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CREATING WEALTH AND LIFESTYLE THROUGH

Issue 21

by Grant & Christina Penrose

Commonly Overlooked Property Investment Tax Tips… How Do You Bag the Best Tenants?

Top Property Tips For Budgeting and Research…

Be Sure Not To Underinsure

Four Mistakes All Investors MUST Avoid!

PROFILE REAL ESTATE

Helping you understand Real Estate


Celebrations and Successes Since our last issue Joshua celebrated his 6th birthday on Mothers’ Day (Grant had a birthday too but was much more low-key about his, mainly wanting them to go under the radar these days!) So seventeen super-excitable kids (felt like a hundred), including school friends and cousins, made for a very busy and wonderful occasion for us all. We rolled out all the good old party games including a treasure hunt... I reckon organising major professional functions for RE/MAX is a cinch compared to a kids' party! Seems good to celebrate on the other end too - because in a couple of weeks, Grant's father will visit from New Zealand and we're all looking forward to his 80th birthday. It's been boys, boys, boys lately and we haven't seen enough of Jade, who is busy studying for exams as I write (and having her own grown up life!) but we're all missing her and cherish any precious time with her.

Grant and the boys at Lone Pine

top of our game has certainly been helped by all the training we do. Recently, the RE/MAX Balloon showed us the way as we drove to the coast to attend the Australasian Real Estate Conference with 2,300 real estate agents. The line-up of speakers was sensational including: Tom Ferry, Robin Sharma and, via satellite live streaming - Donald Trump and Verne Harnish. The energy and ideas boost has us bursting with possibilities and we want to help you in any way we can. And with that in mind, a quick reminder that with the end of the financial year nigh - now could be a strategic time for you to consider making last minute investments and to do any improvements and repairs to maximise your tax position. Wishing you health, happiness and prosperity,

Christina Penrose Showing off the necklace Joshua made for me

From a sales perspective, the office has been flying. Last month we were recognized as number 5 office for the RE/MAX group nationally. So if you're thinking of selling at some stage, we'd love to help you and you can know you're in great hands. The rentals business is trucking along well, not many vacancies with rents almost always on the increase for our owners. Keeping on Daniel feeding the Kangaroo

In this edition ➣ Commonly Overlooked Property Investment Tax Tips…

➣ Get Paid Way More for Your Property With Easy External Fixes…

➣ How Do You Bag the Best Tenants? ➣ Boom or Doom? The Latest Auction Results… ➣ Four Mistakes All Investors MUST Avoid! ➣ So What’s the True Value of View? ➣ Essential Things You Need to Know for Buying a Unit or Apartment…

➣ Changing Homes – Change the Locks!

➣ Save $$$ by Saving the Planet…

➣ Herron Todd White April 2012 Month In Review

➣ Top Property Tips For Budgeting and Research…

➣ Don’t Pay More Than You Should… How To Get Cheaper Rates!

➣ Be Sure Not To Underinsure 2

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


Commonly Overlooked Property Investment Tax Tips… Getting your taxation right is of utmost importance. Here are three tax tips that many property investors commonly overlook:

3. Building Profit: If you engage a builder directly to complete your investment property, then the profit from your work can be claimed for Capital Gains Tax implementations.

1. Design and Professional Fees: This includes architectural fees, engineering costs and any other design fees associated with ”creating” the property.

If in doubt always check with your Tax Adviser. Remember every dollar back is another dollar for you!

2. Council Costs: Many investors neglect to claim council fees. This is not limited to development application fees, reports and the like but can include council contributions when undertaking a development.

How Do You Bag the Best Tenants? The secret to attracting the right tenant is by making sure your property is the right property! And it’s all in the detail… Following are some top tips to make sure your property is ready to perform: • Keep decoration simple and décor very neutral. • Storage, wardrobe and cupboard space are critical. Include freestanding wardrobes or pantries if not built-in. • Bathrooms need to be workable and super clean. Remove mould and regrout if necessary to give a fresh look. • Gardens should be easy to care for or include garden maintenance. • Ensure the property looks, feels and smells clean. • Have landlord protection insurance. • Use an agent as tenants tend to prefer a middle man. • Make sure the agent has access to realestate.com.au, domain.com.au and other popular websites such as: remax.com.au! Talk to us today to find the right tenant for you on 3510 5222.

Four Mistakes All Investors MUST Avoid! Investing in property is an ideal way to create wealth over the long-term, but many property investors are forced to learn from common mistakes that can, with the right advice, be easily avoided. So why learn from your own mistakes when learning from other people’s failures can be so much easier? Many potential problems can be avoided through common sense and a commitment to a game plan.

Mistake 1: Buying The Wrong Property. To achieve financial freedom you will need to accumulate a large asset base. This means owning the right property – essentially one that outperforms the average. Many investors buy for the wrong reasons such as buying because they like the idea of purchasing close to where they live, or because they were on holidays and liked the area. A much smarter way to buy is by undertaking proper research which entails looking carefully at capital growth patterns, rental returns and vacancy rates.

Mistake 2: Not Having A Plan Most of us spend more time planning our holidays than we do planning our financial future! 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.

Australians tend to fall into one of four categories: 1. Those Who Don’t Invest At All 2. Those Who Don’t Invest Enough 3. Those Who Invest Too Much 4. Those Who Invest The Right Amount Thinking about and documenting your wealth creation plan is vital. This avoids the distractions of so called opportunities that pop up from time to time and allows you to stay focused.

Mistake 3: Not Reviewing Your Property Portfolio While property is a long-term investment, that doesn’t mean that you should fall into the trap of not reviewing your portfolio every 6 – 12 months. Inspect your properties and assess any repairs or improvements that can benefit your position. Revisit their values annually.

Mistake 4: Not Managing Your Risk Growing your portfolio will be dependent upon your ability to service your borrowings. Not being able to service borrowings could force you to have to sell while not being able to increase your borrowings will hinder your ability to grow your portfolio. Watch your debt ratios at all times and always have a buffer for changes in your income, times without a tenant, repairs and maintenance and other contingencies.

Grant & Christina Penrose www.propertysalesbrisbane.com

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Essential Things You Need to Know for Buying a Unit or Apartment… When purchasing a unit or apartment, it’s essential to consider much more than whether the apartment is suitable for your living and / or investment needs.

Buying into a poorly managed strata scheme can cause sleepless nights. We offer the following tips for making sure you don’t end up in a living nightmare:

You need to be able to look at the complex, the costs associated with the body corporate and how well it’s managed.

• Undertake a strata report.

Obtaining a strata report is vital. It will detail the body corporate levies, how they have been expended and whether there are any outstanding orders or extra-ordinary levies to be struck in the near future.

• Check how much is in the sinking fund.

There are two components to body corporate strata fees;

• Ascertain whether you personally think this is adequate.

1. Administration fund: this is where the day-to-day costs of administering the complex are attributed. It includes things such as insurance, electricity, staffing, pool cleaning etc.

• Check if the complex is maintained in an orderly manner.

2. Sinking fund: this is where monies are set aside for the ongoing maintenance of the common property including repairs, painting, etc.

Save $$$ by Saving the Planet… With ever increasing energy bills and the likelihood of more dramatic price rises it’s important for most households to find ways to lower their energy bills.

Here are some simple suggestions: • Do the household washing in cold water • Use a clothesline rather than a dryer • Dump the beer fridge • Switch off unused appliances • Install water saving shower heads and taps • Upgrade to more efficient whitegoods

Be Sure Not To Underinsure Underinsurance is a serious problem for Australian home owners and is one of a number of features policyholders should check regularly. The Insurance Council of Australia estimates that up to 70% of Australians are underinsured. One major insurance provider (AAMI) suggests that the average level of underinsurance is $85,000, whilst older Australian homes are underinsured by $131,000 on average. Here are some insurance tips to ensure you avoid being underinsured: • Review your insured value at least annually. • Building prices can rise rapidly so make sure your home can be replaced by the agreed insured value. • When taking out a new policy or reviewing an existing one, make sure you understand what features your policy contains and what the insurance covers. Being underinsured can cause financial heartache – never take your policy for granted.

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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.


Get Paid Way More for Your Property With Easy External Fixes… Obtaining the best possible price for our home is usually a top goal for most of us. So how do we create competition and increased interest in our property when it comes time to sell? Renovating or “tricking up” the outside of our home is one definite way of getting you more buck for your bang! The key to getting the very best price for your home is to create interest and hopefully competition between interested buyers. Sellers should do everything possible to enhance their property and make it more appealing to the market place. This doesn’t need to cost a fortune. In fact, the following guidelines will help greatly enhance your sale price without breaking the bank.

Tips on renovating the outside of your home include: • Pick a colour scheme that enhances your home and its street appeal. Avoid colours that clash with others or colours that are too offbeat. If you’re uncertain about the best combinations, a colour consultant can help you make the right choice. • Choose the right sheen. Glossy paints generally show imperfections, but can look fresher. As a general rule, use higher gloss paints for small areas, windowsills etc. and save flat paints for the bulk of the house.

• Replace the front door. The front door is your welcome point. If your door is shabby, warped or worn – replace it! • Replace the letterbox. Again first impressions count, if your letterbox has seen better days, best to get a new one. • Install new house numbers. • Tidy the garden. Remove weeds and hide the garden hose. • Add flowers or potplants near the entrance to make the property more welcoming. If you are thinking of selling and would like sell the best possible price in the shortest record time! possible time ask us for a FREE Copy of our Book “How to sell your home for a dream price in record time!” It’s an easy read of only 90 pages. SMS (0418 747 997) or email us now with free book and your postal address or logon to our website www.propertysalesbrisbane.com and download your own copy. How to

your ho dream me for a price in

Seduce your BUYER wit home of h the their dreams!

BY GRA NT & CHR ISTINA PENROS E

Boom or Doom? The Latest Auction Results… The media loves reporting real estate. The only catch is it seems that it’s not a story unless the angle includes the market either going up or down.

auction

Before Easter, the reports were optimistic, with some journalists going so far as to suggest South-East Queensland property was beginning to boom. More recently, the tone has been far more subdued, with one report even saying auction numbers are flatlining as vendors become “gun shy” in a tough environment. It might make for compelling reading, but in reality, it’s pretty far from the truth. Firstly, compared to the same period last year, the overall auction clearance rate YTD in 2012 is up from 34% to 42%, which is encouraging. Further, for the first full week post Easter, JAA tracked a 48% clearance, quite the opposite to the media picture of a post-Easter crash. Breaking it down, we can see there have been more buyers around so far this year - average registrations per auction are up from 94% YTD in 2011 to 123% YTD in 2012. Buyers are also more willing to act – last year, only 53% of those registered actually made a bid, while this year that number is 68%. Interestingly, although we tracked a higher clearance last week than the YTD average, the number of active buyers was while down. Average registrations fell to 93%, while the percentage actually making a bid rose to 72%. But the other piece of the puzzle relates to vendor motivation. Across the first quarter, the 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.

percentage of forced sale vendors was exceptionally high at almost 80%. Last week, that number dropped to just 58%, with an average shift on auction day for sales under the hammer of just over 5%.

Extrapolating the real story (as opposed to the news-worthy version), we can see that the market this year has been relatively healthy in the first quarter compared to last year, without showing any real signs of a boom. Total buyer numbers have dropped off post-Easter, but those buyers still in the market are more inclined to act. Team that information with the fact that vendors are clearly increasingly prepared to accept current market value and we have a market which has been fairly consistent throughout 2012. Lastly, in direct response to the wild claim that vendors are deserting the auction method, JAA has called almost 40% more auctions YTD this year. This is not just because our business has grown – more agents and more vendors are turning to auction as days on market for private treaty blows out to more than 100 days. With 42% of properties selling within 35 days, it’s a compelling argument for the auction method of sale. We’re beginning to track a wide sample of private treaty sales and the average days on market across major cities, and look forward to bringing you the true picture on that front in the coming months. Until then, pay little attention to the stories of boom and doom – the media does not determine the market. Source: Jason Andrew Auctioneers 18.04.2012

Grant & Christina Penrose www.propertysalesbrisbane.com

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So What’s the True Value of View? Extracts from an article by Marilyn Lewis of MSN Real Estate

A house is a house is a house — until it’s on a mountain top looking over the ocean. Here, experts put numbers to those valuable vistas. How do sellers decide what to charge for the shack on the hill versus the identical house it looks down on?

would be minimal, if I gave it anything. But take that same view and put it on the ground floor, it’s worth a lot.” In high-rise buildings, view premiums rise with the elevator. “There’s a status to being higher, and you tend to get a broader view as you go up higher,” Siracusa says.

Pricing the View Siracusa’s research has been confirmed over time, at least in new subdivisions, he says. Here are the premiums he sees for homes in new Southern California subdivisions (with houses on each side and views ranging from 45 to 90 degrees): 1% - 2.5%: A home on level ground overlooking unobstructed open space. For example, a house that would otherwise cost $300,000 would go for $307,500 (a 2.5% premium). 3% - 5%: A home just high enough to look over rooftops with a partially obstructed view. “Not a real high-quality view,” as Siracusa puts it. View properties are worth more, sure, but there’s no hard-and-fast rule for calculating how much more. Guess too high and a beautiful home can sit and sit and sit, ignored by buyers, in even the hottest market. Too low and you’ve just handed the next owner thousands of dollars, perhaps much more. It’s the job of appraisers, market analysts and brokers to identify the market’s sweet spot — the least a seller will accept and the most a buyer will pay — for each piece of property at a given time. Long experience has taught them the features that attract the eye, but pricing them is more of an intriguing art than a science. Is the view from the right rooms? Will it go away with the change of seasons or an ill-considered building permit? Is the focus on mountains in the distance or on city lights a block away? The experts weigh each of these factors and more, but in the end, they’re putting a dollar value on the human need for privacy and status.

A Lot of Science, and a Little Intuition… When Siracusa launched The Siracusa Co. in Thousand Oaks, Calif., 35 years ago, he set about establishing some rules of thumb for himself. He analysed the problem systematically over several years, comparing sale prices of identical subdivision homes (or methodically valuing and accounting for any differences) to arrive at a few guidelines for valuing a view. “I set out to define this for myself in the real world,” he says. “I tried to compare the same floor plans, lot sizes, get rid of the externals that could bias the price. I did it for a lot of tracts in a lot of different communities, looking at sale prices of new homes.”

6% - 8%: A good unobstructed view but without much elevation; a home halfway up the hill, for example. 9% - 12%: Atop the hill with an unobstructed view of a city or open space. 15% - 20%: A water view. An outstanding, unobstructed view of a big lake or ocean can command up to 25% more in a development, Siracusa says. And oceanfront can cost 25% to 30% more. For example: A $500,000 house can run $625,000 with an outstanding water view. By the same token, a $1 million house jumps to $1,250,000 or more overlooking a lake. It’s a lot harder to isolate a view’s value in older, resale homes. To do that, analysts compare prices of similar homes sold in the same market and time frame, eliminating all other differences but view. That’s hard to do. Seemingly comparable houses can be quite different in subtle ways, including the quality of construction and materials, upgrades and maintenance, and those differences affect the price. Among those who’ve tried to reduce a view’s value to hard cash are Western Washington University marketing and finance professor Earl Benson and his colleagues. In the late ‘80s and ‘90s they scoured thousands of assessors’ records in Bellingham, Washington, measured homes’ distance from the water and performed fancy calculations to conclude that a $200,000 house with no view would sell for $317,600 if it had a full ocean view and $453,280 if it were right smack on the shore of a lake.

For example, he’d compare the sale price of a house on a lot without a view ($314,990) with the price of an identical house near the top of a hill with an unobstructed view ($344,990, a premium of 9.5%). Comparing each sale with others with similar types of views, he arrived at premium ranges for each category. The view premiums were remarkably similar in each category, he says. “What really counts is the (ground level) view from the back, because that’s where people live.” A stunning view out the front door has little value, in Siracusa’s opinion, because no one lives in the front of the house. “You can have a house literally across the street from open space, but a view from the front doesn’t count. You give that zero view premium.” What matters, he says, is what people see from the kitchen, master bedroom, dining and family rooms, the most-used rooms in a home. Likewise, Siracusa gives little premium for second-story views. “It

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On average, Benson says, a full, unobstructed water view boosted a home’s price about 60%; the closer the water, the higher the price. Partially blocked views still fetched a 10% to 20% premium. Today, with view properties even scarcer, he says, chances are that view premiums have risen: “The 60% that we estimated in the early ‘90s may be 80% or 100% today,” he says.

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.


Changing Homes – Change the Locks! Whether you’re buying or renting it’s always a good idea to have your locks changed as soon as practical when you move into a new premise. This eliminates any concerns that others may have a key and access to your home and its contents. Let’s face it: you will never know if a relative or cleaner may still have a key! Remember, when renting you will need to seek permission from the agent or landlord PRIOR to changing the locks and a full set of keys will have to be left with the agent or landlord.

Follow the Property Wave Across Brisbane The great South-East property market is typical of the “pebble in a pond” scenario.

roads and train line frontages, you will find the dirt with the most potential.

As soon as the tremors start moving wavelike from the inner city suburbs, you just know that the outer areas are set to follow suit at some future date and like the proverbial body of water, the force tends to dissipate with distance. You can be sure the best gains will always be made in the centre and not on the fringes.

As far as our prestige sector, well it is well and truly tied to confidence of the broader economic kind. These operators are not so much fazed by moving interest rates as they are by stock market fluctuations. This last downturn was easily tracked through the ASX and it matters not whether you’re sitting atop a mountain in the lush end of the western suburb rural residential market, or gazing wistfully from your penthouse abode and admiring your fellow CEO’s house on Hamilton Hill, the upper end will move en masse along with the rising economy.

With this in mind, the typical beacons of an ever rising would be anything within a 5km circle of the CBD centre. This is where the prime dirt resides. It’s the surest bet of future capital growth when the upswing comes, so everyone wants to get in early on the rising market and take advantage of what’s in store. The more affordable sectors and properties in New Farm or West End are cases in point. Rental is solid, supply of the cheaper stuff is relatively limited and demand from buyers is always reasonable. A solid second-hand unit in a softer market is not so hard to come by amongst the “For Sale” listings. There are plenty of young professionals keen to live in these areas and those with the wherewithal will try and take advantage when they see a market turn. As the young jetsetters start moving in, tenants either begin moving away or tracking rises in their weekly rent. The solution is to move further out. When Brisbane runs hot, you can almost see the crest travelling.

....when confidence leaves the market, the outer suburbs often suffer first....

When it comes to slowdowns, we at Herron Todd White have noticed that the trend is reversed. When confidence leaves the market, the outer suburbs often suffer first. Rising unemployment results in residents having trouble making their mortgage repayments and this doesn’t bode well for the softer socioeconomic areas in fringe localities. There are also plenty of investors floating around these markets and when things turn sour, quite a few will dispose of their portfolio before disposing of the family home. As long as the Brisbane region continues to consider the CBD as its ultimate centre, the real estate market will revolve around it. This may evolve into something different as other potential SE Qld centres of commerce develop, but this change would have to be considered a long-term prospect at best. Extract from the Herron Todd White April 2012 Month in Review

Another unit area worth watching is around the Auchenflower/Toowong locale. Here there are a number of cheaper, modest quality 1970s and 1980s units with good sized bedrooms, all close to facilities and only a brisk morning stroll into the CBD. You can find stock in the low $300,000s that would be just fine. This is the stuff which will get a solid run on during the upswing. For detached housing, the lower end stuff in inner localities like Paddington, Red Hill or Woolloongabba probably telegraphs things to come. Whilst real estate is still fairly tightly held, sub $700,000 is the first to rise. At present there are certainly enough listings for buyers to check out and as long as you steer away from main

Don’t Pay More Than You Should… How To Get Cheaper Rates! As we’ve seen in recent months, major banks not passing on rate cuts generally causes the sort of shock and controversy, which causes people to sit up and take note. And in this situation, smaller lenders may be a more viable option. While some banks refuse to move their rates, others will. When banks move rates in either direction, this can often create confusion in the market place. However it can also create opportunity as many of the smaller lenders are looking to take advantage of such movement and acquire a bigger market share by offering attractive lending packages. So it can definitely pay to talk to good broker to make sure that you have got the best deal available. 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

EVIDENCE OF EXCELLENCE I have dealt with both Grant and Christina of RE/MAX Profile over the past 5 years with my home in Kenmore. They are a husband and wife team who are very dedicated to their clients in every sense. My property has been successfully rented during this time through RE/MAX with little or no disruption to me. I recently placed the property in Grant’s hands for sale and he has worked tirelessly to achieve a positive outcome! He always followed up with me and potential buyers every step of the way, ensuring a sale would happen. Grant never stopped working the property and always gave me the feedback on a regular basis, either by phone call or email. If I were to ever purchase property in Brisbane again I would have no doubt about employing Remax to property-manage it or sell it. I wish both 76 Twilight St, Kenmore Christina and Grant and their team all the best in the future and thank them all for working for me and with me over the past 5 years. Regards, Kaylene Randall (nee Morris). Seller of 76 Twilight St, Kenmore, 24 April 2012

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43 Stafford St, Paddington

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‘Integrity and humility are not words often associated with the stereotypical real estate agent, however these are two words we would use to describe Grant Penrose. At all times during the emotional sale of a loved one’s property, Grant conducted himself with both. Grant quietly and efficiently got the job done, keeping us informed of the progress of the sale. We would recommend Grant to anyone seeking these qualities in employing an agent to sell or buy a property.’ John and Laura Ragonesi Sellers of 43 Stafford St, Paddington, 2 May 2012

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10 Vista St, Bard on: $995pw - 4 be d

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2/15 Cedar St, Greenslopes: $310pw - 1 bed

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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

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RE/MAX Profile Newsletter Issue 21