All Posts by Jo Vadillo

Experienced Investors

Welcome to Property Women. Congratulations for being an investor. You are already on the path to creating a future for yourself and your family through property investing. However, sometimes that path isn’t easy, or as much fun when you are on your own. Property Women would love to help you and be a part of your continuing journey.

The key ingredients used by successful Property Women are:

  • Getting the right education – learning from those who have done what you want to do
  • Mixing with other like-minded women
  • Continuing to keep motivated and inspired

How you can boost your knowledge and keep on track:

New Book! Property is a Girl’s Best Friend

  • A step by step guide to property investing by 11 authors who walk the talk
  • 7 strategies, including pros and cons, and what persoanlity traits suit each of them
  • Top tips and bonus charts and reports
  • Essential reading for serious investors

Click here to find out more

 


Property Women Events

Property Women hold events to boost your knowledge, answer your questions and give you access to other like-minded women.

Find out about our upcoming events here


Diamond Membership

Grow your knowledge and grow your portfolio with access to ongoing education, information and networking as a Property Woman Diamond Member.  Benefits include…

  • Audio CD’s delivered to your door monthly packed with information and inspiration
  • Have your personal property questions answered
  • Teleconferences with the opportunity to ask direct questions
  • Substantial Member discounts on Property Women events and products
  • Work thourgh the On-line Course
  • Network with likeminded women on the Inner Circle
  • Discounts from selected trades and suppliers in our Little Pink Book

Want more information about our Diamond Membership?  Click here

New Investors

Welcome to Property Women. If you are a new investor, you’ve probably spent years dreaming about being a property investor but don’t know who to ask or how to get started. Property Women would love to help you to create a future for yourself and your family through property investing.

The key ingredients used by successful Property Women are:

  • Get the right education – learn from those who have done what you want to do
  • Mix with other like-minded women
  • Continue to keep motivated and inspired

 


How you can get started:


Property is a Girl’s Best Friend

  • A step by step guide to property investing by 11 authors who walk the talk
  • 7 strategies so you can select the one to suit you
  • Top tips and bonus charts and reports
  • Essential reading for serious investors

Click here to find out more

 


Property Women Events

Property Women hold events to boost your knowledge, answer your questions and give you access to other like-minded women.

Find out about our upcoming events here


Diamond Membership

Grow your knowledge and grow your portfolio with access to ongoing education, information and networking as a Property Woman Diamond Member.  Benefits include…

  • Audio CD’s delivered to your door monthly packed with information and inspiration
  • Have your personal property questions answered
  • Teleconferences with the opportunity to ask direct questions
  • Substantial Member discounts on Property Women events and products
  • Work thourgh the On-line Course
  • Network with likeminded women on the Inner Circle
  • Discounts from selected trades and suppliers in our Little Pink Book

Want more information about our Diamond Membership?  Click here

Currency risks management when investing abroad

Exchange rate movements can substantially affect the bottom line of any property investment made in a currency other than that of your home country. Accordingly, if you plan on investing in foreign real estate, managing your foreign exchange risk properly makes sound business sense.

Of course, you will want to get the best deal on the larger currency transfers required for the property purchase and sale transactions, since those will be your primary foreign currency exposures.

Nevertheless, you might also want to hedge your currency risk over your anticipated investment time horizon, or you might need to make regular foreign currency payments to service a mortgage.

Ideally, such forex transactions should be made at the most competitive rates possible so that you can maximise your returns and minimise your exchange rate risks.

The rest of this article will describe some ways that you can manage the currency risk arising from your foreign property investment appropriately.

Shop for the Best Forex Rates

Since you do not have to use your local bank to make forex transactions or to hedge currency risks using forward contracts, you can inquire with other foreign exchange providers about the exchange rates they offer.

Shopping around like this can improve your exchange rate by 1 to 2 percent when making currency transfers. Reputable foreign exchange providers like OzForex work hard to ensure that your foreign exchange transactions are easy and efficient to execute.

Naturally, your top priority will be to shop for the most attractive forex rate on your initial foreign real estate deposit or when you are repatriating funds after a property sale. Nevertheless, you can also save substantially by getting better forex rates on periodic currency transfers that you might require in order to service a foreign currency mortgage.

Use Limit Orders

Limit orders placed with a reputable forex provider can assist you in obtaining an exchange rate that is better than what you might have received if you had just executed your currency transfer at the initial market rate.

Entering a limit order involves setting a target exchange rate for a particular currency pair and amount of currency that is better than the prevailing market rate.  You will also need to specify whether you want to buy or sell that currency amount if the market reaches your target rate.

Should the exchange rate move to the more favourable target level of your limit order, your forex provider will then automatically transact the currency amount you specified in your order.

Since most real estate investors prefer not to watch the forex market constantly, they can let their forex providers monitor the market for them by placing limit orders at strategic exchange rates in order to benefit from a temporary improvement in the relevant forex rate.

While most stock brokers will work limit orders for their clients, this useful ability is less commonly offered by forex providers. If you think placing limit orders might make sense for you, make sure to ask any prospective forex provider if they offer them.

Using Forex Forward Contracts to Manage Real Estate Currency Risk

Foreign property investments are typically done over a relatively extended time period of months or years. This makes forex forward contracts useful to real estate investors who wish to hedge the currency risk associated with buying foreign properties against longer term adverse forex rate shifts.

Foreign property investors can also use a series of smaller forward hedges when they need to make periodic foreign currency payments in order to service a mortgage.

Using forward contracts to manage property related forex risks permits you to set a market forex rate in a given currency amount for delivery on a specific future date. The forward rate is related to the spot rate by a mathematical formula that depends on the prevailing deposit rate differential between the two currencies involved for the chosen time period.

You can execute a forex forward hedge as early as two years before you will actually need to make a foreign exchange transaction related to your property investment abroad. Such a hedge can also typically be extended forward in time as its delivery date approaches should you wish to hold the property investment for a longer time period than originally anticipated.

If forex forward contracts might suit your foreign property investment hedging needs, then be sure to ask a prospective forex provider whether they can offer this product to you.

To learn more about your foreign exchange requirements, speak to OzForex. You can contact them via Property Women’s Property Professional Network

15 steps to property success

Key Steps to YOUR Property Success

It’s time to take action. Here are 15 Steps to get you started towards Property Success.

1. Where are you now

Take a realistic look at your financial position today…

  • What assets do you have?
  • How much do you owe?
  • How much do you spend?
  • Do you have any money left over to invest?

2. Where do you want to be

Write down where you’d like to be financially in 1, 5 and 10 years.

(You need to plan for your property success)

3. Pick a Strategy

You need to work out what Property Investment strategy suits you best.

  • Do you like to renovate?
  • Do you need cash flow?
  • Does developing or subdividing properties appeal to you?

There are many different strategies so you will need to pick one that suits your personality and budget.

The strategy you choose will determine the type of properties you will be searching for.  It would be impossible to look at every piece of real estate on the market so picking a strategy will help you narrow down your search and also help you communicate what you are looking for to real estate agents and prospective vendors.

It is then important that you stick to and focus on your strategy.

4. Create a Plan of Action

Without a plan you will not go anywhere.

Write down what you want to achieve and how you plan to achieve it and by when…be specific.

(Action will lead to your property success)

5. Finding the Properties

Not only will you need to do some research to work out the areas you need to be searching for your property, but it is also important that you think about attracting the properties you seek creatively;

  • consider advertising in local papers
  • community notice boards
  • use flyers
  • give the real estate agents in the area a good outline of the type of property you are looking for
  • have the type of property on a back of a business card and perhaps offer a financial incentive to anyone who finds you a deal (and hand these out to everyone you meet in the area).

6. Network with like-minded women

Surrounding yourself with like-minded property women is an important part of your property investment journey.

There are several reasons to network with as many property investors as you can. They can act as information sources; provide inspiration; and assist you in finding deals. You might even consider going into a joint venture with someone who shares your vision.

Other property investors are easy to find if you look in the right places; obviously you’ll meet them at property investment workshops, and other Property Women events. You can also find them by going on-line and logging on to property forums. Facebook can be an option too, for example www.facebook.com/Propertywomen. It’s worthwhile attending any networking events for property investing in your area. You might even like to think about organising your own networking events by placing ads in the paper or on-line.

Visit www.propertywomen.com.au to find out about upcoming networking events we will be having in your area.

(Networking with like-minded women increases your changes of staying focussed and motivated which leads to your property success)

7. Find your Finance

The first thing you need to do is get your finances in order by getting any bad debt under control. It’s a good idea to add a mortgage broker to your investment team and establish your borrowing capacity:

  • What is your available equity?
  • How much can you borrow?
  • What value property can you buy?

(the right loan increases your changes of your property success)

8. Assemble your team

Start by getting referrals from others through your network and check out our Little Pink Book online services directory :

  • Find a Property Wise Accountant
  • Find a Property Savvy Lawyer
  • Take the time to find a good Property Manager
  • Do you need a Quantity Surveyor
  • Need a Trade or Service provider in the area

(a Good team equals property success)

9. Research

  • Choose an area to begin your research (this will depend largely on the strategy you choose, your suburb could be a good start).
  • Go to lots of Open for Inspections and Auctions.
  • Read property investor magazines.
    • Both the Australian and New Zealand Property Investor Magazines list sales and rental returns in the back of the book.
  • What to look for:
    • Location
      • Is it a good or bad street/suburb
    • Do not overlook up and coming suburbs.
    • Are surrounding houses well cared for?
    • Proximity to shops, schools, cafe’s
  • Infrastructure
    • Proximity to roads and railway/buses, hospitals
  • Type of property
    • House, townhouse, unit, block of units development site
  • Property with a twist
    • Can you turn a 2 bedroom house into a 3 bedroom house
    • Can you divide it into flats?
    • Can you turn the garage into a bedsit?
    • Can you subdivide the block / section?
    • Is it zoned for development?
  • How can you add value?
    • Paint
      • The absolute cheapest and quickest way to add value
      • Choose neutral colours
    • Revamp the kitchen and bathroom
      • It’s not always necessary to replace them
    • Replace the carpet if old and worn
    • Clean up the yard
    • Build a new fence
  • Find bargain suppliers (consider Auctions)

10. Make Offers

  • Make low offers- what have you got to lose?
    • Perhaps even between 10%-30% below asking price
  • Always buy at less than market value (which isn’t always the asking price!)
  • Be aware that sometimes the asking price is good value

11. Do your due diligence

  • Have an escape clause in place
    • Check it with your lawyer
  • Building/pest inspection
    • Is the building structurally sound
    • Problems and Pests can make you money
      • Ask for a discount for you to correct any problems

12. Add value

  • Plan your renovation during the contract period so that it can begin shortly after settlement.
  • Cosmetic Makeover
    • Budget your time
    • Allow 4 weeks for your renovation (time is money)
    • Follow a strict budget – you are not living in this house
    • Spend no more than 5% – 10% of the cost of the house on renovations
      • E.g. $200 000 house – $10 000 to $20 000 on renos (maximum)
      • If your reno is more than 10% then change your plan

13. Find good tenants

  • Thoroughly check out potential tenants
    • Can they pay?
    • Will they look after the house
    • Check out their references
  • Or find a good property manager

14. Put your equityto work!

  • Revalue the Property
    • Talk to your mortgage broker
  • Then do it all again
    • Build a multiple property portfolio over time

15. The secret to ongoing success

  • Continue to educate yourself
  • Mix with like-minded people

Summary

  1. Where are you now
  2. Where do you want to be
  3. Pick a Strategy
  4. Make an Action Plan
  5. Find Properties
  6. Network
  7. Finance
  8. Your Team
  9. Research
  10. Offers (buying)
  11. Due diligence
  12. Add Value
  13. Property Management
  14. Revalue/Refinance/Buy More
  15. Education (www.propertywomen.com.au)

Get started today!

Stage 1:

This is the getting started phase. Steps 1 to 11 could be completed within 90 days.

Stage 2:

Stage 1 will form the base for steps 12 to 15. You have researched, made offers and secured your property. You can now add value quickly. You can then rent it, revalue it and refinance it so you can do it all again and again. You are then on your way to reaching your financial goals.
If you’re committed to starting out or continuing your property education, check out the resources we have available to help you : www.propertywomen.com.au

Wishing your all the property success you dream of.

14 good reasons to invest in New Zealand

Investing in New Zealand

1. It’s a buyers market

With limited competition and lots of properties on the market the property market in New Zealand can be described as a buyers market.

2. Building consent numbers have fallen

The number of building consents for houses in March fell 8.3%.

3. New Homes are becoming more expensive

Due to the falling dollar new homes will be more expensive to build as the cost of importing construction material is increasing and a number of builders have left or are leaving the industry.

4. Investors are currently not buying rental properties

This will lead to a shortage in rental properties available and therefore will see rents increase over time.

5. Lower interest rates and tax cuts

Lower interest rates and tax cuts have made it easier then ever before to afford to purchase property in New Zealand.

6. Property prices have remained reasonably steady

Property prices have remained reasonably steady in the face of negative media and the current financial crisis.

7. Vendors are ready to negotiate on price

Vendor are ready to negotiate resulting in opportunities for investors to pick up bargains.

8. Positively-geared property deals can now be found

In most areas of New Zealand positively geared properties can now be found.

9. Prices are set to increase again

Once the confidence in the property market picks up again property prices are set to rise.

10. New Zealand’s property prices have doubled every 7 years

On average property prices have doubled every seven years for more than 50 years and there is nothing to suggest that this will change.

11. No Stamp Duty

You do not need to pay stamp duty in New Zealand.

12. No land tax

Investors do not need to pay land tax in New Zealand

13. Low entry level

Investors are able to enter the property market at the lower end as some properties are available to investors from as low as $100,000 NZD.

14. Exchange Rate

Australians are able to buy more property for their dollar due to the current exchange rate.

Finance – Making or breaking your next deal

Finance is Key

Finance is a key factor when obtaining an investment property. As an investor, you need to have the necessary information and understand all the available options to make successful decisions that suit your next purchase.

Financers don’t always understand property investing that doesn’t conform to the ‘norm.’ That’s why it’s important for you to know about all the new options available in the finance industry. Thinking outside the box could significantly impact the cash flow of your investment and determine whether you can even obtain the loan.

Since structuring your finance properly can make or break your next deal, here are a few options to consider:

Joint Ventures

Joint ventures can allow you to accelerate the growth of your property portfolio even when you have little or no more equity to use as deposits to buy property.  There’s nothing worse to an investor than finding a great deal or wanting to purchase more properties without the means to do it. If you keep running out of equity, even though you have great borrowing capacity, this strategy may be for you.

Joint ventures can be a good way to fast-track your portfolio but it’s important to choose the right partner. “Joint venture partnerships should have a common purpose, complimentary skills, and an asset base from both sides that can contribute to the project,” explains Todd O’Neill, whose career in banking and finance spans 20 years. He currently operates a business finance company, The Mardent Group, with Damian Mantini.

Joint ventures are successful when the partners have done their homework on each other and have written agreements that spell out the conditions of the partnership.

Low Doc (or Lo Doc) Loans or Lines of Credit

If you are self-employed or an independent contractor with no proof of income or a property investor that has been rejected by traditional lenders you might want to consider low doc lending. Changes in financial trends are adding to the demand for non-conforming products, such as low doc loans, which require less “documentation” than traditional loans.

These loans predominantly for clients who have difficulty documenting their finances with regular pay slips, tax returns or business financials. For example, while the self-employed often can’t satisfy traditional lending criteria, they can be perfectly capable of serving a loan.

Keep in mind, low doc home loans are usually more expensive than traditional loans due to the higher level of risk. In addition, “requirements are more stringent than in the past,” warns Mantini. An investor must demonstrate the ability to repay the loan.

Commercial Finance

Commercial property offers a wide range of exciting investment opportunities. While purchasing commercial properties, retail shops, industrial land, or offices have a higher risk; returns are often higher as well. A well-researched commercial property investment can be very lucrative and require little attention once it’s tenanted.

Commercial property finance is typically more complex than residential funding. A qualified broker can help you understand all your options and determine which loan structure is right for your needs. Normally banks will lend up to 75% of the value of the property.

Cross-Collateralization

Cross collateralization occurs when more than one property is used to secure a loan or multiple loans. It is a creative financing technique that has been used for years in commercial real estate and is currently being used by some forward-thinking property investors.

For example, if you own one property and want to purchase another without using your own funds, the bank can use both properties as collateral for the new loan. However, be aware that cross collateralization gives banks greater control over the properties and this strategy has the potential to negatively impact future investment opportunities.

These are just a few of the innovative options available in the finance industry. As useful as traditional financing strategies can be in acquiring property, don’t overlook the other options of finance that can unlock doors to wealth and prosperity.

Recent Successful Case Studies:


Tracy Kearey from the Mardent Group
has given us two recent case studies which show how a broker can help their client overcome obstacles that are stopping them getting finance.

Case Study 1:

Client purchased the property 2 years prior with vendor finance. The terms were for 2 years with the client making I/O repayments. Time was up!

Obstacles:

  1. Client’s bank would not refinance the vendor finance
  2. Client wanted to use a current valuation not the contract as she had renovated the property and wanted pull out the equity for another venture.

Solution:

I called my lenders and established that as she had repayment history on the current facility and we were looking at an 80% LVR the application would be considered.
The application was submitted and within 1 month the application was settled client had a lower repayment and funds to move onto the next venture!

Result:

Happy Client!

Scenario 2:

A self employed couple (61yo and 55yo) approached one of our brokers in order to purchase a commercial security in the name of their self managed super fund.  The purchase price of the security was $800,000 with an expected rental return of $110,000 per annum.  The loan they were seeking to complete the purchase was $500,000.  The security on offer, their unencumbered owner occupied property.  The broker shopped the loan to a couple of the major Banks and was told no it doesn’t fit their lending criteria

Obstacles:

  • The borrowers business strategy was to purchase ailing “Tint-a-Car” franchises and build them up in to profitable going concerns.  In early 2009 they sold their previous “Tint-a-Car” franchise’s for a considerable profit and purchased two new franchises.  2010 financial year was spent building up the new franchises therefore all monies earnt were put back into the operations and the business traded at a small loss.  The borrowers opted to draw from the profits of the sale rather than take a salary from the business, therefore the borrowers income was $Nil for the 2010 tax year.  In 2011 all there planning and hard work paid off with a substantial profit earnt plus directors salaries paid.
  • As the borrowers were nearing retirement age and the security being used was their owner occupied property, responsible lending concerns needed to be addressed.
  • As the property being purchased was in the SMSF rental income could not be included in servicing.
  • Average of the two financial years was not adequate to service the debt.

Solution:

  • We obtained the borrowers 2012 interim figures and BAS to March 2012 (including tax portal lodgement evidence). The figures shown in the interims and BAS exceeded the 2011 tax year.  Which meant that based on the 2011 figures supported by the current trade servicing was evident on trading income alone.
  • The value of the commercial premises being purchased exceeded the proposed funding by $300,000 plus the value of their current franchises provided us with an equitable exit strategy which meant we were able to write the loan over 30 years rather than reducing the loan term to years to retirement.
  • The borrowers entered into a loan agreement with the superannuation fund where the superfund were to pay a regular monthly payment to the borrowers.  Formal evidence of the arrangement was provided.  The repayment was adequate to cover the monthly commitment for the proposed funding.  Whilst we did not use this income in servicing it supported the proposal put forward to our funder.
  • The loan application was received by our office on 8 May 2012 and settled just 18 working day later on 31 May 2012 at a residential Profession All in One Line of Credit rate.

Result :

Happy Clients

If you’d like to get in contact with a finance broker to see how they can help you we have some great finance brokers based around the country go to Property Women’s Property Professional Network to find out more.

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