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November 30, 2010

How not to get stuck with the washing up

Family get-togethers at my grandparents’ place were always a big deal; lots of food, lots of laughter and lots of people… which meant lots of washing up. At the end of the meal my grandfather would throw into a hat the names of 15 birds and anyone who drew out the black crow had to wash up. The thing is, it seemed it was always me and my youngest cousins who got the black crow.


It took me a while to realise that every name in the hat said ‘black crow’ and those who knew the game would just call out kookaburra, lorikeet, cockatoo etc while those who were inexperienced at the game and didn’t understand ‘the rules’ were at a distinct disadvantage.

Property investing is the same: there are those who seem to know the rules of the game and those who don’t. Those who don’t are often the ones lumbered with ‘the dirty dishes’ or in this case, the underperforming property. If you want to be successful with your investments you require an understanding of the fundamentals. The keys are 1) get to know the rules of the game and 2) start playing! However, without someone to share the rules you might win now and then but you won’t know exactly how or why, so that you can do it again (and again) and be successful each time. I teach hundreds of property investors every year – first we discuss their goals, their strategy and their criteria, and only then do we consider actual properties. Read more →

November 26, 2010

Apartments are the way of the future

The key to building a successful property investment business is to own the type of property that will be in continuous strong demand in the medium to long term, so as to maximise its capital growth.


I’ve often said that successful property investors are a bit like chess players – they must think three or four steps ahead. They ask: ‘what type of property will be in demand in the future?” – not only by tenants, but by owner-occupiers, because they drive the property markets.

That’s why I would only invest in our major capital cities as they have broad-based economy and a wide range of potential owner-occupiers to buy properties and tenants to help pay your rent. Read more →

November 25, 2010

Organising a renovation is like organising a wedding

It’s uncanny how many parallels there are between organising a renovation and organising a wedding.

Having run a renovation company for quite a few years now and recently being involved in organising my own wedding, it’s been interesting to see how many skills and templates I could leverage off from one for the other.

It all seems to centre around planning, finding good quality service providers and suppliers and scheduling.


So the first place to start is to work out the requirements. What are you trying to achieve? What are the priorities? Look and feel? Doing research here into what others have done previously and learning from their mistakes and knowledge will make this process go a lot smoother.

Then you really need to identify all the different things that need to happen. Do a task breakdown structure just like with a renovation and work out what order they need to happen in. Read more →

November 23, 2010

What’s really happening to the Melbourne market?

We’re in the downward phase of a typical market cycle that won’t last perpetually. The rate rise has been blamed for the lower clearance figures; however the drop in market activity has much more to do with buyer sentiment than affordability.


Rate rises only have a major influence on first homebuyers who find it difficult to absorb high loan repayments. However, it’s not first homebuyers who affect clearance figures. After much activity earlier in the year, they’re no longer a major competing force in our market and they certainly aren’t prevalent in the inner and middle ring suburbs where most properties are auctioned. The average first homebuyer loan is approximately $280,000 and most are only able to purchase in outer Metropolitan areas. Read more →

November 19, 2010

Too many properties for sale flood our markets

It’s clear the property sector is in the midst of a consolidation – something I have been predicting for a few months. I saw this coming because finance approvals were falling (there were fewer buyers applying for finance) at a time when there were more properties on the market.


According to SQM Research residential property listings (properties for sale) increased in all cities during October with the market now flooded with more properties than during 2008.

SQM Research managing director Louis Christopher says the increase in listings is clear evidence the market is softening. Read more →

November 18, 2010

Hedge your bets by splitting

The business of rate forecasting is littered with the graves of those who got it wrong, but it’s safe to assume that, even after the controversy caused by the Commonwealth Bank’s decision to increase variable rates by 45 basis points, this is not the last we will see of rate rises in the next 12 months. There’s an emerging consensus that the RBA will lift rates by around 50 basis points over the next 12 months, but a possibility of as much as 100 basis points.


What does all of this uncertainty mean for investors out there who are interested in purchasing an investment property? Fixed loans are usually popular with investors because of the consistency to help manage cash flow.

But with fixed rates starting to rise, it’s worthwhile considering hedging your bets and splitting your loan.

Just as you’d want your investment portfolio to be balanced with different kinds of assets and risks, so too can split loans provide a good hedge, especially when the path and pace of rate changes are uncertain. They can also help reduce the impact of interest rate fluctuations while also keeping the features and benefits you need. Read more →

November 17, 2010

Financially savvy at a younger age?

The sooner you start investing, the better off you’ll be financially. This is something we all know, but often it seems much easier said than done.

A recent survey by Club Financial Services, conducted in Victoria, South Australia, New South Wales and Queensland, found that 35 per cent of respondents aged 18 to 29 and 44 per cent of all respondents under the age of 40 have already started an investment portfolio.


This was in significant contrast to the results of respondents aged over 40 years of age, of which just 13 per cent had started their investment portfolio by the age of 30.

Just under 80 per cent of survey respondents indicated that they purchased their first home before they were 30 and the results also show that the younger generation made the purchase of a first home earlier in life. Read more →

November 16, 2010

What building inspection reports don’t cover

Property buyers must always ensure, when contracting subject to satisfactory building inspection reports, that adequate time has been provided for this in their contracts. In my experience, the ideal time is 30 days from the contract date.


This allows for the inspector to make his inspection, prepare his report, deliver the report to you, and for you to consider it. Thirty days also allows time for any supplementary inspections that may be needed from other professionals and for you to find out the likely costs of rectifying any matters of concern raised in the report. Finally more time is needed than the agents’ usual period of 14 days because buyers who have received a less than satisfactory report may wish to renegotiate the contract price with the sellers. Read more →

November 12, 2010

Rents on the rise as property prices take a breather

Talk of property bubbles, rising interest rates and a cooling property market dominate the media at present and though it’s easy to jump to alarmist conclusions, the fact is that what we are seeing is simply the next stage of a constantly revolving property cycle.


On the one hand this phase ushers in a period of lower capital growth and on the other it brings rising rents and higher yields.

According to RP Data, capital city house rents increased by 3.3 per cent in the last quarter alone. Read more →

November 11, 2010

Will a ban on ‘price-plus’ advertising help the buyer?

Tony Robinson’s nicely timed election proposal to ban ‘price-plus’ advertising cajoles purchasers into believing real steps are being made in their favour. However, no matter what Consumer Affairs Victoria (CAV) proposes, they cannot manipulate a selling agent to assist a prospective purchaser.


Selling agents are contractually obliged to work in the best interests of the vendor. The vendor is paying the selling agent to get a premium price for their property and whilst they won’t go out of their way to openly mislead a buyer, any advice relating to the likely sale price will be bias towards the vendor and conservative at best. In an auction campaign, quotes are nearly always below ‘expectation’ – this is no different to any other commercially advertised auction campaign. The alternative would be starting with the highest price and working down until a purchaser agrees! Furthermore, what Tony Robinson doesn’t explain, is that while $700,000-plus is no longer okay, $700,000-$900,000 is! Read more →

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