Achieving Financial Freedom!

Monthly Archives: September 2016

Photo Board Notice

As you already know, our goal here at Preston Coe & Ring is to help you achieve the following: – “Living for today, saving for tomorrow and protecting in between” We would like to create a photo board for our office with various photos of our team and of our clients “living for today”, in celebration of the things that we all love to do and have achieved so far on this journey we are experiencing together. Examples of photos that could be included are:- 1. You and/or your family on a favourite holiday 2. Things that you like to do most to relax (sit on the beach/read a good book) 3. Recreation activities (favourite sport to play or attend) 4. Awesome photos you have taken yourself with landscapes or on adventures Please note that your privacy will be protected and no personal information will be attached to the photo. If you would like further information or would like to contribute, please let us know. We look forward to hearing from you soon.

Property Types to Avoid

By Renee Kiley of Property Way There are so many different types of properties that selecting one can be very confusing, and mixed messages from arm chair experts can make it all the more difficult. There are however some specific property types I suggest you avoid altogether as they are simply a very bad choice or are very high risk investments. My advice is not only based on my personal opinion, Australia’s biggest Banks also have concerns with the majority of the below property types and will restrict lending levels on them. I always say that if the Banks are wary and don’t want to lend on a particular property type you should steer clear as they have access to far more property and mortgage related data than we do! One of the key things to remember is, just because a property has good cash flow it doesn’t mean it’s a good investment, the whole point of investing is to achieve capital growth, cash flow just allows you to hold onto the property whilst it grows in value for you. Here is my list: Mining towns – Some of Australia’s most highly volatile and controversial property markets. These towns rely heavily on both investors and the mining industry and property markets can literally collapse overnight when a mine shuts or scales down. Mining towns do not have diverse economies to prop up their property markets. Examples are areas like Emerald and Roma in QLD and Port Hedland in WA. Department of Defence Housing (DHA) – Yes they seem attractive on the surface with long leases and generally no ongoing maintenance costs however they have huge management expenses, generally need to offered up for sale to defence housing to sell first instead of the open market and are only located in areas that require housing for defence personnel, which may not necessarily be the best place to invest in. Student Accommodation – Most banks have a limit on the size of a property before they will lend on it. This is about 45m2 for a one bedroom apartment. Student accommodation is often much smaller than this so bank financing is terribly difficult. Not to mention the fact that these properties only appeal to a certain (small) segment of the market, often have complex lease arrangements attached and cannot be occupied by anyone other than a student. Serviced Apartments – With these properties, an operator is engaged to look after the building and manage the property. So you are reliant on them and cannot change companies as the management rights form part of the ownership. The management fees are also very high which can dilute what often looks like great cash flow, they have an extremely limited resale market and rely on tourism and strong economic conditions to drive occupancies. Large “Off the plan” Projects – At Property Way; we generally don’t approve projects with any more than 50 apartments in the development (any more than this would require a very, very convincing reason). The majority of our projects have only up to 15 or 30 apartments. As projects get bigger, resale and capital growth prospects get worse as there are so many other similar properties in the same building that can drag values down. Not to mention that the land content (the component of the property that actually grows in value) is very low. Banks also restrict their lending in large developments for fear of over-exposing themselves in a particular building. A Property With Title Issues – This only affects a very small percentage of properties however making a mistake here can be extremely costly. Part of your solicitors role is to check the Title for the property and let you know if there are any covenants, easements, overlays or outdated title structures that could restrict you from selling or making changes to the property in the future. Some examples of this might be apartments with Company Share Title (banks will restrict their lending on these properties) or a Heritage overlay on a house which might mean you must renovate or improve the property in accordance with heritage conditions; this can add tens, sometimes hundreds of thousands of dollars to the cost of a renovation or addition to the property. You can probably see a recurring theme here, the best types of properties are those that will appeal to both an investor and an owner occupier, so don’t limit yourself to a small segment of the market by purchasing one of these property types, it’s just not worth the risk.