Enhance Your Real Estate Knowledge With
These Ins and Outs About
Real Estate Investing
Property investing outperforms the national economy
The economy isn’t so crash hot these days; nonetheless things haven’t been going too badly for a lot of real estate investors. If you are going to invest anywhere, start investing in real estate. If you want to be successful in the property investing niche keep on reading to find out how.
One thing to keep an eye for is strange room layouts when considering investing in any given property. Even though you personally may find it attractive for whatever reason, you have to think about resale value and what other people are going to think about it. A lot of people don’t like unusual looking properties. The reselling of these ‘unique’ properties can be extremely tough. They can take months if not years to sell if you end up owning one unless you get lucky with the right buyer coming along, which would be the exception to the rule.
The longer view is the better view
When it comes to investing in property you should think long term. Although you’ll hear stories about a few investors who seem to be able to make quick profits by buying cheaply and then being able to flip properties with weeks or just a few months, in the end you best bet is going to be to take the longer view. The more secure route is to seek out safe properties in good locations that have potential for growth and that will give you an immediate healthy monthly rental return.
You’ve heard it many times before – location – location – location is the most important factor when it comes to purchasing a property for wealth building. Things like the condition of the property and many other factors can always be fixed. Areas that are on the decline should be avoided at all costs. Never rush in, it’s always smart to spend extra time on sussing any area out and it’s history of values when looking to purchase a property there.
Finder’s keepers – loser’s weepers
Keep in mind that once you buy a property it’s yours to keep and the seller and the agent are long gone. In other words, don’t expect that which you don’t inspect. Even if it’s a new property don’t take anyone else’s word for it, get it professionally inspected by a licensed building inspector. Many defects in buildings are not always immediately apparent. Nonetheless, any serious issues can be uncovered through the services of a qualified building inspector. If you find issues and they’re not of a too serious a nature you can then use this information as a great negotiating tool for reducing the price.
The value of any property you purchase is not going to shoot up straight away, so don’t automatically think that. That would be a dangerous assumption in any property market. Rather, you should seek out properties that are going to give you an immediate cash flow boost through high rental yields and deductions that are going to reduce your taxes. Any future capital gains will then become an added bonus.
If you can’t beat them, join them
Follow industry blogs and when the opportunity arises join those groups that are aimed at investors. You will gain valuable information in those sorts of places. You might even be able to strike up a more user friendly type of conversation in that atmosphere.
Carefully assess the potential for future increased value returns on any type of investment property you are seeking to purchase. For example, a property located on the waterfront or near water might have the potential for higher future returns. Seek out and analyse as much meaningful information as possible to see what kind of future price projections are being forecasted to get a better idea whether it’s going to be worth the punt.
Are you really a Reno King?
Fixer uppers can be cheap and enticing, but be sure you know what you’re doing when it comes to renovations, because it’s really easy for the initial budget to get away from you. Also, after you’ve spent your renovation budget will it really increase the value to where you can make a decent profit? If the property only needs a cosmetic makeover you might be onto a good thing. Nonetheless if you run into major structural issues these can be extremely expensive to rectify. In other words, it may be better to pass, because you probably won’t end up getting a decent return on your investment.
Before you dive into any specific neighbourhood carefully check in advance the percentage of rental properties that are there. Buyers who want to raise a family are usually wary of moving into precincts of that nature. The value of homes in neighbourhoods with a high percentage of rental properties will generally lag behind when it comes to future capital growth.
Emotional purchases can be very expensive
Think with your head and not your heart when it comes to real estate investing. When it comes to investing your money try to separate what you would do when buying a home for yourself from what a professional investor would do. The bottom line is you need to stick with what’s going to make you money, not what makes you feel good. Going in you need to have a plan that compares how much you need to invest against what you are going to get back in the way rental income or what you had to spend to improve the property versus the final sales price.
Although some markets may have reached their peak and are now slowing down it doesn’t mean there are not other regions that could contain excellent opportunities. Experienced investors with successful track records can usually demonstrate that they always do advance detailed research before making a commitment to any one purchase. There’s no reason why you can’t also be very good at property investing if you take the above advice to heart and follow it religiously.
Australia’s Largest Lenders Decided To Charge More From Real Estate Investors And Profited $2.5 Billion
Home Owners aren’t off the Hook Either
Australia’s largest lenders have made an additional $2.5 billion simply from charging more for investors for their loans as compared to owner-occupiers. Financial institutions and banks are also keeping up with hammering both groups of consumers with hiking interest rates should they fail to look around for better deals.
Recent analysis provided by RateCity, a financial comparison website, shows that since the beginning of 2015, investors have seen not one but two distinct rate hikes that were definitively out of cycle. On the other hand, owner-occupiers only saw one such rate hike that was clearly out of cycle.
As a result, investors are spending more for their loans. Lenders to investors are now making more than they might have had they simply kept their rates in alignment with the Reserve Bank of Australia.
This is How Much Each Bank Made
RateCity was able to estimate the specific sums that particular institutions made starting from the beginning of 2015, and they did this based on the interest rate changes of the banks as well as APRA home loan figures. The data indicates that Westpac saw an additional $750 million, while Commonwealth Bank netted an extra $740 million. $570 million fell into the hands of National Australia Bank, while $440 million wound up in the lap of Australia and New Zealand Banking Group.
The data and insights director of RateCity, Peter Arnold, has gone on record as to say that borrowers ought to be shrewd so they can find great deals on interest rates. He warns that investors can continue to pay more than owner-occupiers, but notes that a few lenders don’t charge investors as much as others. He advises a minimum of 20 percent equity in either loan case, so that a rate less than 4 percent can be had.
The Banks Reckoned they Could Afford it
Australian Finance Group’s general manager for sales and operations, Mark Hewitt, has pointed out that investor loan market rates are not as sensitive to pricing given that many investment costs can be written off as tax deductions.
Consider a 30-year home loan totaling $300,000. At the time of writing, owner-occupiers were facing an average rate of 5.27 percent, whereas investors were closing in averages around 5.51 percentage points. In practical terms regarding monthly repayments, that meant investors were paying $45 more, with $1705 monthly obligations instead of the $1660 owner-occupiers were facing.
Don’t Despair – Shop Around
Mortgage Choice’s head of corporate affairs, Jessica Darnbrough, claims that even though investors are getting hammered with higher interest rates throughout the marketplace that deals are still very low. She pointed out loans that clocked in at 3.7 percent for owner-occupiers and 3.9 percent for investors.
About About Dave Fleming
Dave is enthusiastic and fascinated by the digital and social media worlds. He is passionate and enjoys entrepreneurial pursuits, wealth creation financial strategies, health, fitness as well as cooking. Dave is the webmaster at www.mastermortgagebrokersydney.com.au, which is an information website pertaining to loans. He has a deep commitment towards writing about and helping people understand the basics of how the financial world works.