Neglected or maintained?
Owning a quality investment property over a number of years can do wonders for building your wealth. As capital growth and rental returns inevitably increase, the pain of owning an investment property begins to reap the desired return for landlords. The financial pain of transactions costs and establishing the investment property are behind you. Future capital gains and increasing rental returns are fruits to be enjoyed by the landlord.
Yes, an investment property can offer dazzling dividends. However, like any investment play, where there is a chance of a gain, there is also a chance of a loss. If you are a long term holder of real estate, time will usually take care of the market in your favour. The market may ebb and flow in the short term, but it will often reward the long term investor, both in increased rent and capital growth.
What is absolutely heart breaking for a landlord is when the investment property is trashed, wiping off market gains. Not only is this heart breaking, it is common. So common, that if you have not physically inspected your investment property in the past 2 years, you would be well advised to do so. Continue reading
Is it worth the risk?
Buy now without putting any money down, profit later… So goes the pitch for buying real estate “Off the Plan”
Putting your name down against an apartment or townhouse in a yet to be built development can be one way to profit in the property market. The major enticement for buying off the plan is that you secure a property at todays price (sometimes with no deposit) and wait for market growth whilst the property is being built.
As the market rises above your purchase price, the profit is yours.
The sales person will often provide charts, projections and promises of how the forthcoming development will perform as an investment.
The reason that buying off the plan is so popular is that some people have and will continue to profit handsomely from this investment strategy.
It is darkest during the hour before dawn and housing stock is usually at its lowest level the month before Spring. Given that the Federal Election has now been set for September 7, it is a fair call to say that the traditional Spring selling season will hold off until mid September. In turn, buyers already facing a lack of inventory will see the situation tighten even more in August.
Another interest rate cut combined with an election campaign announcement and a low level of listings, will keep the advantage with sellers, particularly in the Sydney and Melbourne market. In comparison with the Winter of 2012, the market has essentially gone from a near bust to a near boom. The market for houses below $1 million has increased about 15 percent from its low in the past 12 months.
Other indicators also suggest healthy market conditions. Time on market is now under 40 days, auction clearance rates are hovering at 80 percent, there are multiple buyers and offers per property transaction and sale prices are exceeding sellers’ expectations. The thought that the property market reacts poorly to elections has been destroyed in 2013 as the market continues to rally.
Real Estate Market set to benefit from a lower AUD
The property market is rising. Record low interest rates are credited with restoring confidence in the housing sector. But low interest rates may not be the only catalyst causing the market to turn around. A lower Australian Dollar (AUD) is also helping the Australian real estate market. If its international exchange rate remains low, it should also contribute to the sustainability of the market rebound.
Whenever the currency moves decisively in one direction or another, there are winners and losers within the economy. As the AUD soared over the past three years, its impact on affected areas of the economy was widely discussed. The real estate market was negatively affected by the high AUD, but its role seemed to have been overlooked in much of the commentary.