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Preparing for Retirement with Real Estate

In their plan for retirement, many people invest in the share market as a means of building wealth for the future. However, the common perception is that diversification of your investment portfolio is a way to minimise the risk of losing a lot of money at once. 

Investing in property presents a great opportunity to achieve this that can offer many benefits to investors.

If you are not already involved or haven't put in many hours of research into the share market, it can be a strange, confusing and unpredictable thing. Trying to understand an explanations as to why one share went up and another went down can certainly be head spinning at times.

To investors, real estate represents an opportunity that is reasonably steady and can easily provide an income stream during retirement. You will rarely see property value or rental yields jump significantly in a short period. Instead, property values can consistently grow over time. 

It is also a good opportunity because, when investing in real estate, there are steps that owners are taking to boost the value of their investment. Improvement works to the property like renovation or landscaping are just some of the ways an owner can take improving the value of their asset into their own hands.

A bonus is that doing this can often provide a strong justification for rental increases that will see a better return on investment over the years. 

It is important to note that, while initially your returns will be lower due to the cost of taking measures to improve the value of your property, once the mortgage is paid off (hopefully by the time you retire) you can continue to rent out your property to maintain it as a revenue stream. You could also live in your investment or choose to sell it. There are a lot of options.

As with all investments, there comes some risks and downsides to investing in property.

There are always going to be ongoing costs when you purchase a property as an investment, just like there would be for your home. Maintenance costs, insurance and replacement appliances can all be costly on their own - let alone if they happen at the same time. 

But, in the long run, investing in property can present a lucrative strategy for planning a comfortable retirement that many Australians are already taking advantage of.

Planning for the future is an important step for everyone to take. If you've already invested in property and are seeking ways to maximise your return on investment, or if you're considering property investment, our real estate experts can help!

Call 02-9301-5603 to talk to Sarah Jubb - your dedicated relationship manager at Little Real estate. 

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Buddy Buying Loans – How To Build Your Property Portfolio Faster

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 Building a property investment portfolio is a dream for many women seeking to achieve financial independence. However, getting your first loan under your belt can be challenging finance wise, but you do have options.

They say two heads are better than one. Have you considered pooling your resources to buy an investment property with a friend, business colleague or family member? Or maybe you have, but you’ve held back because you feared entangling yourself in a loan with someone else and what that might mean to your credit rating and financial status if it all went wrong.

Well hold back no more, as there are lenders in the market today who allow two borrowers to buy the one investment property utilising separate loans.

And the good news is – each borrower is separately responsible for their own loans.

These types of loans offer women who want to grow their investment portfolio the option to buddy up for success, by allowing them to split the cost of buying an investment property with someone else, while retaining individual control of their finances.

Consider the Benefits:

  • Pooling money could allow you to expand your property portfolio faster.
  • Allows you to borrow more funds than you could otherwise afford on your own.
  • You might be able to buy the property you want, in the location you want, rather than having to settle for a cheaper option.
  • Your credit rating is not affected by the actions of your co-owner.
  • Each borrower can decide on how they want to manage their loan own repayments.

Naturally as standard practice each borrower needs to show they can service the loan they are taking out, but this type of loan is certainly a great option. For example, say one borrower has a sizeable deposit and the other lacks deposit but has good serviceability. In this situation buying with a buddy could be a win-win for both parties.

However, in saying that there are things to be considered.

You should always buy with a like-minded person, someone with similar goals to yourself. And you need to make sure you feel confident that the other partner is financially secure enough to make their loan repayments.

With co-ownership it is also imperative that each party seeks out independent financial advice and a co-ownership agreement is in place before buying a property.

If it all goes wrong things can quickly turn into a nightmare, so it is important to protect your position. I recommend you speak to a solicitor and have an agreement drawn up that is specific to your needs and situation.

The agreement doesn’t have to be complex, but it will require you to have rules and agreements worked out in advance – this is crucial. For example, co-owners may agree that if one wishes to sell, the other co-owners have first right of refusal to buy their share.

Things to be considered might include:

  • The contribution of deposit and the cost of the investment property?
  • Should a sinking fund be set up to cover repairs?
  • How long will the property be held before selling it.
  • A plan to pay for unforeseen maintenance costs.
  • How various insurance issues will be managed?
  • Taxation/depreciation and capital gains tax issues clarified
  • On the sale to another co-owner, how will the sale price be determined?
  • Who determines the rent payable and the tenant?
  • Will either of the co-owners live in the property and on what basis?
  • How sale proceeds will be distributed and why a sale would take place?
  • How will disputes between owners be resolved?

Reading through this list gives you some idea of the things that need to be addressed. No doubt you and your solicitor will come up with many more which is why it is important to draw up your co-ownership agreement prior to purchasing. This way you can avoid any disputes down the track.

In regards to the finance and choosing the right loan for your co-ownership investment property, banks and lenders are continually altering their products, interest rate offerings and there’s always great deals to be found.

If you would like to discuss the right loan for your buddy buying journey or revise any of your existing investment loans just give me a call.

There is no doubt that when it comes to investing in property, knowledge is power. Whether you are new to property investing or purchasing subsequent investment properties, avoiding the common mistakes made by others will ensure you build a successful property portfolio.

Contact:         Tracy Kearey
Position:         Managing Director and Mortgage Specialist
Business:        Home Loan Connexion Pty Ltd
Mobile:           +61 (0) 417 738 469
Phone:            +61 (7) 240 4800
Email:             tkearey@homeloanconnexion.com.au
Web:               www.homeloanconnexion.com.au
LinkedIn:       https://www.linkedin.com/in/tracy-kearey-67631a22/

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Geoff Doidge

 

Behind every Great Woman there could be a great man. In Property Women’s history there are actually three great men…And one stands out for mention NOW…

If you are new to property investing this name may not ring any bells yet, but if you have been in the field for the last 10+years then you should at least have heard something of the ” RENO KINGS

The Reno Kings were renown for their ability to create ” Money out of Muck “, or “Dollars out of Dirt”. Of course that may not be anything new for many renovators, but the Reno King’s uniqueness came in their ability to have FUN while they teach others to make fortunes too.

As I mentioned there were actually 3 great or ” wise ” men behind Property Women’s foundation and success. Although you will only see two keys Kings on stage, Paul Eslick and Geoff Doidge, the 3rd wise man, Steve Blably was the business backbone. It was these three men who first started Property Women back in 2006.

Geoff Doidge was the main reason Property Women exists today!

Geoff had the vision and conveyed that with conviction to Steve Blaby, who was already running the existing ultra busy and successful Reno kings business, who had the auspicious task of forming and setting up a complete new business with a focus to be run by and for women.  That’s when Judith Taylor and Rachel Barnes were asked to be involved in the leadership and management of Property Women. Before I (Jo Vadillo) purchased Property Women some years ago, the business was previously owned by the 3 Reno Kings, Judith Taylor and Rachel Barnes.

Today we want to reflect, respect and be inspired by the visionary Geoff Doidge.

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Geoff sadly passed away on 16th April 2018.

Geoff story is quite a long one, but to cut the chase, he always described himself as a " Failed Public Servant" who failed his way to success... and he didn't start until late compared to many!

After "failing" to be a good employee, he took his leave of the public service and decided to follow his passion of renovating property. He loved what he did and was getting great results, and as a gregarious guy, he was eager to share his knowledge with others.

Writing a book was of the key things on his ' wish list '. About 28 years ago, he attended a course called ' The magic of Goal Setting ' run by Josh Grant, and he shared his desire to write a book. John asked him a few questions which he didn't have answers for and John challenged him to get more clarity and define his desire to make it a goal... or to admit that it was still just a dream. 

Geoff rose splendidly to the challenge and basically wrote a manuscript within months and had his first book published! But that was just the beginning... 

Josh Grant suggested they run a few events together which they did... and that's when Geoff met Paul Eslick. The Reno Kings were born... and rest as they is history! 

It's worth noting that Geoff ended up having 7 books published, inspired and educated over 300,000 people from stage, and was still teaching though interviews until July 2017!

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Simple Ways to Add Value to Your Home?

Darren Wallis is the owner of Modern Solutions, a company that provides the services for the construction of stratco outback verandah and verandah designs. Your home is your life’s biggest investment. While maintenance for the same can go a long way, adding value to your property is equally important.

Outdoor living spaces are the best way to add value to your property. This is because it is a new addition and not just a remodeling of old parts of your home.

Having such a space added to your property can help price it at a higher level giving you a better price if you ever intend to sell it. Even if you don’t intend to sell it, investing in increasing your property will never be something you regret.

Like all redesigning decisions, adding an outdoor living space requires planning too. This includes choosing from a vast range of options. To make your decisions easier, here are a few ways you can add value to your property.

 

 

Modern Patio:

The number of residents in Melbourne that are choosing to invest in a patio is increasing as the days pass. There are also various new designs and structures that can help make any regular property look lavish and well invested in.

With additional features like bifold door and windows, roofing choices and retractable screens, modern patios are taking outdoor living to the next level.

Pergolas:

Pergolas are known to have slatted rooks that cover a patio-like structure while proving beneficial in its several features. These features include better shade, the better scope of lighting decorations and more greenery.

It also helps provide the comfort of an indoor living space while being situated outdoors. This is because it protects you from bugs and allows you to have beautiful curtains to make your living space livelier.

You can also opt for hanging flowers instead of lights or grow vines on this structure.

Gazebos:

Gazebos are similar in structure to patios; however, these can be used more extensively. Homeowners have been opting for Gazebo structures only to turn them into an outdoor lounging area, dining space, spa room, etc. A gazebo can also house your delicate plants or your coffee table and seating.

 

Landscaping or Gardening:

Choosing landscaping and gardening to add value to your home can be fruitful in resulting in an increase of 10-2o% of the same.

For those homeowners in Melbourne that love a green property, this option is ideal to delight your gardening senses. While you can enjoy the gardening part yourself, you will need to rope in a professional for expertise to get the best results and really increase the value of your home.

Proper installation is an essential part of landscaping and expert planning helps makes your expense worth it instead of turning out to be a waste.

 

Outdoor Kitchens:

While a lot of homeowners are indulging in outdoor dining spaces, the number of residents that are opting for outdoor kitchens is on a rise.

Such a construction revolutionizes the barbeque parties and takes away the need for an exhaust. This can also help your cooking experience be cooler and seem more interesting. Of course, this requires a proper set-up and facilities like electricity, gas, ice makers, burner, ovens, sink etc.

A table can also help keep your family and friends close and within hearing distance while you display your talents at small parties.

Outdoor screening room:

Imagine the amazing thrill of a cinematic experience outdoors. An outdoor screening room provides you with the same. These are also built to bear the extreme weathers of Melbourne, Australia which means that you can enjoy this experience all year round without having the hassle of removing the set up during the winters or monsoon. It is important to get a good professional to help you get the best results that will be durable too.

Lighting Options:

Inducing lighting options into your outdoor living space can make your outdoor living experience one that is brighter and more exciting. It also helps upgrade the aesthetic aspects of your outdoors.

While lighting can seem exciting it is important not to light up the place too much as it could be harsh on the eyes instead of creating a pleasant feel. Think about your decor and structure while selecting lighting and placements for the same.

Outdoor fireplace:

Take the adventurous feel of a bonfire and couple it with the comfort and peace of your indoors when you choose an outdoor fireplace. This can make some of the most boring family gathering a load of fun. It can also help you enjoy your outdoor living experience even during the harsh winters.

Counting the stars while reminiscing old memories with a cup of coffee can never get more exciting than at an outdoor fireplace.

Swimming Pools:

Adding an outdoor swimming pool or spa can help intensify the relaxation of your experience. You can also opt for a heating system that makes this addition usable even during the winters. This also takes your properties aesthetic rating to a much higher level.

Choose from these outdoor living space options to add value to your home and invest your hard earned money in your life’s biggest and most durable investment.

Have a professional help you with creating the ideal outdoor living space. They can also give you the best advice for your property and can give you better results by building structures that enhance your property and don’t stand out absurdly.

 

Not All Property Managers Are Created Equal


Not All Property Managers Are Created Equal.

Finding a good property manager is so vitally important to the ease and on some level, the growth, of your investment property.

 

You will hear me mention this time and again but your investment property is a business. You need to treat it like one.  So finding yourself a  good property manager is a good investment.  

 

You have sunk a massive amount of money, time and to a degree risk into this investment.

For a case study, let’s assume instead of a house it is a cafe.

 That cafe is a 3-hour drive from home so you enlist the services of someone to manage things for you. Hire staff, ensure it is maintained, clean and prices are increased when appropriate.

 If the customers of employees have complaints they are looked after…or managed appropriately.

 If there are maintenance issues you want to ensure they are actioned. Your manager should get quotes plus share photos so you can see the damage, concerns and why trades were required.

 Managing a cafe is a big deal. If that cafe cost you $500k and you make $48,000 a year from it with $39,000 worth of costs you wouldn’t want to have too much grief from the business.

You want to sleep at night and see the takings in your account fortnightly or monthly. You want to be sure your obligations to a finance company are met. You would also like to have a report at the end of the financial year so you can see the real numbers.

If your manager hired bad staff the cafe would get a poor reputation. It wouldn’t be run well. It would not be maintained. There would external complaints to also deal with.

At this point  you would probably fire your manager and look for someone to trust, someone who can alleviate your financial situation. Ensures you get peace of mind, reduce stress and the time that you are dedicating to your business.

Which brings me to this point if you would be quick to fire a bad manager in a business scenario.  Why is it so many investors hold onto lazy, unreliable, non- communicative property managers?

We hear the worst of stories from investors, some recent highlights – being told after 3 months there has been no rent received (true story), being charged for pool cleaning (no pool), properties left damaged, maintenance not reported.  So a small leak becomes a big expensive damp issue and tenants not paying market value so the owner has been out of pocket potentially thousands of dollars.

I have had a mostly good run with managements. I have had my PM’s put up new curtains for me in an interstate property.  They have over delivered on sourcing quotes and secured a rental return on one property $20 above the advertised weekly price.

Some property managers are bloody awesome. It is a tough job so I salute the industry heroes out there. PM’s have many people to report to and no one calls them for anything particularly positive. It is also a job with no standard hours so it can be draining mentally with plumbing issues that happen at 7am on Sunday mornings.

If you have a good property manager, maybe thank them, send them a Xmas card, let them know they are appreciated. They are looking after one of your biggest assets so you want to know their name!

If you need to fire the one you have because they are out of luck and out of excuses then do it fast!

Property Women has secured an awesome deal with Little Real Estate so if your properties are in QLD, NSW or Victoria.  You can connect with Little today and get a dedicated account manager.

Just for mentioning that you are a member of our community they will waiver re- leasing fee’s, knock off 1% from their standard fee’s, price match any existing management fee’s plus you will pay NO MANAGEMENT FEES for 6 months – even on an existing lease.

You are a business owner, expect to have your team work for you, deliver a good service, secure you the best tenant and jump in when things go wrong.

Jo Vadillo

Jo Vadillo is a seasoned property investor and long time advocate for having the best team around you when it comes to investing. She often preaches that you get what you pay for. Cheapest is not always the best, but neither is expensive. Interview your team, hire slow, fire fast and expect the service you deserve.

How to maintain the best investments out of your divorce to secure your future by Tanya Somerton

Let me introduce you to Michelle.

Michelle and her husband of 28 years have separated and have just settled on their financial agreement after dividing their investments. If you have read my book The Jelly Bean Jar, you would know l break divorces into three categories: A Your decision, B Partner’s decision, C Joint decision. Each of these categories has different connotations for the partners, involved, and that is why ‘no two divorces are the same.’ Depending on the class you fall into will depend on your emotional state. How long it takes to recover, and ultimately the team of professionals l engage to best deal with your circumstances. Ultimately this team with help to achieve your seamless outcome from your divorce journey.

Now getting back to Michelle, she falls into category B. Michelle had no idea, her husband was unhappy. She was ill-prepared for the disaster her life was to become when he asked her for a divorce. The couple had worked hard all their life and had two adult children. Together they had acquired a property portfolio of four investment properties around Australia and owned their own home. They both have substantial superannuation and if they had stayed together retirement was only a few short years away. Feeling frantic about her future Michelle, found out some months later her husband had a new partner. The ex-husband remained in the family home, and she moved out and was renting a two bedroom unit. Her hopes, dreams, and wishes for an enjoyable retirement out the window in four word….I want a divorce. Not to mention the reality of being alone and scared about what her future holds.

Michelle had been referred to a lawyer, by a fellow work colleague.

The lawyer had done a good job for the co-worker’s sister. Now here lays the problem, ‘no two divorces are the same’. And a lawyer could do a great job for someone else but not be the lawyer for you. My category system alone highlights this discrepancy. So off Michelle went and worked with the lawyer for some months. They collaborating on what Michelle thought was the best possible outcome for her financial situation and racking up a bill into the tens of thousands. But wait, this lawyer had no idea about investment properties, capital growth, taxes, mining areas and the list goes on. The lawyer just knew about the law.

Throughout their marriage, Michelle had let her husband make all the investments. What property they purchased and where, how the mortgages were structured and so on.  When it comes to negotiating for your future having insufficient knowledge of your circumstances and structures, due diligence is paramount. Michelle’s lawyer certainly had no appreciation; she didn’t even own any properties herself, how possibly could this outcome be beneficial? To the lawyer, it was just a numbers game.

In steps TLC Investment Group, my mortgage broking company. When l first met Michelle, she was looking to refinance two of her investment properties as part of her separation. Lucky for her, as a property investor myself, I highlighted straight away something was desperately wrong. The agreed split of assets was unfair. The husband wanted to keep the family home and two of the investment properties. Michelle was to receive the other two properties and her superannuation policy. 

If your lawyer has no idea, they rely on their client ( being Michelle) to help guide the division of assets and agree on what they think to be right. This is where a team of experts on your side is critical to your success, a team you can trust and who are the subject matter experts.  In this instance, Michelle had not taken into consideration that one of the properties she was about to acquire was in a mining town. Or that the mortgage on the property nearly three times its value. BOOM! Her future borrowing power not to mention the meager income the property was generating could ruin her future.

Michelle ultimate hired my company Tanya Somerton Divorce Angel, and we got to work reviewing the assets and the superannuation of both parties. We completely renegotiated the financial settlement much to the distaste of the ex-husband who thought he had just gotten away with a massive coup.

Couples Joint Assets

Husbands super:   Value $425,000.00                              

Wifes super: Value $525,000.00                       

PPOR: Value $650,000.00                             

#1 Investment: Value $450,000.00   Mortgage $250,000.00

Investment #2: Value $185,000.00   Mortgage $365,000.00

#3 Investment: Value $395,000.00 Mortgage $200,000.00

Investment  #4: Value $590,000.00 Mortgage $225,000.00

Total Value:$3,220,000.00              Debt: $640,000.00

 

Total value of assets:            $2,580,000.00                    

 

The economic chaos, the husband, would have left Michelle with, would have her working well into her late sixties, while he skipped off with his new partner. Looking above you can see that by dividing the assets by half, the couple would both receive roughly $1.25 Million each. But the first lawyer had not taken into consideration the adverse effects property #2 would have on Michelle’s future, the changes in land tax laws and costs associated. Michelle would also need to use funds as a deposit for a new home, and a possible loan, otherwise she would continue renting.

Everyone must have a property strategy, and as an investor myself, paying down the debt to ultimately live off the income is fantastic. That is of course if the assets held are in good order and the returns worthy of the risk. In Michelle’s case, their property portfolio was a mixed bag, of good, average and bad assets. And the ex-husband was trying to hand off the bad.

Outcome:

Michelle now owns only one of the properties the couple had in their portfolio. Why might you ask? After reviewing the couple’s assets and liabilities, my financial angel highlighted that the super policy Michelle was in was returning above average. The fund was excellent and the penalties and fees low.  When we reviewed the portfolio, it was clear that both parties needed to hold onto the property in the mining town as a dual risk. The couple would sell another profitable investment home to pay down the debt in the mining town property and offset the capital gains. Leaving the other properties for the husband if he so wished. The reason we didn’t want our client to keep any of the remaining properties, had to do with her wanting to leave the workforce within the next ten years, if not sooner and if we could build up her super, she would be able to survive comfortably.

Divorce Angel’s Asset split:
  • Together the couple needs to hold on to investment #2 until it is sold. This way both are responsible for the risk and if the property is sold and a loss is made that figure comes out of both asset pools or the sale of one of the other assets. It also meant that it was in both their interest to work together and come up with a positive outcome.
  • The property with the most equity (Property #4) would be sold to pay out the debt in the mining town property. ( Best case wiping both properties off the asset register).
  • Currently, Michelle is renting a unit, and with the transfer of land being 50% of its value in a divorce as of July 17, an additional fee is involved. We recommended Michelle live in one of the properties. This way the land transfer is not required as the house would be her Primary place of residence. In the current lending environment, it also meant a cheaper interest rate on her loan of up to 1 percent. Michelle decided that property #1 would be preferable. We have now refinanced this property, and it will become her home until she decides what is best for her future.
  • It was critical not to touch Michelle’s super as the balance, and the fund had excellent returns, so overall this was paramount.
  • The husband can keep the family home and asset #3 if he so wishes, as that was what he wanted originally.
  • Michelle is now entitled to a cash payout from the husband or a part super transfer of $545,000.00

All of a sudden Michelle’s future has turned around. She took control of her finances by being part of the decision-making process and understanding why the first offer was detrimental to her future. She relinquished the underperforming assets in her portfolio and now has the security of a place to live into her old age. Her super balance will get an injection of funds and some cash in the bank. She feels empowered because she no longer feels like her husband can walk over her. His attitude has also changed as he realizes, she can no longer be fooled.

My team of Angels is nothing short of amazing and the best in the business. If you are looking at traveling through the divorce juggernaut, make sure you have the finest experts on your team. One mistake and you could find yourself having worked all your life and not benefiting.

So did Michelle have a seamless experience? I have asked her that question and having dealt with a previous lawyer she realises the importance of a trusted team of advisors. My step by step process and a team of professional provided her with a level of security and a tribe of women she could rely on 100% to uphold her best interests. Considering her wishes and knowing my client, l am pleased with her outcome, and she tells me often, that if l hadn’t come into her life, she would be financially overwhelmed. She now has a plan for her life, financial security and a smile on her face knowing she doesn’t need a husband to make her happy, she is quite capable of doing that herself. She is even considering buying an investment property herself. From her perspective, seamless it was!

Michelle’s future looks bright, and she continually reiterates how we are certainly her Army of Angels.

Written by Tanya Somerton

Tanya Somerton is a divorce angel, whose business is to help women through divorce and separation with the aid of her’Army of Angels.’ Tanya has a ‘One stop divorce shop’ helping empower women to move on both emotional and financially and to live an independent and productive life. Her divorce model: 6 Steps to a Seamless Divorce, will limit legal cost, saving you money and teaching you how to become financially empowered, no matter what your financial position.

She is also the author of The Jelly Bean Jar – Empowering independence through Divorce. If you are looking to prevent any mistakes and save money this book is a must. Purchase your copy http://tanyasomerton.com/shop/the-jelly-bean-jar/

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