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CREATING WEALTH AND LIFESTYLE THROUGH

Issue 20

by Grant & Christina Penrose

Finally – the National Housing Market is Starting to Stabilise Five Fast Ways to Add Value to Your Property

Have You Selected Your Property Manager Wisely?

Would You Welcome a Better Fortnightly Cash Flow?

How to Hang On To Your Home When Money’s Tight!

PROFILE REAL ESTATE

Helping you understand Real Estate


Easter Pleasures: Chocolate Eggs and Purchased Properties! Wow, we certainly seem to have been all over the place since I last wrote, literally! Kayaking on Wivenhoe Dam, a fleeting visit to Stanthorpe to visit my 98 year-old Grandfather and - yeah yeah I know it's tough but I'm having to write this from the beach... It's seriously heaven, all calm as Alexander has his siesta and the big boys enjoy a walk with Dad. Just the waves crashing, a wonderful sound, so soothing and therapeutic. We've been blessed to enjoy glorious golden days and, for those few times of scattered rain, trusty Mum (yep that's me!) had the foresight to pack the Lego, an endless source of entertainment for all the boys. The day trip to Grandad's also worked out beautifully. The boys went straight to work in his gardens, weeding and digging for hours. Then a visit to my uncle and aunt where a long ride on the four-wheeler had all four kids grinning from ear to ear.

Okay, before I start to sound way too relaxed - I want to reassure you that it hasn't been all play - this year has been extremely busy, with every month getting better and better. Sales and rentals are up substantially from last year and the beginning of April promises a bumper month. Maybe the change of government has been a contributor to the confidence shown? From our perspective, we are definitely looking forward to the promised simplification of real estate paperwork and hopefully we can save some trees in the process! There are also many eagerly anticipating the reintroduction of the stamp duty discounts. We hope you also enjoyed some rest and relaxation (and lots of chocolate!) over Easter.

Christina Penrose

Uncle Trevor and the boys doing laps

Working in Grandads garden.

Out to dinner with Jade

Hours of fun with Lego

In this edition ➣ Easter Pleasures: Chocolate Eggs and Purchased Properties!

➣ Cut Your Mortgage Loan Term in Half! 10 Tips for Paying it Off Sooner…

➣ Finally – the National Housing Market is Starting to Stabilise…

➣ Property Investment Is Not A Get Rich Quick Scheme ➣ Have You Selected Your Property Manager Wisely?

➣ Would You Welcome a Better Fortnightly Cash Flow? ➣ Simple Steps to Stop Balcony Falls! ➣ Five Fast Ways to Add Value to Your Property ➣ Investors Have Eyes on the Qld Property Market! ➣ How to Hang On To Your Home When Money’s Tight! ➣ Are You Covered for a Disaster? 2

RE/MAX PROFILE REAL ESTATE creating wealth and lifestyle through property


Finally – the National Housing Market is Starting to Stabilise… Australia’s housing market is showing signs of stabilising after home values rose 0.2 per cent in March. Not only has the market remained unchanged for the quarter ending 31 March 2012, it is also level with the 30 November 2011 home values across the combined capital cities. The flat result over the quarter is the strongest result since March 2011 when values increased by 0.7 per cent. RP Data’s research director, Tim Lawless, points out that while the quarterly result was an improvement on recent quarters, the Sydney housing market has been the primary growth driver. “Looking at the quarterly results on a more granular basis, the improved conditions over the March quarter can largely be attributed to the performance of Australia’s largest housing market, Sydney, where values rose 1.1 per cent over the quarter. Values were down across many of the other capital cities over the quarter with the most significant drop recorded in Adelaide where dwelling values were down 1.5 per cent,” Mr Lawless said. According to the managing director of Rismark International, Ben Skilbeck, “While the housing market remains soft, the zero per cent change over the first quarter of 2012 demonstrates that it is consolidating its position following the decline seen in calendar year 2011. This month it was the resource rich states which delivered the strongest gains with Perth, Darwin and Brisbane up 1.4 per cent, 1.1 per cent and 0.8 per cent respectively.” Over the twelve months ending March 31, capital city home values are down 4.4 per cent with the largest falls being recorded in Hobart (-7.3 per cent), Brisbane (-6.1 per cent), Adelaide (-5.7 per cent) and Melbourne (-5.4 per cent). Despite the fall in Melbourne home values they are still up 45.5 per cent since the start of 2007. At the other end of the spectrum, Canberra continues to show the most resilience with values down just -0.3 per cent over the year. According to Mr Skilbeck there are a number of factors pointing towards an improvement in housing market conditions over recent months. “The ratio of national house prices to household disposable incomes is currently below the decade average. Additionally, according to the ABS housing finance data, both the value and number of loan approvals for the purchase of established dwellings are at levels not seen since November 2009. First home buyers as a proportion of all home loans approved are back to levels not seen for 2 years,” Mr Skilbeck said. Yields are also showing modest improvements. According to Mr Skilbeck, “Rental yields for houses across the combined capital cities have moved from just 3.6 per cent eighteen months ago to 4.1 per cent and gross yields on unit dwellings have improved from a recent low of 4.4 per cent to 4.8 per cent. The most significant rental yield improvements have been recorded in Darwin, Perth and Brisbane where yields have increased by 22 per cent, 21 per cent and 18 per cent respectively from their recent lows.” Materials and articles in this publication are general comment, not advice. The information is believed to be accurate and reliable but no responsibility is taken for any opinions expressed or for errors or omissions. Readers should not act on the basis of the material without taking professional advice relating to their particular circumstances.

Other market metrics are also showing some improvement. “The number of properties available for sale is continuing to moderate from the historic highs which peaked late last year and auction clearance rates have been holding above 50 per cent for most of 2012,” Mr Lawless said. “Additionally, we have recently seen the Reserve Bank reporting that the rate of mortgage arrears has fallen from a peak of 0.7 per cent to 0.6 per cent, a default rate which is comparably low by international standards. The latest Financial Stability Review from the RBA also highlighted that most mortgage holders are paying down more of their mortgage debt than they are contractually obliged to, a sure sign that Australians are coping with their mortgage debt,” Mr Lawless said. Source RP DATA 2 April 2012

Grant & Christina Penrose www.propertysalesbrisbane.com

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Would You Welcome a Better Fortnightly Cash Flow? What would you do with extra cash each fortnight? Save on interest costs by paying your current mortgage off faster? Save more swiftly for the next investment property deposit? Go on that dream holiday? There are so many possibilities…

Why not consider a Pay As You Go (PAYG) variation? Often overlooked by investors, the PAYG system is a great way to increase fortnightly cash flow throughout the year. The PAYG method of tax collection was introduced in July 2000 to replace previous versions of the same system, such as pay as you earn (PAYE). The system gives the option of claiming back tax regularly, rather than in one lump sum at the end of the financial year. A PAYG variation means that the property owner’s employer will reduce the amount of tax withheld to reflect set deductions like depreciation on a rental property. In essence, it’s a way of decreasing the amount of tax paid by the investor each pay period. It is important to note that submitting the PAYG variation does not replace a normal tax return. A tax return still needs to be filed at the end of the year to calculate the actual amount of tax liability. Your PAYG instalments for the year are credited against your assessment. A Quantity Surveyor can provide all current and future depreciation values for investment properties in a detailed tax depreciation report. Obtaining the report immediately after the purchase of a property will allow the maximum return from a PAYG variation, as the precise figures will make the instalments accurate.

The flexibility provided to the Investor through a PAYG variation, combined with depreciation deductions identified by a Quantity Surveyor, can be of great help in managing the fortnightly cash flow of an investment property.

Let’s consider a hypothetical situation: A typical $400,000 investment property would show an average annual loss (or deduction) of $35,000 and an average income of $20,000 for the first 5 years. The deductions include costs such as interest on a $350,000 mortgage, management fees, maintenance, and property depreciation. The total loss (income minus expenses) will result in a deduction for the owner of $15,000. In the 37% tax bracket the $15,000 deduction could generate a tax return (or credit) of $5,550. Under a PAYG variation, the investment property owner can adjust their fortnightly pay to anticipate this return, adding $213 to their pay packet each fortnight. BMT Tax Depreciation are specialists at maximising tax deductions for investment properties. Talk to an accountant about a PAYG variation to increase fortnightly cash flow. Article Provided by BMT Tax Depreciation. Bradley Beer (B. Con. Mgt, AAIQS, MRICS) is a Director of BMT Tax Depreciation. Please contact 1300 728 726 or visit www.bmtqs.com.au for an Australia wide service

Five Fast Ways to Add Value to Your Property Everybody would like to add value to their property and enhance its sale price. Leading agents believe every property can be improved and every owner should try to obtain maximum sale prices. Adding value to property isn’t necessarily that difficult. It takes planning and vision and, of course, sticking to a budget!

5. Add a WOW factor: incorporate finishes or factors that people remember. Perhaps a double-sized shower, French doors or an outstanding entertaining sell area. How to

your ho dream me for a price in

If you are thinking of buying or selling, please contact us for a FREE copy of our book “How to sell your home for a dream price in record time” for all the tips you need.

record time!

Seduce your BUYER wit home of h the their dreams!

BY GRA NT & CHR ISTINA PENROS E

Five fast ways to add value are:

1. Add a bedroom: preferably under the same roofline, convert a garage or dining area. Valuers generally begin their assessment of property by looking at comparable sales in line with the number of bedrooms. Immediately you can boost your property to a higher value bracket.

2. First impressions: improve the front yard and facade of the home to offer “street appeal”.

3. Add a bathroom: this is particularly important if you go from 3 to 4 bedrooms and can often be achieved by converting an existing laundry.

4. Use similar features and finishes to those in a more expensive property.

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RE/MAX PROFILE REAL ESTATE creating wealth and lifestyle through property

Materials and articles in this publication are general comment, not advice. The information is believed to be accurate and reliable but no responsibility is taken for any opinions expressed or for errors or omissions. Readers should not act on the basis of the material without taking professional advice relating to their particular circumstances.


How to Hang On To Your Home When Money’s Tight! With today’s ever-changing economy, home owners are under increasing pressure and especially when interest rates increases are combined with the rapidly rising cost of living. We believe that many households are under enormous financial pressure. Times are uncertain. Job security, interest rates, electricity increases and the general cost of living are putting families under more and more pressure. Whatever happens, it is important to attempt to hang onto the family home by riding out the storm.

Tips on balancing the budget to keep the home: • If mortgage payments are too difficult, try and switch to an interest-only loan • Shop for a better mortgage deal • Rent a bedroom or granny flat • Enjoy a great night in – regularly! Understand that property is a long-term appreciating asset. Hang onto it at all costs if you can; over a period of time the gain outweighs the pain.

Cut Your Mortgage Loan Term in Half! 10 Tips for Paying it Off Sooner… Anyone who has ever had to pay off a mortgage will tell you they would love to pay it off before the term, but most people will continue to chip away at their loan on autopilot. A proactive strategy can cut your loan term from 30 years to less than half in some cases. Robert Projeski of Australian Mortgage Options offers 10 ways on how to own your home sooner... 1. Pay your mortgage as you receive your income - for example, fortnightly. This cuts down on interest payable and can save you a lot of money over the course of your home loan. As there are 26 fornights in a year, but only 12 months, you effectively end up paying one month extra annually, reducing both time and interest on your home loan. 2. Set up an automated recurring payment for your mortgage payments. This is usually free of charge and means that you are always on time and can't overspend on other things, leaving you short to meet your payment obligations. 3. Park a large lump sum into your mortgage account. For example, if you get $2000 back from your tax return, receive dividends from other investments, sell a car, boat or caravan or get bonus payments from your job, make a large payment towards your mortgage. These large lump sums can cut years worth of interest off the loan. You'll need a re-draw or line of credit facility in order to have access to these funds when you need to. 4. List your regular expenses and you'll find one or two items that you can do without. Whether it's buying your magazines as subscriptions rather than at the newsagent or pooling your family's mobile phones and home phone on one plan, often giving you free calls in between all your numbers these can present a considerable saving. This will make a big difference to your cash flow, freeing up disposable income to put into your mortgage account. 5. Make a habit of using only your bank's ATMs. The charges (usually $1 to $2.50 per transaction or account enquiry) can easily add up to a nice little amount ($60 to $120 per month) that can remain in your pocket or go towards your loan. Another way to save on transactions is to get cash out on EFTPOS purchases rather than using ATMs. 6. Increase your repayments. You can cut up to two years off the lifespan of your loan by paying an extra $30 to $50 on each payment. This may just mean cutting out an extra cup of coffee here or there or occasionally taking lunch to work rather than buying it. Materials and articles in this publication are general comment, not advice. The information is believed to be accurate and reliable but no responsibility is taken for any opinions expressed or for errors or omissions. Readers should not act on the basis of the material without taking professional advice relating to their particular circumstances.

7. Have your wages paid directly into your home loan account, but you'll need a loan with re-draw or line of credit type facility so you can have unlimited access to the funds for living expenses etc. This will greatly reduce the interest that you pay as the interest is debited at the end of the month and usually calculated daily. 8. Offset your loans with a savings account. This is called mortgage offsetting, whereas the amount in your savings account (earning interest) is calculated/subtracted against the actual interest charge against the loan amount, then the interest is calculated only on the balance. For an example, if your loan is $400,000 and you have $100,000 in savings, this equates to $300,000 on which you actually pay interest. This of course greatly reduces the amount of interest you effectively pay and will save you years on your home loan. 9. Perform a mortgage health check. Sometimes you just have to admit your loan might not be the best for you anymore. It may have been superseded as a product or interest rates may have changed drastically, leaving you better off with a variable rate than a fixed one. In that case, look at refinancing. 10. When refinancing, consider pooling or consolidating any other loans (such as a car or personal loan) and credit cards (with a much higher interest rate) into the one loan as the savings often will outweigh the slightly higher loan amount. And if your repayments end up being lower than they were, consider keeping the same amount going. The extra on each payment can really slice some cost/time off your loan. Extra tip: If you're refinancing, consider making a lump payment at the start. Most loans are set out that you pay more interest in the earlier stages. So if you pay only $100 at the start, this can add up to about $1,600 in interest savings over the life of the loan. Ideally throw a lump sum against your loan, which instantly reduces the premium and hence the interest payable. Source : Australian Property Investor (3 February 2012)

Grant & Christina Penrose www.propertysalesbrisbane.com

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Property Investment Is Not A Get Rich Quick Scheme Some may describe the market as “sluggish”, others describe it as “normal real estate conditions”. Whatever the case, property investment has never been a get rich quick scheme. Property is a great investment over long periods of time. Too often people get excited when the market booms and fast gains can be made. This type of market is rare and generally lasts for short periods. The current climate is typical of a normal real estate market where one can make steady long-term gains over time. History shows that property has proven to be a great investment averaging annual growth of upwards of 7% per annum over 10 year periods. This provides the opportunity for property values to double every 7 – 10 years. There are riches to be made through property investment but a sound strategy and patience are the keys. Please feel free to contact us for free expert advice on all your property investment needs.

Have You Selected Your Property Manager Wisely? So, you have bought your investment property and are looking to secure quality tenants. How do you choose your property manager and what do you look for? Peace of mind plays a big part in property investment. The right property manager can save investors a whole host of headaches and sleepless nights, so choosing the right one is vital.

Tips on what to ask potential property managers include: • How many properties do you manage and how large is your management team? An effective property management department should operate on around 100 properties per manager. • Will you be the actual property manager looking after my investment? • How much experience do you have in this industry? A good property manager will offer the following: • An annual rent review • Timely processing of rent increases • Regular routine inspections • Minimise vacancy by planning re-letting. We would love to assist you with your property. Please contact us today on 3510 5222.

Simple Steps to Stop Balcony Falls! Four children fall from Queensland balconies every week, but property managers and lessors can take steps to minimise this risk.

“Thankfully, the child’s father caught him just in time.”

Queensland Injury Surveillance Unit (QISU) Director, Dr Ruth Barker, said falls usually happen when a child climbs over or falls through a balustrade. Children can also topple from furniture placed on balconies.

Dr Barker said there were three sliding doors from the apartment onto the balcony. None had child-resistant locks, so it was difficult for the parents to restrict child access.

Building codes have been changed over the years to reduce this risk. While the changes are not retrospective, older buildings can be altered to lower the risk of severe injury. There are simple solutions, such as fitting materials to reduce balustrade gaps to 12.5cm and minimising opportunities for small children to climb or fall through balcony railings.

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Dr Barker said that a two year-old boy nearly fell from the eighth floor balcony of a rented riverside apartment recently. The one-metre high balustrade had a concrete ledge 30cm off the ground.

In this case the property manager or lessor could fit materials to cover the lower part of the balustrade and child-resistant locks could be added to the sliding doors.

“The child was being supervised on the balcony but he managed to get a foot up onto the ledge,” Dr Barker said.

Source : RTA Newsletter (December 2011/January 2012)

RE/MAX PROFILE REAL ESTATE creating wealth and lifestyle through property

Materials and articles in this publication are general comment, not advice. The information is believed to be accurate and reliable but no responsibility is taken for any opinions expressed or for errors or omissions. Readers should not act on the basis of the material without taking professional advice relating to their particular circumstances.


Investors Have Eyes on the Qld Property Market! Investors are turning their interest back to the Queensland property market according to the Real Estate Institute of Queensland (REIQ).

with the resources boom continuing to attract families to the area.

The REIQ have listed attractive property prices, strong demand from tenants, and improving confidence as the catalyst for more investors in the property market. ‘‘After being in hibernation for most of 2011, investors are starting to return to the market with REIQ accredited agencies also reporting a more buoyant mood since about November,’’ REIQ CEO, Anton Kardash, said. The latest Australian Bureau of Statistics housing finance figures for November found the number of investors in Queensland increased by more than 16 per cent over the month. This return to investor activity, while still slightly below historical averages, is also being driven by the lower interest rate environment that is now in play.

REIQ vacancy rates remained steady for the Brisbane City local government area (LGA) although this was a mix of slightly tighter conditions for the outer suburbs while the inner suburbs have eased since the end of September. Agents from REIQ accredited agencies reported vacancy periods averaging about one to two weeks, with up to five applicants per listing. The Brisbane LGA vacancy rate was 2.3 per cent, while inner Brisbane recorded 1.9 per cent. A vacancy rate of 3 per cent is generally considered to be the equilibrium point of demand and supply.

‘‘These tentative signs of recovery, however, can only be sustained if confidence levels continue to improve. The key to this is having an interest rate regime that reflects and supports the economic reality of the majority of businesses in Australia,” Mr Kardash said.

The Moreton Bay region fared better than other Greater Brisbane regions, posting a decrease in its vacancy rate to 2.7 per cent at the end of December, although median rents remained unchanged according to REIQ.

There continues to be strong demand from tenants across Queensland with the latest REIQ residential rental survey finding vacancy rates tightening in many areas as at the end of December.

However, Gerrie Bowden, principal of Moreton Bay Regional Real Estate, said she has experienced a slowdown in investor interest and rental curiosity since the Reserve Bank’s decision to hold interest rates.

Residential Tenancy Authority (RTA) December median rents were steady for most regions although, as expected, resource centres continue to record strong rental growth. REIQ vacancy rates show Mackay overtaking Gladstone as the region with the lowest vacancy rate across the state

“Earlier this year we were experiencing a slight increase in activity but since the RBA met and the banks are now putting up interest rates, it has been very slow,” she told Real Estate Business. “The rental market has quieted a lot as well. This type of thing tends to go in a cycle. Overall our market has been very quiet of late.” Source : Real Estate Business Bulletin (13 February 2012)

Are You Covered for a Disaster? So far, it’s been a wild year, with January offering up bushfires in the west and flooding in the east. When was the last time you checked your insurance policy, to make sure it’s up-to-date and be 100% certain of exactly what it covers? ASIC’s Senior Executive Leader Financial Literacy, Delia Rickard, suggests checking your policy or contacting your insurer and asking them exactly what events you’re covered for and what’s excluded, for example: damage from flooding! "Some home and contents policies may not cover damage from floods, or may have caps on how much you can claim for flooding and other events," says Ms Rickard. “Make sure you have enough home insurance cover by using online calculators on insurance websites to estimate the total cost of rebuilding your home. Try a couple of calculators to compare because the results can differ. Be sure to shop around for appropriate cover and quotes. Phone potential insurers, and ask lots of questions,” she advises.

‘extended replacement cover’ or ‘total replacement’ policies. Sum-insured cover is more common and will cover you up to a set amount that you choose. Extended replacement cover policies have a sum-insured amount, but will provide a limited amount of extended cover in the event of a total loss. Total replacement cover covers the costs to rebuild your home to the standard it was prior to the event, thus significantly reducing the risk of being underinsured. There are a number of variations to these basic models, so read the fine print and ask as many questions as possible when comparing insurers. The key is to be sure your policy covers all the costs of rebuilding your home. If you are renting, you should consider insuring the valuable items that you couldn’t afford to replace, such as your car, boat, tools of trade, and expensive home contents. See the insurance articles at www.moneysmart.gov.au for more details. Source : Quartile Property Network (3 February 2012)

Home insurance policies are usually either ‘sum-insured’, Materials and articles in this publication are general comment, not advice. The information is believed to be accurate and reliable but no responsibility is taken for any opinions expressed or for errors or omissions. Readers should not act on the basis of the material without taking professional advice relating to their particular circumstances.

Grant & Christina Penrose www.propertysalesbrisbane.com

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sell

How to

Selling? Order a Free Book Today.

your ho dream me for a price in

record time!

Call us or SMS “Free Book” with your name and address to 0418 747 997, or go to www.propertysalesbrisbane.com/our-book and we will rush you a copy.

Seduce your BUYER wit home of h the their dreams!

BY GRA NT & CHR ISTINA PENROS E

Can You Sell a Home Under the Hammer With Just One Bidder? Yes, you can - and we do it all the time! I mention this here as invariably people ask if we've held any auctions this week and how they went, and they're often shocked to learn we've sold a property that only had one bidder. Grant is pictured here in action doing just that last week, selling a unit at Clayfield for one of our team. When the market is tougher this type of auction becomes a more regular event: either having one bidder or a buyer who is clearly willing to pay a lot more than the others. In this situation many agents pass the property in and negotiate after auction but as this means the cooling off period and other clauses often come into play, we consider this a last resort. Not every property will have ten bidders like the property we recently sold in Ennever St, Bardon (testimonial included here), though of course we wish they did as they are lots of fun! We find that people will often question (and rightly so!) why you would auction if you don't have a high demand property in a hot market? Going to auction has its own specific advantages. With the right agent and an auctioneer who thoroughly understand the process and is confident in negotiating with one bidder, a frequent result will be an unconditional sale. Under the hammer within less than thirty days on the market is eminently achievable!

ED

WOULD YOU LIKE YOUR PROPERTY SOLD OR RENTED?

S

RE ST JU

RE

NT

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1 bath $500pw – 2 bed –

19 Ennever St, Bardon - $746,000

– Stuartholme Road, Bardon - $910pw – 4 bed

2 bath

PROFILE REAL ESTATE P: 07 3510 5256 M: 0418 747 997 E: grantpenrose@remax.com.au christinapenrose@remax.com.au A: PO Box 388, Paddington QLD 4064 W: www.propertysalesbrisbane.com 8

Materials and articles in this publication are general comment, not advice. The information is believed to be accurate and reliable but no responsibility is taken for any opinions expressed or for errors or omissions. Readers should not act on the basis of the material without taking professional advice relating to their particular circumstances.

(07) 3375 1868 www.LithoArt.com.au

Peter Searle

D L O

AT

C U A

N O TI

Bardon Outlook Crescent,

ST

Grant’s follow up of potential buyers was exceptional and we were continually updated on all developments. Throughout the whole campaign Grant’s commitment to securing the best possible result for us was evident and when the house sold at auction, as planned, we couldn’t have been happier with the result.

JU

From our initial meeting, Grant’s detailed knowledge of current local market trends, advertising strategies and sales options combined with his honest professional advice allowed us to develop a marketing and sales campaign specifically suited to our needs. His friendly and accommodating nature was reassuring and allowed us to feel at ease during negotiations.

NT

We couldn’t have been happier with the result.


RE/MAX Profile Newsletter Issue 20