Bad Credit home loans

Selling Your Home? Five Things that could Decrease the Value

If you are thinking of selling your home somewhere down the road, there are a couple of things that the experts suggest that you NOT do because it could actually decrease the value of your home and make it less appealing to potential home buyers.

I wanted to share some of them with you.

  1. Bold Paint Colours – When buyers view your home, bold colours may stick out like a sore thumb and they may look at it as an extra expense to have the walls repainted. If you decide to use a bolder colour, it’s recommended that you use it on an accent wall with lighter shades.

 

  1. Over-Renovated Kitchens – It’s one of the most important rooms in your home. There is a point where it can be overly done and doesn’t fit with the rest of your home.  It’s suggested that you don’t go overboard—renovate so it matches the style and design of the rest of your home.

 

  1. Landscaping – It’s the first impression that makes them want to walk in the door. Get rid of overgrown shrubs and plant new ones.  If you have weeds growing in your lawn, apply a good weed killer.  Fertilise the grass to make it look greener.  Get rid of junk and toys in both the back and front yards.

 

  1. Unfinished Projects – You may be doing them yourself or have hired a contractor who has not yet finished an improvement project. Make sure it’s complete before listing your home for sale. Buyers may view it as costing them money or may not be able to imagine the finished project.

 

  1. Wasted Space – Do you have a spare bedroom that has turned into a storage area? Or a family room or office that is now an exercise area?  Potential buyers want to visualise how every square metre can be used—especially if home prices in your area are somewhat tied to the size of your home.

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Low Doc Loans – What Lenders Look For

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Low Doc Loans are an ideal lending solution for people who are self-employed and struggling to secure traditional finance. If you are in the market for a Low Doc Loan, there are several key criteria that lenders look at when assessing your application for approval.

Below is a brief list of these key criteria.

Deposit

As a general rule a minimum 20 per cent deposit is required to secure a low doc loan for residential purposes.  However at Sherlock we have options for low doc loans up to 85% even 90%  – meaning the minimum required would reduce to a 15% or 10% deposit.

Self-employed history

Your ABN is a key component that lenders look at in determining how long you have been in self-employment. Normally a minimum 12-month ABN is required, however the longer you have been self-employed the more agreeable the lender will be.

Assets

If you can show that you hold significant equity in assets that you hold, lenders tend to view your low doc loan application more favourably.

Existing loan repayment history

Lenders will often ask to look at statements on other loan facilities you currently hold to ensure you have a consistent repayment history.

Maximum loan amount/exposure

Low doc home loan lenders will limit the amount of overall lending they will advance to a low doc borrower.  As a general rule this limit is $1 million.  However at Sherlock Holmes we have access to some niche low doc loans that will advance funds in excess of this minimum.

Contact the team at Sherlock Holmes Lending Solutions to find out more about low doc loans and how the options available can be tailored to your needs.

Flipping Real Estate – Calculating Costs

I know, I know – how obnoxiously American a term – ‘flipping’ real estate! However it works – and whatever we chose to call it Down Under – we still do it (and probably better than the Yanks anyway 😉 )

If you’ve been in the real estate investing business, or more specifically been flipping real estate, for more than a few days, you’ve inevitably gotten an email that reads something like this:

“Investor’s Dream. This property will go QUICK.

– Property Address: 1234 Main Street

– Asking Price: $400,000 (Add or subtract zeros!)

– After Repair Value: $500,000

– Repairs: $25,000

– Profit: $75,000

– Details: Needs paint, carpet, tile, new kitchen, update bathroom, some roof damage.

STOP! Before you read on… Take a guess at what you think the “real” profit’s going to be on this real estate investment…

If you haven’t ever gotten an email or fax broadcast like this, then rest assured, you will! I’m about to probably tick off all of the late night infomercials and pitchmen out there! Sure, I understand that when you’ve got 30 minutes (or 90 minutes, for that matter), that you’ve got to sell what’s sexy… not what’s real!

Now it’s my turn to expose the real deal on real estate investing! This goes for flipping real estate itself (i.e. properties) or simply flipping the contract (also known as assigning the contract). When you’re flipping real estate, you need to be able to calculate the “real” bottom line and if your assigning the contract, you need to know your numbers so you don’t get blacklisted by investors! This one piece of information will keep you from getting into trouble because of any “real estate bubble”!

Purchase Costs

Here goes… Have you EVER purchased and sold a piece of real estate for FREE? If you’re not sure what the answer is… It’s an emphatic NO… You are going to have costs to buy, costs to hold and costs to sell. This holds true even if you are buying a property for all cash. (Think stamp duty, titles office fees, conveyancing  fees, etc.)

If you’re not getting a mortgage, your purchase costs are obviously much lower, but nonetheless, there are costs associated with any real estate transaction. Plus, more than likely, if you’re relatively new, you’re probably not paying all cash for property anyway. You’re probably going to be using a home loan/mortgage for your initial real estate investing financing! (As a general rule I expect you would be using loans and mortgages for most if not all of your investments in real estate).

For a quick calculation, you can estimate anywhere between 3% – 5% for settlement costs to just acquire the property. That’s 3%-5% of the purchase price.

Holding Costs

How much is it going to cost you each and every day to own this piece of real estate? See, if you’re making money in real estate, you’d better believe that there are a lot of other people that are going to expect to get paid and they get paid in the form of mortgage interest, council rates, utilities (unless it is rented), property insurance, etc. Each of these is an expense each and every day that you own the property. Here’s an example… A home loan on a bread and butter type piece of real estate might run you 5%. Let’s say you got the property for $400,000. Every month, you are paying $1,666 in interest alone. Let’s say that taxes and insurance are another $200/month and then utilities at $200. Right there, the property is costing you $2066/month – or roughly $68/day. See, why it’s important to know not only your holding costs on a real estate investment, but also how long it’s going to be on the market before you can flip the property.

Selling Costs

Here’s the third part of the real estate investing puzzle. When you want to turn around and sell this piece of real estate, it’s going to cost you yet again! Are you going to use a real estate agent and pay a commission or 1.5-3.5% or even more? On $500,000, that’s anywhere from $7,500 to $17,500 chopped of the top.

If you can remember this… and apply what you’ve just learned to each and every real estate deal that you do, you’ll be safe flipping real estate in any market. You see, if it’s a hot market, you can calculate less time for holding cost. But, in a slower market, make your offer based on 6 months or 9 months of holding costs. It’s really simple mathematics! And real estate really is a numbers game…

5 House Flipping Do’s

1) Do put everything to pen and paper and plan it out carefully before you begin.

2) Do establish a budget for the entire project.

3) Do have an inspection.

4) Do know the neighbourhood and plan your flip according to the needs of the area rather than your personal tastes and needs in a home.

5) Do remember that you are in the market to make money not waste money when it comes to establishing an asking price for the property.

5 House Flipping Don’ts

1) Don’t forget to check out the neighbourhood before you buy.

2) Don’t blow your budget without just cause. Your budget is what you used to determine whether or not the house would be a profitable venture.

3) Don’t forget to set daily goals and hold yourself accountable to those goals.

4) Don’t neglect the exterior. Curbside appeal is what brings buyers into the property.

5) Don’t spend money you don’t need to spend. While it would be great to put in granite countertops and gourmet kitchens into every home it isn’t always practical.

If Real Estate Investment Is So Great, Why Doesn’t Everyone Do It?

Oh, that’s an easy one. I can answer that in one word. FEAR.

Real Estate investment is a great way to change just about everything in your life, but it’s one of those things where doing it for the FIRST time is the toughest. In fact, the second is exponentially easier! It’s fear folks, plain and simple! And why it is fear doesn’t make much sense to me. Consider that:

– “Everyone knows that the surest path from low income to millionaire is through real estate.” This appears to be a well-documented truism. I’ve seen a similar statement in some of the most prestigious financial resources on the planet.

– I rarely hear of someone losing it all from real estate. I might be living in la-la land, but for the most part I only hear of people prospering from real estate investing. Sure, occasionally I hear of a deal going bad or growing complicated, but not to the point of ruining people.

– There are a lot of properties available. People are still selling, divorcing, dying, or just not paying the bills and getting their homes sold out from under them. Much of the mortgagee auction activity is not SEEN by the public, but most of it is available to the public.

– There are a lot of properties available at below market prices. That’s been my experience anyway. Of course, I have people right here in my area that tell me they can’t find properties. I just smile and nod my head.

– Rental demand is strong and rents never go down!

So with all this common knowledge and raw opportunity out there, why isn’t everyone investing in real estate?

Here’s my theory.

* Real estate transactions are more involved than going to K-Mart for a pair of undies, so that scares people. You have to learn a little bit. Mind you, this isn’t a lot of learning, but it is apparently enough to keep some on the sidelines.

* The numbers are big. I’ve seen folks nearly FREEZE UP mentally talking about large amounts of money. Merely talking about a $400,000 mortgage causes some people to break out in a sweat.

* Horror stories. Everyone’s heard about some scam, sink hole, meteor or something else on the fringes of believability that has happened somewhere at sometime. I mean, there is SOME risk involved.

* Fear of taking action! It’s hard to do something you’ve never done, and harder to do something you’ve never done before in a subject matter on which you aren’t an expert! People fear something, which makes facing that fear hard. What I’m referring to is what I call, “IT’S EASIER NOT TO.”

So what does one do to face fear and make a change in their life,

Ah, that’s just as easy as the first question. I can also answer that in one word…KNOWLEDGE.

Once properly armed with the knowledge they need, most people can overcome their fears to the point of taking action.

So if you are contemplating taking your financial future into your own hands by investing in real estate, FOCUS on one thing for the next 3-6 months. Buy books or courses, got to real estate investing club meetings, visit websites and get on discussion groups. Let those things be your action steps for awhile. I suspect you’ll be ready to dive into the market with the knowledge you’ll gain.

 “Knowledge Always Precedes the Money.”

Author: Melanie Burns

If you have found a property, or are looking at refinancing to access equity so you can take the leap into Real Estate Investment then contact us to discuss your home loan options. Whether you are self-employed, PAYG, credit impaired, looking to invest via Self Managed Super or looking to construct, or even if you are seeking funding for a commercial property the team at Sherlock Holmes are mortgage specialists here to help you finance your dreams!

Oh, that’s an easy one. I can answer that in one word. FEAR. Real Estate investment is a great way to change just about everything in your life, but it’s one of those things where doing it for the FIRST time is the toughest. In fact, the second is exponentially easier! It’s fear folks, plain…

Keys To Blogging Success With Social Media

For sure you have heard about the fact that blogging success involves a lot of social media help. If you haven’t, then you probably have not gone into the core part of internet marketing. Social media is a vast way of marketing your online business to different parts of the online world. It’s where the fish are. If you have an business online that you want to promote as fast and as easy as you can, you only need to visit as many social media websites to get it done right away.

There are many places for social media that you can find online and some are even very popular to those who know nothing about internet marketing.
When it comes to social media, you need to learn a few important tips and keys to making your blogging a great success. Making use of your knowledge in this area will surely take your blog into new heights. Here are a few key points that you need to keep in mind when using social media marketing:
Get a huge following. Having a huge number of followers will not only get you a huge number of friends on any social media site that you are registered in – it will also help you market your business online. Let’s look at Facebook for example where almost all the people in the entire world are hanging out every second of their day. If you had 5,000 friends on your list, you can be sure that when you make a “post” there would be at least 1 of them who has viewed it or seen it. Zero would surely be impossible unless you set your posts to be seen by only yourself.

When you have something interesting going on in your website or even when you have no idea what to do and you’re wondering what everybody thinks, posting it on your Facebook wall will surely help. There are other places where you can market your blog as well. Places like Twitter, LinkedIn, Digg, Reddit and the new craze for many people today which is Pinterest.

Be interesting even if you’re not! Yes, you read it right! You can surely turn something dull into something that will stir up the curiosity of many people online. Bloggers are known to be creative enough. When you post your stuff on any of the social media websites mentioned or not mentioned above, make sure that you leave some captions too. Don’t just post it as if you are putting it up on the wall. Say something about it and make sure that it will get people to click on the link that you’ve shared with them. Re-posting would also be a good action that you can take when you can’t see any feedback from anyone yet. If you get some, make sure you reply to them. Give them hints but not all the details. Leave them with an it’s-for-you-to-find-out kind of feeling so that they will visit the page themselves and find the answer to their questions.

It’s undeniable that social media is growing bigger by the day as an important arm in any business. For whatever your goals you have, use this avenue wisely to ensure that your blogs are read and followed and with time you will attain the success you want!

Author: Melanie Burns

 

For sure you have heard about the fact that blogging success involves a lot of social media help. If you haven’t, then you probably have not gone into the core part of internet marketing. Social media is a vast way of marketing your online business to different parts of the online world. It’s where the…

Life is a Stage – So is Your Home!

What is a home staging?

Home staging prepares a home for sale, and for the dozens of enquiring eyes that
will be scouring the property looking for flaws. It creates an image of the perfectly decorated home, in move-in condition. This should be the next step after de-cluttering, cleaning and repairing your home. The changes may be as small as rearranging furniture to give the illusion of more space, or repainting with more neutral and soothing colours. Home stagers will offer great ideas for perking up a room with accessories and creating a new stylish look for your home.

Why stage your home?

In this day and age, having to deal with competition, staging is a must. It can give you the edge that may result in a faster sale or a higher sales price.

First impressions can make or break the sale of the house, and a home that is properly staged helps to maximize your chances of a positive first impression.

Your home will have an advantage over other unstaged homes.

A staged home shows well in web site marketing and video tours, and since the majority of homes are chosen over the internet, this is a vital form of advertising.

Tips for staging your home.

As you go from room to room, there should be a flow to your home. Avoid overly bright or bold coloured walls. This may mean repainting some or all of your rooms with more calming, neutral tones. Some people cannot understand that that bright purple wall can be removed with a coat of paint, and these distractions may result in no sales.

Clean the carpets.

Furniture: The most common trick used by stagers is to rearrange furniture to create a more stylish look. During my house sale, my stager suggested I move my dining room table into the living room, creating a living/dining room. This freed up space for my crammed kitchen table and voila, I had a brand new and improved living space.

Rearranging may also mean reducing the amount of furniture so that a room looks more open. This includes emptying out closets, even if it means putting some things in storage. Consider renting a few pieces of stylish furniture or pieces of art.

Tidy up your bookcases so that they look pleasing to the eye. This may mean packing away many of your books and keeping out the ones that display well.

Brighten the house up by cleaning windows, and go with higher wattage light bulbs (just until the home sells). Make sure that the lights are left on before an open house, so the prospective buyers are walking into well-lit rooms and hallways.

Creative use of fabrics as accent pieces for additional texture and colour are very common.

Remove family pictures, footy trophies, any traces of everyday family life. You don’t want the buyer feeling that they are in someone else’s space; they need to imagine their family living in this house.

Use plug in room fresheners, especially to mask pet and smoking odours. If you can’t get rid of a smell, overpower it by providing a distraction such as baking a cake and leaving the tray in the oven.

Make a list of general repairs, and if you can’t complete them, hire a handyman to polish them off.

Add fresh or silk flowers to many of the rooms.

Kitchen:

Display bowls of colourful fruit.

Apply oil to cabinets to revive their finish.

Modernise your cabinet handles.

Clear everything off the counters, finding homes for small appliances – you’ll love the look.

Remove fridge magnets and small area rugs.

Have a table set for use, complete with place mats, place setting and napkins.

Bathroom:

Have a set of thick and luxurious towels reserved only for open houses.

Fill baskets with scented soaps and lotions.

Use a scented plug in air freshener.

Remove the collection of shampoo bottles from the shower, or toothbrushes lying on the counter.

Bedroom:

Clear off your night tables, maybe leaving out an interesting looking book.

Outdoors:

Place containers of flowers on the patios, decks and entranceways.

Set the table with colourful picnic plates

Power wash the outside of the house, patios and walkways.

Freshen up the paint on all porches and doors

Weed the gardens and apply mulch; it makes them look like new.

In order to make your home staging a positive experience make sure you use either a real estate agent who is skilled at home staging, or a professional home stager. The latter is a trained designer and they understand how to create a mood or illusion for the buyer.

It can be difficult listening to strangers telling you how your home needs to look. You really need to be open minded and trust their expertise. Many people are surprised at how hard it is to separate from their homes; just keep telling yourself, “It’s not my home anymore”. You’ll probably enjoy many of the changes you’ve made and may reflect these in your new house as well.

Author: Melanie Burns

Looking for finance for your new home once you sell?  Contact us for a no obligation home loan assessment at [email protected]

What is a home staging? Home staging prepares a home for sale, and for the dozens of enquiring eyes that will be scouring the property looking for flaws. It creates an image of the perfectly decorated home, in move-in condition. This should be the next step after de-cluttering, cleaning and repairing your home. The changes…

Fine Tune Your Commercial Real Estate Crystal Ball

Don’t you wish you had a crystal ball that showed you what is to come in the future? A simple wave over the crystal ball, the mutter of a magic word, and your entire future is there, revealed in front of you. Now that you know what is to come, you can prepare and move accordingly so you can be ready for what the now identified future holds.

Unfortunately, this crystal ball does not literally exist, but in commercial real estate there are many tools that you can use that act like a crystal ball. They can show you the future in an indirect way so you, too, may pla
n and move accordingly in order to take advantage of the market place.

Fining tuning your commercial real estate crystal ball is really a matter of paying attention, doing some basic research, and being on top and aware of all elements in your comfort zone, or concentrated area of focus and influence. It does take vision and an element of creativity to really fine tune your crystal ball, and, for some, it is the best aspect of commercial real estate! Being able to predict, envision, and then create something that at one time did not even exist, not even in an idea, and then search out the resources to create and put the plan in motion is a commercial real estate insider’s dream.  When done effectively, it can be very satisfying and lucrative!

You should already be doing many things that assist you in predicting and planning for the future, which is extremely important in commercial real estate. If you can see an opportunity coming before it actually presents itself, then you are able to prepare for that opportunity before anyone else, and reap the benefits. These things may include driving the streets of your community to see what land and buildings are for sale, what centres are vacant for leasing, attending planning and zoning meetings, reading the local newspaper for economic and real estate changes or trends, as well as researching other cities and how their market may affect yours in any way, shape or form.

As a real estate insider, it is pertinent that you are up to par, and even an expert in your comfort zone. These things listed above are how you are constantly informed and a step ahead of other real estate people, as well as your own market.

Besides doing these things religiously, and always analysing the data that you collect, there are a few other specific tools that will allow you to see into your commercial real estate future and identify opportunities that others will miss.

The first is a city’s or town’s future land use plan or map that shows the future zoning and use for all the land within a city or town’s limits. Some cities may not have one if they are too small and not looking for growth. However, most cities do have master use plans that are used to dictate the entire future of a city’s economic make-up.  The reports that go along with these offer a wealth of demographic information as well which provides great insight into the future development of an area.  For example, here is the link to the Melbourne Growth Plan documents http://www.planmelbourne.vic.gov.au/Plan-Melbourne . In addition, check out the actual planning websites for your specific state, city or region. Here is Victoria’s http://planningschemes.dpcd.vic.gov.au .

These maps and report are used to plan for growth so that all elements of a city or town are controlled. Zoning and use may change for operating properties; others may remain the same. There is the possibility of raw land to be annexed into the city, having a specific use, offering huge opportunities to the commercial real estate investor. There may be a need to tear down or renovate old properties, and develop them for a different use.

The possibilities of what a future land use map holds is gold in the eyes of an investor, and extremely important to all those working in commercial real estate. Refer to this map, and actually visit the locations of where there is change to identify opportunities. As every area is different, you will be amazed as to what opportunities will unveil themselves when you bring to it a little vision, creativity, and insider information regarding the zoning and use of a property.

Another tool to see into the future is the economic forecast for your area. By looking at both the past and future per capita income, population growth rates, housing costs and other such data that can be found via the Bureau of Statistics, you can see the overall economic environment of your city or town and how it is performing.

Perhaps a continuing decrease in population means people are moving out of the area, telling you not to invest in new home or unit development in that area. Or, the growth has been so extreme that the area is in desperate need of commercial property in order to support the influx of people. You can definitely plan on how you are going to move in the market with this information by your side.

The final tool I urge you to utilise when predicting your commercial real estate future is already approved infrastructural changes within your city. This will require you to attend city and town meetings regarding zoning, planning, development, etc. There could be discussion of a new development a year or more before it actually occurs, and once you hear about it, you can start putting your own ideas into place.

As I am sure you already know, large, influential, infrastructural changes can greatly increase the land values of properties that surround them. For example, a large shopping centre being developed will increase the value of all the land surrounding it, as well as possibly call for a greater demand of residential units, and an increase in the rental prices that can be charged according to the new market.

Let’s say that you hear two years in advance about a shopping centre that will begin development after it is approved. You are then going to get a jump on all competition, look at the site, the land surrounding it, and the opportunities it may offer. Can you purchase the now extremely cheap land adjacent to this site, or perhaps the poor performing units nearby in anticipation of this new development so that you may benefit from the price increase this major infrastructural change is going to cause?

Absolutely!

These things happen all the time, and I urge you to be a visionary and look to the future. After all, this is where a majority of commercial real estate profits are made- by creating something that either wasn’t there, or improving upon what is there.

As you can see, you may not have a crystal ball that does all the work for you, but I promise that if you use these tools and follow these guidelines, you will be preparing yourself for great opportunities that others, quite simply, will overlook. It will take some effort and constant dedication. However, the results that you yield will be worth it. Actually, it is much easier to be the first mover, rather than suffering the increased land prices and changes after a development is already in place or even underway.

Realise your power to predict the future and plan your goals accordingly! You will be successful with these tools, so implement them today.

Author: Melanie Burns

To discuss this article or anything else to do with your finances, please call our office today on 0434 087 735 or email us and we will be happy to assist you.

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Don’t you wish you had a crystal ball that showed you what is to come in the future? A simple wave over the crystal ball, the mutter of a magic word, and your entire future is there, revealed in front of you. Now that you know what is to come, you can prepare and move…

Selling Your Home – Don’t Be A Victim

Selling your home can be a complex process. If you make mistakes, you may be unable to sell your home or have seller’s remorse. There’s no need for this if you keep in mind the following.

Overpricing Your Home

It’s important to be realistic about the value of your home. Sellers should insist their real estate agents present them with objective criteria for pricing. Comparative information is the most critical in getting a house priced properly. If you ask for too much, it’s hard to ask for less later on in the process.

Not Displaying  Curb-side Appeal (I know – an American term – but it works!)

You don’t have to invest thousands of dollars into redecorating your home. But there some basic steps you must take to present your house in the most positive light.

Overdoing Home Improvements

Don’t go overboard staging your home. It should feel warm and inviting. Lawns should be freshly cut, plant some flowers, organise the home’s interior, rid the home of foul smells and apply new coats of paint to all walls and doors.

Not Understanding The Buyer’s Offer

Carefully reviewing and understanding the offer or purchase contract is imperative. Here are a few things to look for:

1. Has the buyer agreed to pay down a significant deposit?

2. Is the offer contingent upon the owner selling his or her present home? If so, how is the selling process transpiring?

Home Inspection/Open Houses

Have general inspections done in advance. Even though buyers will often have the house inspected again, it’s best to prepare for any potential problems.

Withholding Information

While it is tempting to hide or fail to mention the snafus of a home for example, it’s a hotel for cockroaches or termites, located in an area that’s prone to floods or fires, it is best to give buyers full disclosure. This kind of information can greatly affect the value or desirability of the property.

Be Objective:

While you may think your pink walls or roman columns are fabulous, it is best to keep that opinion to yourself.

Poor Real Estate Agent Communication

Sellers should take a pro-active approach to the selling process and not rely completely on the agent. Sellers should insist upon regular updates about the house and never assume the agent has taken care of everything. It is the seller’s responsibility to ensure everything is running smoothly.

Investigate Buyers

Once you have an offer on the table, it is imperative to secure confirmation of loan approval from the buyers (or their conveyancer/lawyer). Many do not ask about this – you are well within your rights to do so – and generally the buyer will have a finance clause in the contract that they must adhere to (unless you sell at auction and that is another article entirely!).

If you follow these steps, you will go a long way towards avoiding being a victim in the home selling process.

Author: Melanie Burns

To discuss this article or anything else to do with your finances, please call our office today on 0434 087 735 or email us and we will be happy to assist you.

Commercial Real Estate Misconceptions: You Mean Location, Location, Location Was a Lie?

Commercial real estate is a wonderful, exciting business that can offer a wealth of opportunity for those who look for it! Many people are often hesitant to enter the market of commercial real estate for many different reasons. In fact, there are some major misconceptions about commercial real estate which I am going to address here.Many people who hear about commercial real estate, but aren’t necessarily in the business, often use the expression “location, location, location!” Many people associate this expression as the truth, that the three most important attributes about a property are “location, location, location!”

I am here to tell you – this is absolutely not the case! Now, I am not going to say location is not important, but what if you have a beautiful location for a Bushland retreat, complete with hills, a perfect location for a hotel, and beautiful mountain views? What you want to do to the property is improve it as a weekend getaway for romantic couples with a beautiful hotel, resort, luxury type housing, and perhaps some individual cottages overlooking the bushland. Sounds great, right?

The perfect location- you can’t beat it! But, you learn that the zoning for this property is residential. The use is only one single family residence per acre, and no commercial property allowed. What happened to your “location, location, location?” It flew out the window!

The most important aspect of a property is the use. What is it intended for by designation of the council? It does not matter where the property is, if you cannot get the zoning that is in the realm of your intended use.

It is possible to get properties rezoned, especially as cities and towns change and grow. Be sure to consult with the council to determine if these changes are even possible, because you do not want to buy a property that you cannot rezone, and be left with an unprofitable property on your hands.

Most people believe that commercial real estate is complicated and you need a special education or know how to succeed in the business. Many think that commercial real estate is filled with international finance, heavy and complicated math, complicated tax rules, and forms and applications that are just too complicated to understand correctly.

I am happy to tell you this misconception is the worst, because it puts a road block in front of many people’s aspirations to become a commercial real estate insider. Let me put this misconception to rest. There is math involved, and most of it is not at all complicated: simple ratios, adding, subtracting and multiplying. What is even better is you don’t have to do the math. There are others who can do that for you. The same is true with property management, inspecting the property, and doing the end of year taxes. In fact, commercial real estate is less complicated than residential real estate because you can focus your energies on a single deal that will be worth perhaps 10, 20, even 50 residential deals!

Let me put it into perspective for you. If you owned a business (many of you may), would you create strategies, keep the books, manage the many locations, sell on the front floor, and take out the trash after the day was over? I think not! Commercial real estate is made up of many people whom are there to help you with whatever you need. You must position yourself as a real estate insider, which is a leader in the business.

Another misconception is commercial real estate is management intensive, that you must manage every property you own. Let me tell you when you end up owning 10 or more properties, this is almost impossible to do! You do not have to actually manage your properties yourself, so you can concentrate on creating more deals. Hire a company or agent or set a team in place to take care of this “day-to-day” business.

As you can see, what is passed around in dialogue about commercial real estate is not always true. Before you take everything to heart, be sure to get your facts straight. In fact, many people in this profession speak about commercial real estate as a business in which only the savvy and sophisticated can succeed. They often act this way because they want to keep people out of the market by differentiating themselves. If you were in this position, you would too!

Author: Melanie Burns

To discuss this article or anything else to do with your finances, please call our office today on 0434 087 735 or email us and we will be happy to assist you.

 

Commercial real estate is a wonderful, exciting business that can offer a wealth of opportunity for those who look for it! Many people are often hesitant to enter the market of commercial real estate for many different reasons. In fact, there are some major misconceptions about commercial real estate which I am going to address here.Many…

Sherlock Holmes Lending Solutions

Budget for Settlement Costs – Loan Origination Fees, LMI (Lenders Mortgage Insurance) & Stamp Duty

Once you reach an agreement on the purchase of a home, things start moving quickly. In the chaos, it is important to remember to budget for settlement costs.

Settlement costs are fees associated with miscellaneous events associated with a home purchase, things such as property inspections, stamp duty, conveyancing fees etc. Even if you are purchasing a home for the first time, you are probably aware there are closing costs that have to be paid. Rarely, however, are you aware of just how much and how fast the can accumulate. If you have not budgeted for them, they can put a kink in the settlement or even cause you to lose the home.

A couple of closing costs to keep in mind are origination fees for home loans and lenders mortgage insurance. The mortgage related costs are only a small part of the overall closing costs you can face, but deserve a closer look.

Origination fees for home loans can be a shock to first time buyers. Few realise they are going to have to pay such things. Origination fees are costs charged by a lender for services used to determine if the lender should give you a loan in the first place. For example, a lender will often charge you fees for having a valuation done on the property. Infuriatingly, the lender will also charge you fees for processing the loan and preparing the loan documents. On a $400,000 loan, the origination fees can quickly add up to thousands of dollars.

Lenders mortgage insurance, often called LMI, can also be a nasty little surprise. The magic number when considering LMI is 20 %. If you pay a deposit on the home that is less than this amount, you are almost certainly going to have to pay LMI. LMI is simply insurance that protects the lender should you default on the loan. The cost can add up to hundreds and into the thousands of dollars, so make sure you know what is expected of you.

Stamp Duty is the one, in my experience, that is consistently overlooked.  As a general rule I always tell clients to allow approx. 4% of the purchase price to cover these costs.  It is usually a little less, and varies from state to state – however I find it always better to lean towards the conservative side. Settlement costs are aggravating – budget for them up front, and you will feel less aggravation.

Author: Melanie Burns

To discuss this article or anything else to do with your finances, please call our office today on 0434 087 735 or email us and we will be happy to assist you.

Once you reach an agreement on the purchase of a home, things start moving quickly. In the chaos, it is important to remember to budget for settlement costs. Settlement costs are fees associated with miscellaneous events associated with a home purchase, things such as property inspections, stamp duty, conveyancing fees etc. Even if you are…

Three Character Attributes Every Successful Commercial Real Estate Investor Must Have

Known for his tremendous wealth, ability to put together the largest, most profitable commercial real estate deals, and famous reputation, and whether you love him or loathe him, there is no denying that Donald Trump is the commercial real estate investor icon of our times.

Although we know he has extremely creative financial and investment strategies, and expert legal advice from people such as George Ross, he has more than just the average investor. There are other investors who probably know as much as Donald does, or more. However, they do not have the successful qualities that allow them to create such wealth from commercial real estate and accomplish the goals Donald has.

Donald has three successful qualities that you need to possess to truly create the quality of deals and wealth he is known for. These qualities are his ability to build relationships with everyone he works with, his ability to sell the big picture, and strong, overpowering charisma that takes a room by storm.

Almost any deal can work to your advantage if you work on and develop these skills. You may have strength for one or another. However, in order to have this industry at your fingertips, you must master each one. Success is delivered through the relationship between these characteristics, as one is not as good without the other or by itself.

Being able to build relationships with everyone that you work with is absolutely critical in the commercial real estate industry. You want to rub elbows with the decision makers in your city; those who are in charge of council zoning and planning committees at every level of the city. Get past the gate keepers and speak to the core people asking for their advice and become close acquaintances on a first name basis. These relationships can be implemented before you even think about doing a deal where their influence may be necessary. Relationships will not only get you insider information, but will give way for special favours and a good word to others who may influence your accomplishments.

Charisma is the ability to ignite passion and motivation among all those who are in an ear’s reach of the person. Charisma allows everyone to breakthrough barriers that otherwise would remain standing. Those who are charismatic can make even opposing forces agree on a common goal and move forward ambivalently. Donald can do just this – igniting passion and excitement that lines people up to follow in his direction. He becomes a true leader that others happily follow because they believe in him and his message. This characteristic will let you bring people on board that otherwise wouldn’t even think about working in your favour. It is a very helpful and powerful characteristic to possess.

The final characteristic is selling everyone on the big picture – everyone who is influenced by the value created in the deal. The community, the city, builders, developers, banks and even businesses around the location in which the project is growing all need to understand what is not there currently. As you know, these projects that were once old, dilapidated buildings that did absolutely nothing but bring the city or suburb down, can be turned into multi-million dollar establishments that can change the value of the entire city.

Do you have these qualities? Do you see yourself having the same effect on others as Donald Trump has had on the many people he has worked for? Everyone can master these abilities with a little focus and practice. Study others who are successful and possess these qualities. And remember that they are most effective when working together, not standing alone.

Author: Melanie Burns

To discuss this article or anything else to do with your finances, please call our office today on 0434 087 735 or email us and we will be happy to assist you.

Known for his tremendous wealth, ability to put together the largest, most profitable commercial real estate deals, and famous reputation, and whether you love him or loathe him, there is no denying that Donald Trump is the commercial real estate investor icon of our times. Although we know he has extremely creative financial and investment…

How NOT to get a Commercial mortgage loans!

Commercial mortgage loans : Here are a few tips on how not to get a mortgage, and underneath each one, the smart thing to do instead.

1. Don’t haggle.

A mortgage or a house is just another consumer product. A few clever words can get you a sweeter deal.  So haggle!

2. Don’t look at the small print.

Companies may offer very low rates upfront, but hide additional costs in the small print. Beware of additional costs not immediately apparent.

3. Go for a long term.

Try to keep the term of the mortgage as short as possible. The shorter the term the less you pay in interest. Consider a twenty or twenty five year term instead of thirty years if you can afford it.

4. Buy the most expensive property you can (barely) afford.

Resist the urge to splurge. Some lenders will offer up to six times your salary. They’re not doing you a favour. Get the minimum the missus will be happy with. Divorces can be triggered by loan defaults.

5. Ignore your credit rating.

Improve your credit rating as much as you can. Pay off old loans, and once they’re paid off, check your credit report. Ensure you pay all your bills on time (or before time); never later than the due date. Pay off credit cards and keep their balances low. Close unnecessary credit card accounts.  Open a savings account at your bank if you don’t already have one.

6. Focus on the interest rate.

Don’t get too caught up in comparing interest rates and various special offers; they may not reflect what you will get if you apply. Everything depends on your own financial circumstances and the types of features of a loan that are important to you.

7. Ignore your outgoings.

Write up a budget of your monthly expenses; factor in daily, weekly, monthly and yearly outgoings. See how much you can truly afford to put towards repayments.

And …

8. Rush to take the time-limited-one-time-only-discount-special-offer.

The deal that seems too good to be true probably is. Avoid jumping straight into what could be the biggest purchase of your life. Check it out first.

To discuss this article or anything to do with your finances, please call our office today on 0434 087 735 or email us and we will be happy to assist you. commercial mortgage loans

Commercial mortgage loans : Here are a few tips on how not to get a mortgage, and underneath each one, the smart thing to do instead. 1. Don’t haggle. A mortgage or a house is just another consumer product. A few clever words can get you a sweeter deal.  So haggle! 2. Don’t look at the small…

Demystifying mortgages – 12 myths about lending every first home buyer should know.

Myth #1
You need at least 20% deposit to get a mortgage         
In today’s market that is not necessarily true.  While it is correct that having a deposit is the ideal situation, if you are currently renting and just cannot save enough for a deposit there are many lenders that offer low deposit home loans.  Borrowers can often borrow up to 95% of the purchase price which is a tempting offer for any first time home buyer wishing to get into the property market. A low deposit home loan may often attract higher interest rates or more stringent policy restrictions but if you are confident you can afford the repayments then you can achieve the dream of owning your first home with a minimal deposit.

Myth #2
Fixing your rate is safer than a variable rate
When interest rates are high, many are tempted to fix their rate to protect against further hikes.  All is well with the world and as a borrower, you feel incredibly happy that you are not affected by the next huge rate increase.  The problem here is that if rates fall, you end up paying a higher interest rate compared to the variable rate.  Fixed rate home loans do offer some security in an uncertain market, and also allow borrowers to know exactly what their mortgage repayments will be for the next one, three or seven years. Everyone is different and has varying financial requirements so talking through your options with a mortgage broker is recommended.

Myth #3
A bad credit history means you won’t get a home loan
Let’s get one thing clear.  A bad credit history is not good.  Any missed or default payments on credit cards or mobile phones are recorded.  Even if the amount was small or years ago, it affects your credit rating.  However, not all is lost.  Lenders will consult your credit history and feed this into their own credit scoring system.  If it turns out there are issues, the lender may take a closer look and may still approve a home loan if you meet the requirements.  Similarly, non-conforming lenders provide an alternative option for borrowers who have been refused finance by traditional lenders.  Non conforming lenders are an ever expanding avenue and offer in many cases quite competitive products providing opportunities which were once deemed impossible.

Myth #4
I can still get a home loan even though no income, because I have several assets
Yes, you may have a collection of stamps from the 1920’s to be proud of, but it’s not going to convince a bank to lend you $400,000.  Assets aren’t the same as income, and it’s your regular income that lenders get excited about.  Lenders will only lend as much as people can afford to repay, and a first time home loan is a big commitment. The amount of income earning capacity you have will ultimately determine how much you are able to borrow.

Myth #5
Get the lowest rate possible
Be cautious with low interest rates.  A cheap rate is attractive, especially to first home buyers, but take note because these low rates often come with less features on the home loan, reduced flexibility and higher fees. They may only be an introductory rate and once that honeymoon period is over you could find yourself paying a much higher rate.  Often a loan with a slightly higher rate but more features will save you money over the life of the loan.

Myth #6
Credit cards are okay if I pay them off.
When it comes to credit cards it’s not all about the balance on your card, or cards, it’s the total available credit that counts. Having a large range of credit does not necessarily equate to a good credit history.  Often it’s the credit card limit, not the balance that counts.  So even if you pay off all your credit card debts, if you still have a high limit this can affect your servicing and chances of approval.

Myth #7
I can roll my personal debts into my mortgage
So you have a car loan and credit card debts, and you want to roll all of these into your home loan?  Makes sense, as the interest rate on your mortgage will be lower than your current rate.  But, first home buyers are not usually able to just throw all their debts together like this.  Usually you have to build up equity in the property and then use this equity to service the additional debt.

Myth #8
A low-deposit home loan means you don’t need any savings.
This one is most certainly not true.  First home buyers get excited and tend to think that a 95% per cent loan means that they do not have to pay much money upfront.  But, a 95 per cent home loan only covers most of the cost of the property, and not all the purchase costs such as stamp duty, legal fees, property inspection fees and lenders mortgage insurance (LMI).  You will still need some savings to cover these costs as well as the 5% deposit.

Myth #9
Start by paying just the minimum amount
Many first home owners pay only the minimum monthly repayment, as they adjust to the new financial commitment.  However, at the start of the loan you are really only paying interest so by paying more than the minimum, you quickly reduce the amount of interest and principle on the loan.  As interest is calculated daily, repaying twice a month instead of once per month can also save you thousands in interest.

Myth #10
Mortgage insurance protects the borrower
Lenders Mortgage Insurance (LMI) protects the lender, not the borrower.  Borrowers who can put down a 20% deposit should not need to pay LMI but borrowers with any less than this will pay LMI to the lender.  The less deposit you have, the higher the premium.

Myth #11
Offset accounts save you money
Home loan offset accounts are a great idea, but only for those borrowers who are responsible with their money and have a regular income. If you have a shoe addiction or tend to buy all your mates extra rounds at the pub, you may want to think twice about offset accounts.  Your income goes straight into your home loan account, pays your mortgage repayment and then you can use the extra funds for other expenses.  However, if you have bad spending habits you could end up spending more.  Be careful not to end up in negative equity because you didn’t monitor your spending.

Myth #12
Refinancing saves you money
Perhaps you have just bought your first home, and you are enjoying all the benefits of your own home.  Your first time mortgage is going well, but perhaps you fixed your rate six months ago and now rates are coming down, or maybe you want to switch to a different lender.  Refinancing sometimes costs money. In the way of exit fees for existing home loans, and settlement fees for the new loan.  However, the market is quite competitive currently and some lenders are giving all the power to the home owner.  Shopping around and refinancing your home loan can save you thousands over the life of you loan, but can also end up costing you more, so talk your possible choices through with a mortgage broker before making your decision.

Author: Melanie Burns

To discuss this article or anything to do with your finances, please call our office today on 0434 087 735 or email us and we will be happy to assist you.

Myth #1 You need at least 20% deposit to get a mortgage          In today’s market that is not necessarily true.  While it is correct that having a deposit is the ideal situation, if you are currently renting and just cannot save enough for a deposit there are many lenders that offer low deposit home loans. …

The “REAL” Real Estate Roller Coaster

Buying a home is a process fraught with emotional ups and downs. For most people, it will be the most expensive and involved purchase they ever make. On top of the importance of this purchase, is the lack of time one has to make a decision before purchasing a home.

The average amount of time a potential homebuyer spends looking at a prospective home is 96 minutes! For a home that you may spend the next ten to twenty years living in, well, an hour and a half seems like an unjustly short amount of time spent to make such a drastic decision. This “hot” decision making environment, where the pressure is on, is one of the key aspects of a buyer’s emotional stress. But, the fact is, good homes sell fast, and buyers have to be ready to commit to a purchase in a short time. This being said, the “sure fire” way to make a good decision in such a short period of time, is to learn to become a smart, analytical shopper. Not that emotions need to go entirely by the way side – but you must know when emotions are playing into your decision making process, what is at the core of those emotions and whether or not they are helpful to your process. Be your own psychologist, and the sooner you do the sooner you will get off the doctors couch and into a new home!

One approach to help mitigate the emotional roller coaster of the buying process is to truly set out your specific priorities in terms of what you want and need in your new home. Ask yourself, “In order of importance, what are the most important elements for my/our new home?” Proximity to schools, the location and neighbourhood, commuting distance, rates and costs, energy efficiency, shopping accessibility, and recreational facilities are just a few of the considerations a buyer should prioritise beforehand. If purchasing with a spouse or partner, you may discover your priorities are slightly or even vastly different. It is very important that you spend the time to make concessions and get on the same page as best you can.

Other aspects of your priority list may include the type of home you are looking for. These parameters could involve the size of the home or a particular style of home. If you’re set on a particular style of home, this may affect the neighbourhood parameter of your search, as not all houses of certain types are in every neighbourhood. So, as you see, one way to help curb emotional reactions, is to make sure you know what you’re looking for, and in doing so narrow your search. This way, what you’ll be looking at will be within the list of parameters you set out in your priorities. You can then rank homes based on how well they fit into your priority system. Of course, there will be concessions to be made here, as it may not be that a home fits your every single priority in exact order – but at least you’ve done some good analytical homework in advance and have a system for ranking your prospects.

Another tip for dealing with emotions, is to catch yourself when you are honing in on one particular feature of a home, as the “dream feature” of the home.  A “dream home”, should be so, because it satisfies those myriad of components (priorities) that create “your dream of your home”. You may want to check in and ask yourself if you’re being clouded by one enticing feature and have lost touch with your list of priorities.

Another dangerous aspect of buying a home based on your “gut” feeling, is that your guttural instinct may be good for you, but not so great for re-sale. It is, in almost all cases, very important that you consider the potential re-sale value of your home as one of your top priorities. You don’t want to be stuck with a “dream home” that turns out to be everybody else’s nightmare. The investment aspect of purchasing a home, lies in its re-sale value. Now, this doesn’t mean you have to buy in a well-established, totally investment-proof neighbourhood. You may have done your homework and feel confident in buying in a neighbourhood that has great potential for five to ten years down the line. Likewise, the home you are investing in may need improvements that you have the funds and/or the expertise to accomplish. But, you must at least consider the re-sale value of your potential home. Otherwise, you could be investing in a money pit that you’ll never be able to unload for the money that you should.

Keep in mind, smart sellers are bound to know the realm of buyers emotions, and will appeal to your weaknesses. Keep your critical eye sharp, especially when a home seems to smell of professional home staging. It’s not that home staging is trickery, or dishonest, but you might need to work extra hard to look beyond the beautiful and well-appointed furniture and the incredible artwork and the smell of Lemon Meringue Pie – as none of the above are included in your purchase.  Just make sure you look at the house itself and not its decor, set-up – and, DON’T EAT THE PIE!

If all these steps have been taken, you’ve approached the searching process having analysed and prioritised your wants and needs, and you’ve considered the re-sale potential of the properties, then you can allow your emotions to guide you somewhat. Perhaps you’ve been lucky enough and smart enough to mine out two potential properties that fit both your priorities and parameters, at this point, a bit of the old gut instinct can refine your process and actually help, and not hinder the decision making process.

Author: Melanie Burns

To discuss this article or anything else to do with your finances, please call our office today on 0434 087 735 or email us and we will be happy to assist you.

Buying a home is a process fraught with emotional ups and downs. For most people, it will be the most expensive and involved purchase they ever make. On top of the importance of this purchase, is the lack of time one has to make a decision before purchasing a home. The average amount of time…

Timing the market: how the cycles affect your portfolio

Having a thorough understanding of the real estate cycle enables you to time your move accurately and maximize your returns.

Most real estate investors face many challenges in building a profitable real estate portfolio. Determining whether to purchase or liquidate, raise or lower rents, or deciding which sector of real estate to participate in can be determined more easily and profitably by understanding the real estate cycle and the important attributes of its behavior.

It is tough to be at the beginning of a trend. People tend to follow the crowd (or the media) and consequently buy yesterday’s deals. It is much easier to profit when you are buying at the beginning or even in the middle of a cycle. If you can accurately time a rising market, you can benefit from higher rental income due to higher occupancy which results in upward pressure on property values and conversely liquidate when the opposite is evident.

Fortunately for real estate investors, the movements of real estate prices are slower and more predictable than the stock market due to the slow response to promising or discouraging economic movement.  The real estate cycle displays different characteristics based on whether the property is a free-standing house, a high density unit or a commercial property. Property values in office buildings are generally more susceptible to swings in a cycle than industrial buildings, retail buildings, apartment buildings and residential.

Demand drives each of these sectors. In the case of office buildings, the demand for office space is tied in directly to employment and the financial sector. Demand for industrial space is powered by manufacturing, transportation and the need for warehouse space.  Demand for retail space and apartment units is stimulated by population and growth of income.

All cycles are local

The real estate cycle can vary significantly from city to city and even down to suburb, compared to aggregate national statistics. A local real estate cycle can react differently based on economic demand for housing and can have longer or shorter peaks or troughs than the national cycle and nationally reported statistics.

It is important to understand the local real estate cycle wherever you decide to invest in order to make decisions that will be profitable. Being able to predict what will be happening in your local market based on specific key indicators will allow you to analyze expected returns, forecast property income and potential value increases or decreases. This can also aid in buy or sell triggers in your portfolio based on over or undersupply in the market.

Stages of the real estate cycle

There are typically four stages to each real estate cycle. In order to properly analyse, you need local data describing historic appreciation or depreciation which ultimately boils down to supply and demand.  For instance, demand for office space increases as a result of higher employment which in turn stimulates retail and residential demand. Conversely, demand for office space decreases as the value of market rents goes up. This factor spills over to retail and residential.

One must be aware of other indicators that are prevalent in each of the four stages of “top”, “down”, “bottom” and “up” of the cycle, specifically pertaining to residential properties.

1. Top of the market

Many Australian metropolitan cities today have been touted as being at the bottom of their market whereas others are on their way back up, some are booming and yet others remain stagnant. Historically cycles last from seven to 10 years, which allows us to learn from the past and better prepare for what and when our next move should be.

There are key indicators that are indicative of any real estate cycle. At the top of a market, prices are high. This sounds like an obvious statement, but what contributes to factors driving prices up?

Typically when there is high demand, the price goes up. This is usually triggered by employment opportunities, an enticing lifestyle or a retirement destination.

To properly analyse a residential market, you need to know the if the number of sales are increasing month to month, the number of days on the market it takes for a property to sell, if multiple offers on properties are becoming common – this drives property prices up even higher.

Other indicators can be observed just by driving around observing the construction industry. If stock is low and demand is high, people are generally very optimistic.

Vacancy rates will be lower so there will be less “For Rent” signs evident.

Your game plan

  1. If you can raise your rents, now is definitely the time.  Renew leases. With low vacancy and high migration to the area, there is high demand for properties. However, if interest rates are low, renters may be jumping into new homes.
  2. Once over-building is evident, you may consider liquidating one or more of your properties, particularly any underperforming properties, which may sell for a great price.
  3. Buy-reno-sell strategies can work well at the beginning of this phase provided the property is acquired under fair market value.
  4. You may consider selling later in this cycle.

2. A down market

A downward trending market happens after the top of a cycle. This move can be subtle at first. Many inexperienced investors can “get caught” during this shift, resulting in potential losses.

This can result from maintaining a selling price higher than the market will bear rather than anticipating the downward trend and unloading the property with good pricing or speculating in preconstruction.

A downward trending market occurs when new construction exceeds demand and/or prices hit maximum affordability. Once this happens, prices begin leveling off, demand slows down, and public optimism becomes uncertain.

When a market has too much inventory, sales decrease, ultimately triggering the amount of listings to increase.  This causes the average “days on the market” (DOM) of each property to increase, naturally triggering a downward pressure in prices. The market ultimately dictates when the decline will stop and what prices are reasonable.

Vacancy rates begin increasing as tenants have more choice of units and landlords begin offering discounted rents or move in specials.

Your game plan

  1. If you missed selling at the top of the market, sell fast and don’t hold out for top dollar.
  2. You may need to decrease rents or offer incentives to attract or keep tenants.
  3. Many landlords will have higher vacancies and may be highly negotiable on price (wait until later in the cycle).
  4. If you don’t sell now, hold your existing properties until the market corrects.

3. The bottom

At the bottom of a market, general public perception of the economic outlook is negative. Higher unemployment prevails and the banks’ lending criteria becomes more stringent. Prices tend to decline and it is not until prices ultimately begin to increase and vacancies begin to decrease that you will know where the bottom is (or was). Foreclosures or power of sales become more frequent and economic pessimism prevails as demand continues to slow.

New construction during this time drops. However, new builds already underway still come on line. Many contractors either become renovators or get out of the business.

Your game plan

  1. Take buying slowly but start buying distressed properties later in the cycle.
  2. Holding and waiting for the “up market” indicators if you are looking to ultimately sell.
  3. Provide furnished rentals to keep your unit rents up.
  4. Approach builders who have unsold inventory and purchase one, several or all of their unsold inventory at a discount or with a purchase option.

4. The Up Market

During this time falling housing prices have bottomed out and are stabilizing and demand is slow. New inventory is down as new construction is almost at a standstill. However, as the cycle continues and demand becomes more evident, new construction begins as does pre- construction speculation.

In an “up” market prices will begin to increase based on stimulation of the local economy, thus increasing demand. With less property available, there are less listings, the days on market decrease and multiple offers on property become prevalent.

From a rental perspective, this creates a diminishing supply of units, which triggers lower vacancy and higher rents.

Your game plan

  1. Buy for bargain prices from other investors who still haven’t realised a new cycle has begun.
  2. Increase rents.
  3. Buy, reno and sell.
  4. Refinance existing properties to buy more.
  5. Sell if you can move the equity into a more valuable property.

The public is usually driven by the media who are usually trailing the middle or even the end of a wave. This gives those who are studying the key market indicators a distinct advantage. However, acting when no one else has acted takes knowledge, courage and sometimes trusting your gut.

To discuss this article or anything to do with your finances, please call our office today or contact us via email and we will be happy to assist you.

Having a thorough understanding of the real estate cycle enables you to time your move accurately and maximize your returns. Most real estate investors face many challenges in building a profitable real estate portfolio. Determining whether to purchase or liquidate, raise or lower rents, or deciding which sector of real estate to participate in can…