to manage your money and grow your savings is a crucial step to achieve your long-term goal of making one of the largest and most stressful purchases of your life, if you are doing this on your own and not entrusting a buyer’s agent.

I want to discuss money management with you in more detail today. I want to get you thinking, “how can I do this better?”, “how can I reach my goals sooner?”. There are always options and solutions to improve your position. They will require time, energy, focus and consistency, however you will see progress if you commit yourself. This mindset can translate into every area of your life, it all depends on you, how much you want it and how hard you’re willing to work for it!

Fixed Savings

First and foremost, you need to determine what your goals are. This goal might not be to purchase a property. You might want to save for a holiday, save for a rainy day, save for a big event like a wedding or you might want to purchase a property. Whatever your goals, I encourage you to sit down, write them out, set an amount for each goal and the date you want to achieve this goal by. This helps to keep yourself accountable, track your goals and be able to measure you results.

For example, let’s assume it’s the first of January and your goal is to save $15,000 by the 31^st of December. There are 52 weeks in a year, if we divide $15,000 by 52 weeks, that means your goal is to save $283 per week or $40 a day for one year. Now, I don’t know about you, but for me, focusing on saving $283 per week or $40 a day feels much more achievable than saving $15,000 a year! We have now set our goal and know what we need to do to achieve it. This highlights the importance of making measurable goals and having fixed savings targets. Remember that all you need to do is focus on the $283 a week or $ 40 a day and before you know it the yearly goal of $15,000 will be achieved. Remember how quickly a year can fly by!

Percentage Based Savings

Fixed savings targets are a great way to save for a short-term goal. However, when we are considering long-term savings, another method we could consider is percentage-based savings. This involves setting aside a percentage of your salary as savings consistently each time you are paid. For example, if you were currently receiving $1,000 per week in your bank account after tax, and you commit to a goal of saving 40% of this income you would be saving $400 per week. If you received a pay rise and you were now receiving $1,500 per week in your bank account after tax, saving 40% of this increased salary means you would now be saving $600 per week. This means that as your salary increases over time, so does your savings capacity!

The next challenge is to increase the percentage amount, so if you’re currently saving 20% of your income, can you increase this to 25%? If you’re saving to invest and are serious about achieving your goals, we want to get this percentage as high as possible. To put this into perspective, I have set my own personal goals and I am so focused and determined that over the last 5 years, I have been saving at least 55% of my net income. As my salary has increased, I have increased my savings capacity to 64% of my total net income to ensure I can achieve my goals and build my personal property portfolio.

Don’t get me wrong, this is not easy to do, and this can mean a lot of sacrifice at times, but it all depends on how determined and focused you are on achieving your long-term goals. Some would say I’m good with my money, others would say I’m a tight A##, I would say both statements are correct!

It’s a common occurrence when an individual gets a pay rise, and they find they aren’t saving any more money than when they were on their previous lower salary. Some find they instead increase their expenses now they have more disposable income. In some instances, they seek instant gratification, taking on personal debt or credit cards, sadly finding themselves in a worse financial position than before their pay increased. I come across many high-income earners who don’t value their money and spend it just as quickly as they earn it. Alternatively, there are many investors out there who are on modest salaries, however, understand the importance of effective money management focusing on a maintaining a cash surplus. You must understand that money is a vehicle whether you like it or not, and that you need to ensure you can manage this vehicle effectively to reach your goals.

Summary

The most effective savings method will ultimately depend on your goals and the timeframe for achieving these goals. The method that works most effectively for one person might not work most effectively for another. It is important to figure out what works most effectively for YOU and what will help YOU to achieve YOUR goals sooner.

This is the first blog of a 3 part series where we discuss all things relating to your finances and improving your cash surplus. Keep an eye out for our next blog where we discuss strategies that you can implement to increase your income, followed by our last blog in the series where we discuss ways that you can look to reduce your expenses to ultimately improve your cash surplus each and every week.

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By Casey Taylor | Buyers Agent

Why invest in the Brisbane Market?

Selecting a city or market to invest in can be quite overwhelming for some. There are many factors to consider such as where to invest, what to invest in and whether you’ll make the right decision.

Today I want to discuss why we think Brisbane is going to be one of the top performing capital cities now and into the future. I’m going to list these factors and explain why we believe they will positively impact the Brisbane market.

I hope this will give you some clarity and understanding of why we feel Brisbane is a strong market to invest in.

At Taylored Property Wealth we strongly believe Brisbane is currently a strong market to invest in and has huge potential for performance now and into the future. We help clients invest into the Brisbane market and put our money where our mouth is and invest in Brisbane personally ourselves. We have experienced strong performance in the Brisbane market in recent times and believe there will be strong performance in the years to come.

Need help buying in Brisbane?  CLICK HERE ➡️ Buyers Agent Brisbane

Affordability

Brisbane over the first half of the 18-year real estate cycle hasn’t performed as well as Sydney or Melbourne. Based on Phil Anderson’s predictions, we have just experienced the mid-cycle slow down and will approach the top of the cycle approximately 2026/2027. Brisbane, based on historical data, performs better in the second half of the 18-year real estate cycle. This is due to Brisbane being far more affordable than other major capitals cities at this point in the cycle, as Sydney and Melbourne historically perform better in the first half of the cycle.

As per Core Logic’s data, noted below are the average median dwelling values for Sydney, Melbourne, and Brisbane as of October 2021. This median figure shows the distinct difference between the three capital cities in discussion.

Sydney: $1,056,093

Melbourne: $775,342

Brisbane: $625,291

People start to identify that there are more affordable areas to live, and this is where we see the migration to these more affordable lifestyles – Brisbane being one of these locations. Affordability then ties in closely with internal migration, internal migration and an increasing population generates more demand, more demand creates higher sales activity/volumes, which ultimately increases price growth.

Interstate Migration

Typically, within this second half of the 18-year property cycle both Sydney and Melbourne become extremely expensive in relation to some of the other capital cities such as Brisbane, Adelaide, and Perth. This means that people within the more expensive capital cities start to identify the opportunity to move to these capital cities with a more affordable lifestyle.

Brisbane is currently experiencing large interstate migration numbers. According to the Australian Bureau of Statics as at 31 of March 2021, Queensland had experienced an annual population change of 43,900 people. Victoria had seen a population decrease of 42,900 and NSW saw an increase of 11,700. Further, Brisbane has lower population density compared to other major capital cities. Queensland has also been far less effected by the current Covid-19 pandemic.

We believe people these factors will entice people from both Sydney and Melbourne to migrate north.

Infrastructure Spending

Sydney and Melbourne saw massive infrastructure spending between the years of 2013 and 2017. During this time, we saw the Sydney and Melbourne markets achieving strong capital growth, whilst Brisbane and Adelaide were sitting flat, and the Perth and Darwin markets were going backwards.

Infrastructure spending is an important consideration as this creates more jobs and it increases the desirability of an area. People want to live close to these areas and take advantage of the new infrastructure and facilities. It can also increase population growth and interstate migration as more people move to these areas due to the new jobs being created.

Brisbane is now starting to see more infrastructure spending. The biggest infrastructure spending projects that are currently underway or about to commence are as follows:

• Queens Wharf – $3 billion
• Brisbane Airport’s new runway – $2.1 billion
• Brisbane Live – $2.1 billion
• Eagle Street Pier – $2.1 billion
• Cross River rail – $5.4 billion
• Fortitude Valley commercial – $2.5 billion
• Coomera Connector – $2 billion
• Albion Exchange $750 million
• Toowong Town Centre – $450 million
• Brisbane to Gold Coast fast rail – $22 million
• Crestmead Logistics Estate – $1.5 billion
• Brisbane Metro – $1.2 billion

Vacancy Rates

Vacancy rates is a metric used to determine how many properties in a suburb or area are currently vacant without a tenant vs the total number of properties for rent in a suburb or area.

When vacancy rates are low and trending lower, this puts pressure on demand for rentals and what follows is an increase to rental yields which makes it less affordable for renters. Once rentals become less affordable, more people decide to purchase property which creates larger sales activity/volume, and this creates a higher demand and increases property prices.

At Taylored Property Wealth, the vacancy rates in all suburbs across Brisbane that we invest in are currently below 1%. This means for every 100 properties in a suburb there is less than one property vacant. The current average for Brisbane in September 2021 as per SQM research is 1.4%, compared to Sydney sitting at 2.7% and Melbourne sitting at 3.5%.

When looking at Vacancy rates always remember low vacancy rates lead to increased rental yields due to high demand, this causes rentals to become less affordable, renters then become purchasers and generate increased sales activity/volume and this is a forward indicator for capital growth.

Average Income

According to the ABS, as at May 2021 the average weekly salary of Queensland was $1,646.70, Victoria was $1,750.70 and New South Wales was $1,764.30. In the past, NSW and Victoria have had a higher average income however, these margins have narrowed, and the average is now approximately $100 difference.

This is important to note because Brisbane’s median price is lower than Sydney and Melbourne, yet the average income is still at $1,646.70. This mean there is far more room left in terms of serviceability and shows that Brisbane has far more opportunity and growth left before reaching it’s borrowing capacity ceiling. We know this because Sydney and Melbourne are great examples where the income levels have allowed prices to reach far higher then where Brisbane is sitting currently, yet the difference in the average weekly income is only approx. $100 difference.

This means that due to the affordability of Brisbane that we have touched on above, individuals aren’t using their maximum borrowing capacity to purchase properties in Brisbane, meaning that the recent APRA changes to the serviceability rate will not affect prices in Brisbane as dramatically if at all as other potential areas with higher median values and the borrowing capacity of these individuals can afford to pay more then where prices currently sit.

2032 Olympics

It is extremely exciting that Brisbane will be hosting the 2032 Olympics. This is a huge opportunity for the city of Brisbane and means there will be strong infrastructure spending moving forward. We know that more infrastructure means more jobs and as discussed before, we know this can positively impact population growth, further creating more jobs and increasing average income.

This is also a huge opportunity for Brisbane to showcase their wonderful city to the world. This can catapult the exposure and awareness of the city and will attract more people from overseas which will subsequently increase economic strength. This could also see more foreign investors deciding to invest in Brisbane over other capital cities, identifying the large opportunity with affordable property prices. Keeping in mind that this would require foreign investment policy to loosen for this to occur.

Strong Rental Yields

Rental yields are another important factor to consider. Brisbane, as of September 2021 as per SQM research, has a rental yield across all houses of 3.8%, in comparison to Sydney sitting at 2.2% across all houses and Melbourne sitting at 2.5% across all houses. It’s important to note this isn’t inclusive of the unit/apartment sector as we invest in established areas buying houses on large pieces of land, as we know that land appreciates, opposed to the building which is the depreciating portion of the asset.

When investing, you can focus on buying blue chip areas where rental yields can be traditionally lower however the capital gains are larger, or you can focus on regional areas or outer ring suburbs where yields are traditionally higher and capital gains may not be as high as the premium locations.

At Taylored Property Wealth we typically like to focus on a good balance of both capital gains and strong rental yields, as this allows you to build your wealth through capital gains and income due to strong yields. Creating wealth this way allows you to have more freedom and choices now and can also assist you with purchasing further properties.

At Taylored Property Wealth the average rental yields of the suburbs we focus on currently range from 4.5% up to 6%, attracting strong rental yields in conjunction with strong capital growth. It’s a massive opportunity currently to secure a strong rental yield! This is where engaging a knowledgeable buyers agent is beneficial and key to increasing your chances of success. At Taylored Property Wealth, we perform extensive due diligence on every property to ensure we only put forth quality property investments specific to your property criteria and goals.

Need help buying in Brisbane?  CLICK HERE ➡️ Buyers Agent Brisbane

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Bill Gates has a powerful saying ‘Most people overestimate what they can do in one year and underestimate what they can do in ten years’. I remind myself of this regularly and this shows the importance and power of implementing daily habits to achieve your goals.

Goal setting, for myself personally, has been something I have done since a young age. Whilst completing my Certificate IV in Property Services back in 2012 my Tafe teacher highlighted just how important it is to write your goals down. This piece of advice has helped me throughout the years to strive towards my goals, be reminded of them each day, and ensure I achieve them, and for that I am extremely grateful. I always ensure I implement the SMART goal model when creating my goals and then I combine this with breaking it down into daily habits. This allows you to focus on the process, not the outcome. If you can implement the process successfully each day, before you know it, the overall outcome of achieving that goal will become a reality.

Today I want to discuss some ideas that you can implement in your lives to increase your chances of achieving your goals and sticking to them! I want to help make your goals become your achievements!

SMART Goals

When we create a goal we want to ensure it is a ‘smart’ goal, which is key to ensure success with your goals. We need to ensure the goal is specific, what exactly is it that you are wanting to achieve? We need to ensure it is measurable, is this an amount or a certain result? We need to ensure this is a goal you can realistically achieve. If this isn’t achievable you are going to become overwhelmed and disappointed if you fall short of your goal. We need to ensure this goal is relevant, is it getting me towards my overall objective? Or does this goal align with my values? Last, but not least, it needs to be timely, when do you want to achieve this goal by? If you don’t have a date that you wish to achieve this by, it won’t become a priority and you’ll find time has gone by and the goal has still not been achieved.

S-Specific

M-Measurable

A-Achievable

R-Relevant

T-Timely

An example of a SMART goal is we want to save $15,000 from the 1/1/2022 to the 31/12/2022. We have been specific with what the goal is – saving $15,000. We can measure this goal at the end of the year or can even measure this throughout the year to identify if we are on target. The goal is achievable, as it means that we only need to focus on saving $288 a week or $42 a day. The goal is relevant as this is ensuring we save towards our house deposit so we can leverage into purchasing an asset. This is timely as it will be achieved within the coming year, knowing when this should be reached allows us to plan for the next goal or step.

Write your goals down

At the end of each year you should allow yourself the opportunity to reflect on your goals and recognise the achievements and accomplishments for the current year. This also allows you to plan your goals for the year ahead. This may mean that some goals weren’t achieved, and they are carried on from the year before, or you may set yourself new goals building off the achievements from the year before. Remember if you don’t achieve all your goals this is okay, you can’t achieve every single goal every single year. I had purchasing an investment property as a goal for three years in a row before it became a reality, I had a friend even call me out saying this had been a goal for three years as if it was a bad thing. Looking at this every day kept me motivated to keep moving towards that goal until it was achieved.

I have a white board and record my goals on a column on the left and have a column on the right for each time that goal is converted into an accomplishment. Once the goal is achieved, I ticked the goal off and record it as an achievement in the right-hand side column. I have this somewhere where I can see it every single day. If you are having a rough day or you’re unmotivated or energy level is low, seeing this might just give you that little boost you need to keep on working towards those goals. This might sound silly but every small habit to increase your chances of success is important.

Be consistent and break your goals down to daily habits

 When it comes to setting big goals, they can sometimes seem daunting and you may wonder, how am I going to achieve this goal? However, once you can break this goal down into a daily habit it is far easier to comprehend, implement and grasp. Therefore, it is important to ensure you understand the daily habits you need to implement to achieve your bigger overall goals. Remember with any big goal you must be consistent and focus on your daily habits, this is what is going to help you achieve these goals and set you up for success.

Let’s use the same example as before, our goal being to save $15,000 for the year. Now we know that $15,000 saved in one year is $288 per week or $42 a day. $42 a day doesn’t seem anywhere near as daunting as $15,000 a year. Now to ensure that we hit that target of $288 per week, we set up an automatic transfer to our savings account the day after we get paid each week or $576 per fortnight if we are paid fortnightly. We also ensure our savings account cannot be touched unless we go into the branch, you can request this access at your financial institution. This is known as view only access, meaning you can view the balance however not access funds. If your financial institution does not allow this, you may hold the savings account with a financial institution that does. Now that we have our savings structure and transfer set up, we can focus daily on ensuring that we stick to our daily budget, so we don’t need to access the funds in our savings account. This may mean only eating out once per week, or only buying a coffee once per week.

Never underestimate the power of your daily habits! They will be the key to your goals becoming achievements!

Accountability

 When you set goals that you want to achieve you must be accountable. Accountable for your actions, your daily habits and your focus and energy. Throughout the process there will be times where your motivation or energy is low, and you may not be achieving your goals in line with where you wanted them to be. This is where it is important to reflect on how you have been performing. This will allow you to check in with yourself and be accountable if you have let yourself slip a little. Acknowledge this is the case, don’t make excuses as to why and take responsibility. Then make sure you reset and refocus so you can continue on with achieving your goals.

This might mean that you sit down once a week, fortnight or month and reflect on that period. Identify what you have been doing well and identify areas that you may not be happy with and create some solutions to how you are going to do this better moving forward to ensure that you stay on track and achieve your goals. Remember, no one else wants to see you achieve your goals more than you do, which means you must take accountability and responsibility!

I hope the information you have read through today has provided you with some insight and value into helping you move towards achieving your goals and turning them into accomplishments.

If you have any questions or you want to share some of your big goals and achievements, please reach out to info@tayloredpropertywealth.com.au.

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By Casey Taylor | Buyers Agent

To invest in property and set yourself up for success I believe that there are 5 main pillars that you need to implement to be successful and build wealth. So many people are looking at short cuts, or get their emotions involved in the process of purchasing investment properties.

You need to remember that building a property portfolio isn’t easy, it involves patience, discipline, sacrifice, strong cash management skills, having a clear strategy and treating it like a business, not acting on emotion. The 5 pillars I discuss today will help educate you, you will be able to focus on improving each of these pillars and setting yourself up for the highest chance of success. Let’s get into it and look at the 5 pillars.

Mindset

If you look at any successful person, whether it be in business, a professional athlete or someone who is extremely skilled in a certain area, they have a mindset that is extremely strong. This goes the same for investing and building wealth. You must be focused, disciplined, determined, hardworking, patient, obsessed and understand that the small daily habits that you are making are contributing to your overall goal. You must get obsessed with the daily habits and make sure you complete these, no questions asked, no excuses.

Throughout this journey you are going to have friends, family and other people in your life that are going to be negative and tell you that what you are doing isn’t the right thing or try and bring you down for one reason or another. This could be out of fear, jealousy or simply a lack of knowledge and understanding. You need to really be cognitive of who you listen to, if you listen to the wrong people this can stop you from reaching your goals, if you listen to the right people this can help empower you and help you grow and achieve your goals sooner.

Remember that these are your goals, and this may mean that your friends and family won’t fully understand them, don’t listen to them, and stay true to yourself and what you want. Why take advice or insights from a family member or friend that has never invested in property. This is no disrespect to them at all, but you simply can’t take advice from someone who has no experience or education on property investing.

When it comes to investing, I want to listen to people who have laid down the foundation and done it successfully themselves. I want to listen to people who have been doing it longer than I have and have built more wealth than me. Why? Because I’m going to educate myself and gain information from their experiences and they are going to understand why I have these goals. Leveraging on other’s skills, experiences, and mistakes to help you get towards your goals sooner. This leads us onto our next pillar, leverage.

Leverage

We must understand that we can’t know everything and be the absolute best at everything. This may mean that we need to call on other people’s skills, knowledge, and experiences to help us on our journey. This will be in the form of mentors and building a strong team around us. We refer to this as our A Team.

We want to have mentors in our life, whether that be life mentors or mentors specific to business or property investment. You want to actively seek out people who align with you, your goals, and your values. This will help you to gain the knowledge, skills, experiences, and confidence from speaking with them and being in their presence. This will allow you to always level up and not remain stagnate. No matter what level you are at you can always learn something new and always grow.

We also want to build a strong team of advisors around us. The team of advisors that we refer to as our A Team includes an Accountant, a Property Manager, a Solicitor, a Mortgage Broker, a Pest and Building Inspector and a Quantity Surveyor. This allows us to manage the portfolio better, giving us more time back in our lives, it protects us and helps us complete our due diligence before securing an investment, it allows us to be structured in the most effective way for our circumstances to leverage into the next property.

There is one more important factor to leverage. That is leveraging other people’s money (OPM). This is key to being able to build wealth. You need to get comfortable with debt, I don’t mean personal debt and credit cards. I’m talking about good debt, debt that you obtain to purchase assets that are going to provide you with income and increase in value over time. Therefore, if you had $100,000 instead of a 10% return on the $100,000 which would be $10,000. You could leverage money from the banks and buy an asset of $400,000 with a 10% return which is then $40,000. You have now been able to generate $30,000 more by leveraging other people’s money. The percentage on your return is the same however because you have leveraged other people’s money you have been able to purchase a larger asset base. Leveraging other people money is extremely powerful and will get you to your long-term goals sooner.

Treat it like a business with zero emotion

If you want to build a large portfolio, one of the pillars that you are going to need to implement to assist with becoming successful with achieving your goals is treating it as a business. This means purchasing property interstate and around the country not just buying a couple of kilometers from home so you can keep an eye on it and make sure that it doesn’t run away. This is the exact reason it is important you have a high-quality property manager in place, you pay them to keep the property in order and you can spend more time living your life and focusing on the things you would like to be doing. We entrust high quality Property Managers to manage our properties and we have even negotiated a discount on what we pay them which we pass on to our clients. Leveraging a Buyer’s Agent is worth it’s weight in gold.

Treating it like a business also means to ensure you don’t buy somewhere close by so that you can take advantage and save money on stamp duty because you are a first home buyer. Saving $15,000 sounds great until you purchase the wrong asset type and in 15-20 years’ time your asset has underperformed by $200,000 or $300,000 because you were too focused on the short-term thinking and saving $15,000 instead of focusing your attention on the market that is going to perform strongly over the long-term. Remember you must think long-term. What is going to perform over the next 15-25 years? Not how can I save myself money on the way in.

When you have selected your market/suburb and you have found a property within that area you need to then remove your emotions. Remember if you are purchasing an investment property, you won’t be living there. If there is a pink door don’t let this be the decision not to purchase the property or if the finishings are not what you would like to see in the house you live in.

It is always a matter of keeping it simple, sticking to the fundamentals and focusing on the numbers. It is all a game of numbers, remember.

Cash Management

We must grasp the fact that we need to have strong cash management skills to build a large portfolio. If you can’t get your head around managing your finances, then you will struggle to build a large amount of wealth. If you can’t manage $10,000 then you will not be able to successfully manage $100,000. This sounds harsh, but this is the truth.

To purchase your first property will always be the most challenging. Unless you have inherited a large sum of money you will need to have your cash management skills in order and have a cash surplus consistently over time to save up a large enough deposit. You must have the mindset that this may take you multiple years to save up. This means consistent daily habits to ensure you have a cash surplus long term.

Over time you will then be able to use equity to leverage into the next property purchase, if you build up the consistent habit of saving money you will be able to leverage into a new property far sooner, not to mention ensuring that you have cash buffers in place if you lose your job or a large expense comes up within the property.

We must remember that cash is an asset, you can leave it in a term deposit at the bank and receive income via interest. Interest rates are so minimal that cash is not currently a strong asset, however an asset, nonetheless. Remember that cash in the bank will not help you build wealth, especially as inflation over time will devalue the cash you have in your account. We as investors need to use that cash asset as a vehicle to leverage into a stronger asset class. That stronger asset class is property for us property investors.

Strategy

To build a property portfolio you need to create clear goals, and this involves creating a strategy. This strategy will be the blueprint that you will stick to each time that you purchase a property. Over time you may grow your knowledge and skills and this strategy may change, you may pivot and adapt to the market and how your personal circumstances change. It is crucial to always ensure you purchase a property with a clear strategy. If you don’t, you’ll be one of the statistics where someone has purchased a property and bought in a small regional town, where the property hasn’t performed or increased in value.

Before you even begin looking at individual properties you want to look at cities that are going to be the next high performers and using timing to your advantage. This might mean investing in a city that has not performed well over recent years, don’t get sucked in by recency bias. You might purchase a property and pay for someone else’s profits! Brisbane is the example of this now, it has sat flat for the last 10 years however is really finding it’s rhythm currently and performing well.

You want to focus on capital cities, they have the population growth, infrastructure spending, higher incomes just to name a few. Once you identify the capital city you want to focus down on the suburbs. You want to look at the vacancy rates, average vendor discount, last 12 months growth and last 5- and 10-years growth. What is the median sale price, what is the median rental price and what is the rental yield? What is the average income and industry types of the suburbs? So many factors to analyze and consider, again leveraging a high-quality Buyers Agent can assist with this.

Once you identify the individual suburb you want to invest in, you then want to know that suburb like the suburb you live in. At Taylored Property Wealth we are experts in the areas we invest. You want to leverage off your local property managers as well as complete sales data mapping of the last 12 months to identify the lower pockets and higher pockets within a suburb or area. This way you can identify properties under market value to make money on the way in, in conjunction with the growth that will be achieved in the future.

You then want to identify the property criteria that you want to target. Low set or high set property. Three-bedroom 1 bathroom or four-bedroom 2 bathroom.  You want to purchase an existing property, not situated on any main roads, not directly next to any commercial property, major parks or sporting complexes and not directly next to any public housing or in high concentrated areas of public housing. Once the property is then found, you would then complete a cashflow analysis and complete several different reports on the property such as a flood report, noise category report and report on what is under the ground on your block of land. You would receive a rental appraisal and a property inspection checklist as well as analyze comparable sales in the area to understand what the property is truly worth and not pay over fair market value. If it does go over market value, remember that we are not tied emotionally to the property, and we simply move on knowing that another property will become available.

This is how specific your strategy needs to be when purchasing property. Following a strategy in this much depth is going to increase your chances of a higher performing asset and allow you to leverage into the next property sooner.

If you have any questions with the information you have read through,  please reach out using the contact form on our website tayloredpropertywealth.com.au  or email us at info@tayloredpropertywealth.com.au.

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The main reasons you should invest in Australian residential property!

In 2021 there are so many different types of assets classes to invest in. The most common that you hear about are stocks or shares, commercial property, residential property and cryptocurrency. Under each individual asset class there is then a multitude of different types of assets within each asset class that you can invest into.

When investing and looking to set up your foundation to build wealth, it’s effective to dial in and focus on one asset class and get it right. Then once you have built up substantial wealth in one asset class you can then look to diversify and dabble into other asset classes. This is completely your choice as to what asset type you decide on.

As a Buyer’s Agent for Residential Australian property, we truly believe that residential Australian property is a great asset class to invest in to build your foundational wealth. Many millionaires today built their foundational wealth through property. Today I want to discuss some of the main reasons why we invest in Residential Australian property. 

Residential Property is a necessity

Property, and more specifically land, has been a desired asset class for many centuries. While human beings are still on earth, property is going to be a necessary asset class, as everyone needs somewhere to live. If you focus on large capital cities, where most of the population will move from interstate migration or naturally grow over time in addition to large infrastructure spending, this will result in strong demand due to the increased population met with the same level of supply for existing property. Buying in existing established areas ensures that over time the same level of supply occurs, however with the increase in population or demand results in scarcity, and scarcity ultimately results in growth. We’ll discuss existing property vs new property in a future blog in a huge amount of depth which will be extremely valuable.

Leverage other people’s money

Banks identify property as a less risky asset class due to this being less volatile. We know this because they are happy to lend money sometimes up to 100% of the residential property price, in most cases now, the highest they are willing to loan is 95% also known as the ‘loan to valuation ratio’ or LVR. The loan to valuation ratio is the loan amount in comparison to the valuation amount of the property. For example, a $500,000 property value with a loan of $400,000, would have a loan to valuation ratio of 80%.

This means we can save up 5% or 10% plus the purchasing costs, and then use other people’s money (the banks) to purchase an asset class that we would not have been able to afford otherwise. This then means that we are leveraging into a larger asset base and that our returns as a $ amount will be more significant, and we can grow our wealth at a faster rate. 10% of $500,000 is going to have a higher return then 10% of $100,000.

Less volatile and less risky asset class

Property is one of the less volatile asset classes unlike that of stocks/shares/crypto. This is because unlike stocks/shares/crypto they can’t be sold off extremely quickly to get rid of them. If the confidence in the economy or property market goes backwards all property owners can’t rush out and sell their property straight away. You must reach out and contact a selling agent, they must appraise the property, put a plan in place for the marketing of the property, list the property and hold open houses to sell the property. This process typically takes a couple of months. Due to this it helps the property asset class as it becomes less volatile and solidifies that it is less risky. 

Manufacturing of Equity

If you are a savvy active property investor you may be able to complete a strong due diligence and feasibility on a property. This would be to determine if you can complete a cosmetic renovation or extend and add additional bedrooms or bathrooms. If you do this correctly for every $1 you invest, you want to be able to make $2 or $3 back. Therefore, instead of waiting around for prices to move up you are taking things into your own hands to build equity in the property sooner. Not to mention this will also help increase the rental income you would receive. This isn’t for everyone, if you’re just starting out you may not wish to do this, however, in the future may be something you look to consider. 

Australian Economy depends on property

In Australia our economy influences the performance of the property market. When interest rates are lowered, we find more consumers have increased borrowing capacity and go out and spend more on property, increasing property prices. You will also find that during the current Covid-19 pandemic, there is a huge amount of Government stimulus to keep the economy ticking along, this stimulus will always end up back in assets and more specifically land prices. We also have APRA the Australian Prudential Regulation Authority. They are an independent statutory authority that supervises institutions across banking, insurance and superannuation and promotes financial system stability in Australia. An example of this is when APRA stepped in back in 2014 and put restrictions on the interest only lending. This was in response to an environment of heightened risk, a reflection of heightened house prices, high and rising household indebtedness, subdued household income growth, low interest rates and strong competitive pressures. 

I trust that you have gained some value from reading this blog today. I hope that this gives you a better understanding of property as an asset class. If you have any questions or want to have a discussion around the information provided, please reach out at info@tayloredpropertywealth.com.au.

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