Property Investing Workshop Slides

Dean Parker

Property Investing

About Me

2002 • • • • • • • •

Recently engaged to my fiancé Elise Dean - IT Systems Analyst Elise - IT Software Consultant 2 cars <$50k each - both financed Renting in Southbank Melbourne Property portfolio value - $0 Had no property experience Looking for a way to buy our first home

Today • • • • • • • •

Husband and wife team + 2yo daughter Dean - Full time investor + business owner Elise – Business owner + full time Mum Olivia - FUN 2 cars > $50k each - neither financed Own a house on 1100sqm in Woolloongabba Property portfolio value - almost $10M Have extensive property experience

Having a crack • Involved in 454 property transactions (Over 14 years, 1 transaction every 11 days)

• Transacted over $160 million • Renovated 218 dwellings (15 properties per year)

• Developed 153 new dwellings • 51 new dwellings in development • Also done rooming houses, retail, NZ

The Dreamâ&#x20AC;¦

The Realityâ&#x20AC;¦

About YSH • Property Development • Apartments • Townhouses

• Property Investment • Residential • Commercial

• Property Management • Personal properties • Clients properties

• Property Education • Investing • Renovation • Development

Questions?

My Goals for the Day To leverage form my experience to provide you with the knowledge and tools in order for you to: • Ask better questions • Avoid costly mistakes • Understand the process • Become a more sophisticated investor • Have success with your property investing

About You?

Questions • • • • •

How many investment properties do you own?

How long have you been investing in property?

How have your properties performed?

What has held you back from increasing your portfolio?

Do you invest in other assets (shares, business, etc)?

Six Step Process

1

2

3

Prepare Yourself

Find a Location

Find a Property

4 Purchase

5 Management

6 Refinance / Sale

Step 1: Prepare Yourself

Prepare Yourself: Mindset

Mindset • • • •

Are you living the life you desire?

Do you have enough time?

Do you have enough money?

How much more time do you want?

• Eg. 3 day week-ends, not work at all

• How much more money do you want?

• Eg. Pay off house,

• How much money do you need / year?

Prepare Yourself: Activity / Handout

Mindset • What education do you have?

• How much free capital do you have? (Savings, shares, investments, home equity) • How can you create more time (less time travelling, work from home, cut back hours) ?

• Do you have other commitments (kids, religion, family, sport) ?

Mindset • • • • •

How would you rate your financial knowledge?

Where do you prioritise investing?

How would you rate the state of your personal finances?

Are you a saver or spender?

What level of commitment do you have?

Mindset – Joint Ventures • What appetite for risk do you have?

• How comfortable would you be in asking a family member or friend for money?

• How comfortable would you be in asking a stranger for money?

Why? • What do you want to achieve from your investing?

• More money or time?

• For things to change, first things must change: • What is going to change in your life?

• Reduce expenses • Create more time

Questions?

Prepare Yourself: Understanding the Basics

Understanding the Basics • • • • • • • •

What is property investing Active v Passive Types of property (residential, commercial) What is rental yield Factors that influence long term capital growth Factors that influence property prices Property Investing is all about the Numbers – income v expenses Positive cash flow v negative gearing

Questions?

Prepare Yourself: Case Study

Case Study #1 – Buy & Hold • • • • • •

2br apartment, 2 bathroom apartment in Woolloongabba Boutique block of 22 Just around the corner from our house Passed in at Auction Potential to buy under value High rental demand

Case Study #1 – Research • • • • • •

Location: Around corner from where I live, so know the market Location: 1.5km from CBD, good suburb, quiet street Location: +ve: hospitals x 2, CBD, medical precinct, Southbank Location: -ve: Site beside has planning application for 12 storeys Property: Price research, sinking fund $120k Management: manage ourselves

Case Study #1 â&#x20AC;&#x201C; Price Research

Case Study #1 â&#x20AC;&#x201C; Price Research Street Address 1/6 Lockhart Street 2/6 Lockhart Street 3/6 Lockhart Street 4/6 Lockhart Street 5/6 Lockhart Street 6/6 Lockhart Street 7/6 Lockhart Street 8/6 Lockhart Street 9/6 Lockhart Street 10/6 Lockhart Street 11/6 Lockhart Street 12/6 Lockhart Street 13/6 Lockhart Street 14/6 Lockhart Street 15/6 Lockhart Street 16/6 Lockhart Street 17/6 Lockhart Street 18/6 Lockhart Street 19/6 Lockhart Street 20/6 Lockhart Street 21/6 Lockhart Street 22/6 Lockhart Street

Bed 1 0 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 0 2 2 2 2

Bath 1 0 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 3 2 2 2 2

Car 1 0 1 1 1 1 1 1 1 1 2 1 1 1 1 1 1 0 2 1 1 2

Sale Price $385,000 $480,000 $490,000 $495,000 $490,000 $496,450 $505,000 $475,000 $515,000 $480,000 $510,000 $480,000 $485,000 $500,000 $525,000 $499,000 $495,000 $453,000 $495,000 $495,000 $495,000 $505,000 $493,498

Sale Date 21-Sep-09 27-May-10 29-Sep-09 23-Feb-10 16-Feb-10 22-Dec-10 25-Mar-11 8-Oct-09 15-Jul-14 17-Sep-09 8-Jul-15 16-Sep-09 19-Feb-11 28-Jan-16 24-Feb-15 5-Jun-15 3-Feb-16 18-Dec-17 19-Jan-17 21-Sep-09 18-Feb-10 19-Feb-10

Case Study #1 – Offer • • • • • • •

Offer at $420,000 They came back at $429,000 and we accepted $66,000 (13%) less than they paid $64,500 less than the average sale price Replaced floor coverings throughout Installed some better blinds Full builder’s clean

Case Study #1: Settlement Costs Numbers: Purchase Price Legal Fees Gov Fees (Stamp Duty) Discharge of Mortgage Bank Chq Adj (Rates, BC)

$ 429,000 $ $ $ $ $

2,385 13,480 -175 40 762 $

16,492

Case Study #1: Renovations Renovation Costs: Acoustic Report Acoustic underlay Timber Floor inc install Carpet inc install Blinds inc install Skirt repair and paint Toilet seat & full clean

$ $ $ $ $ $ $

550 694 5,364 1,285 481 506 324

$ 9,204

Case Study #1: Settlement Costs Price Acquisition Renovation Holding Total

Total $429,000 $16,492

Cash / Eqty $85,800 $16,492

Bank $343,200 $0

$9,204 $0 $454,696

-$9,204 $0 $111,496

$0 $0 $343,200

Case Study #1: Holding Costs Income: Rent @ $460/wk

$ 23,920

Rental yield on Price = $23,920 / $429,000 = 5.6% Rental yield on Cost = $23,920 / $454,696 = $5.3%

Case Study #1: Holding Costs Expenses: Bank P&I repayments Ownerâ&#x20AC;&#x2122;s Corp Management Fees @ 8.8% Advertising Smoke Alarm (SMS) Landlord Insurance (TS) Water Rates ($183.60/qtr) Council Rates ($393.95/qtr)

$ 21,240 $ 4,456 ($85/wk) $ 2,105 $ 300 $ 79 $ 328 $ 734 $ 1,576 $ 30,817

Case Study #1: Holding Costs Income less Expenses Cash Flow Loss

$ 23,920 $ 30,817 $ 6,897

($132/wk)

Questions?

Prepare Yourself: Accounting & Tax

Accounting • • • • • •

Tax Types of structures Why to use them How to choose Depreciation Thanks Mark Unwin from MJ Unwin and Associates!

Tax Rates

Investor v Trader Property Investor – intent to hold property for long term growth: • Buy and hold • Buy renovate and hold • Build and hold

Capital Gains Tax Capital gains tax applies to investors.

The calculated capital gain (profit) is included as income on your tax return.

Tax is payable at your marginal rate, it is not a â&#x20AC;&#x2DC;separateâ&#x20AC;&#x2122; tax.

Capital Gains Tax Key points: - 50% of the profit is tax free provided: - Held for more than 12 months (contract date) - Capital gain taxed in an individualâ&#x20AC;&#x2122;s name

- Assessable at contract date, not settlement date.

- Capital losses can only reduce capital gains, not ordinary income.

CGT Example Property Cost Base details include: Purchase Price Stamp Duty Legal fees on purchase Pest & Building Inspection Finders Fee Initial Repairs Renovation Costs Commissions on sale Legal fees on sale Total Cost Base

$500,000 $ 25,070 $ 1,200 $ 880 $ 6,000 $ 5,000 $ 25,000 $ 14,800 $ 1,350 $579,300

CGT Example Sales Price -

$740,000

Less: Cost Base Add: Depreciation claimed

($579,300) $ 28,000

Profit on sale of property

$ 188,700

50% Assessable if held for greater than 12 months

$ 94,350

CGT Example

Questions?

Investor v Trader Property Trader – short term profit making intention: • Flip • Buy, renovate and sell • Buy, subdivide and sell • Build and sell

Tax for Property Traders • The taxing point is settlement date (income tax and GST) • No discount applies regardless of whether you hold for more than 12 months • Holding costs such as interest, rates and overheads are claimed as a deduction in the year incurred.

• Profit is calculated on a per property basis, not cash flow.

(Example – build 3 but only sell 2) • No Place of Residence exemption if deemed a trader.

Questions?

Structuring • By structuring, you are protecting your investment from potential creditors in the event of litigation.

• A MUST for anyone running their own business or operating in high risk areas of work (i.e. doctor, lawyer).

• Beware – a structure can still be sued.

Structuring - To Reduce Tax • Structure can legally help reduce your income tax on investment income.

• Potential to distribute income tax free to children and non working partners.

• Potential to cap maximum tax on investment income at 30% instead of 47%.

Structuring - With Others • Using a structure is the easiest way to invest with other people (related or not).

• Structure helps protect your other investments.

• Can be wound up once project completed.

Structuring – When?

• Be pro active and talk to your accountant before purchasing a property.

• Most States now allow you to setup a structure after signing the contract with the use of ‘and or nominee’ clause. Not QLD! • Double stamp duty can apply if not done correctly or changes made to property or structure. Check with your solicitor • Just because the person next to you has a trust, doesn’t mean you should! Talk to your accountant.

Structuring – Types?

• • • • •

Individual Partnership Trust Company Superannuation Fund

Structuring - Individuals Pros

Cons

• Already established • Convenient & Simple • Losses can be offset against other income • Access to 50% Capital Gains Tax discount

• No flexibility • Asset protection limited to insurance • Potential tax rate of 47% when income over $180K

Structuring - Partnership Pros

Cons

• • • •

• Joint and several liability • Partnership income must be declared based on ownership %

Cheap to establish Income splitting helps minimise tax Pooling of resources Potential access to 50% CGT discount • Can be a mixture of entities

Structuring - Trusts Pros

Cons

• Asset protection • Flexible income splitting • Potential access to 50% CGT discount

• • • •

Setup and ongoing costs Complicated Losses trapped within trust Higher land tax rates in most States

Structuring - Company Pros

Cons

• Asset protection due to limited liability • Tax capped at 30% or 27.5% if Small Business entity

• Setup and ongoing costs • No CGT discount • Losses trapped within entity

Structuring - Superannuation Fund Pros

Cons

• Maximum tax rate 15% • Capital gains tax rate10% (1/3rd discount) • At retirement, earnings and pension drawn is tax free *when under

• Restrictions on borrowing • Cannot access money until retirement • Highly regulated • Expensive

$1.6 m balance

Questions?

Prepare Yourself: Banking & Finance

Banking & Finance • • • • • • • •

Deposits and serviceability State of the finance market? Easy to get loans or hard?

Banks or brokers?

How to apply for finance How do banks process your application How does structuring impact my finance application Do you understand how to release equity?

Should I get pre approval?

Finance Changes

Living Expenses Household Expenditure Measurement (HEM) , Henderson Poverty Index (HPI) , Current Index* Household Segments

HPI

HEM

Current*

Annual Increase

Single - No Dependents

$1,250

$1,105

$2,000

$9,000

Single - 1 Dependent

$1,717

$1,430

$2,800

$12,996

Single - 2 Dependents

$2,159

$1,560

$3,600

$17,292

Single - 3 Dependents

$2,601

$1,889

$4,400

$21,588

Couple - No Dependent

$1,817

$2,032

$3,000

$14,196

Couple - 1 Dependent

$2,284

$2,583

$3,800

$18,192

Couple - 2 Dependents

$2,726

$2,704

$4,600

$22,488

Couple - 3 Dependents

$3,168

$3,137

$5,400

$26,784

Renovations: Cosmetic

Renovations: Cosmetic

Renovations: Cosmetic

Renovations: Advanced

Renovations: Advanced

Renovation: Case Study #1

Renovation: Case Study #1 Numbers: Purchase Price Acquisition Costs Renovation Costs

$ 760,000 $ 45,000 $ 450,000 (59%)

Renovation: Case Study #1

Renovation: Case Study #1 Numbers: Purchase Price Acquisition Costs Renovation Costs Holding Costs Selling Costs Sale Price Approximate Loss

$ 760,000 $ 45,000 $ 450,000 (59%) $ ??? $ 18,000 $1,273,000 $ 810,000 $ 463,000

Questions?

Renovation: Case Study #2

Renovation: Case Study #2

Renovation: Case Study #2

Renovation: Case Study #2

Renovation: Case Study #2

Renovation: Case Study #2 Numbers: Purchase Price Acquisition Costs Renovation Costs Holding Costs Selling Costs Sales (+ rent $14k) Actual Profit

$ 601,000 (adv. for $579k) $ 34,435 $ 212,732 (35%) $ 58,043 $ 31,146 $ 937,356 $1,217,462 $ 280,106

Renovation: Case Study #2 Increase in Value: Purchase Price $ 601,000 Sales $1,203,000 Increase in Value $ 602,000 (100%) Return on Costs: Renovation Costs $ 212,732 ($2.84) Cash on Cash Return: Profit $280k รท Cash Req $347k = 121% (annualised)

Questions?

Renovation: Case Study #3

Renovation: Case Study #3 Price Acquisition Renovation Holding Total Valuation Total

Actual $83,000 $3,000

Cash -$16,600 -$3,000

Bank -$66,400 $0

$15,000 $0 $101,000 $120,000

-$15,000 $0 -$34,600 +$29,600

$0 $0 -$66,400 -$29,600

-$5,000

-$96,000

Renovation: Case Study #3

Renovation: Case Study #3

Renovation: Case Study #3

Questions?

Intro to Developing

1 Gumdale Place, Sebastopol Income Rent ($220/wk @ 4 rooms)

Annual $ $

45,760

Bank Interest (Loan $200k)

$

11,000

Cleaning ($77/fn)

$

2,002

Gardening ($30/mo)

$

360

Insurance (Landlord / contents)

$

350

Internet ($130/mo)

$

1,560

Management Fees (6.6%)

$

3,020

Letting Fees ($220 x 4)

$

880

Owners Corp (inc Insurance)

$

800

Compliance (Council / Cons Aff)

$

700

Rates (Council / water)

$

2,650

Utilities - Electricity

$

3,200

Utlities - Gas

$

2,200

Utilities - Water

$

300

Total Expenses

$

29,022

Profit

$

16,738

Expenses

Prepare Yourself - Summary • • • •

I have determined how much I have to invest I have determined why I am investing (growth or income) I have determined whether I wish to be passive or active I have spoken with my accountant and received advice specific to my situation and have determined which structure to use • I have spoken with my bank / broker and worked through a pre approval process to determine how much I am able to borrow • I know how much I have to spend on my property/s

Step 2: Finding a Location

Finding a Location: State

Location – State • • • • • •

Median House Prices Relative affordability Population growth Population growth projections Economic Outlook Levels of employment

SYD MEL BRI ADE PER CAN HOB DAR

Source: REIA

Feb-18

Sep-17

Apr-17

Nov-16

Jun-16

Jan-16

Aug-15

Mar-15

Oct-14

May-14

Dec-13

Jul-13

Feb-13

Sep-12

Apr-12

Nov-11

Jun-11

Jan-11

Aug-10

Mar-10

Oct-09

May-09

Dec-08

Jul-08

Feb-08

Sep-07

Apr-07

Nov-06

Jun-06

Jan-06

Aug-05

Mar-05

Oct-04

May-04

Dec-03

Jul-03

Feb-03

Sep-02

Apr-02

Nov-01

Jun-01

Jan-01

Aug-00

Mar-00

Median House Prices ($'000s) by State

1400.0

1200.0

1000.0

800.0

600.0

400.0

200.0

0.0

SYD MEL BRI

Source: REIA

Feb-18

Sep-17

Apr-17

Nov-16

Jun-16

Jan-16

Aug-15

Mar-15

Oct-14

May-14

Dec-13

Jul-13

Feb-13

Sep-12

Apr-12

Nov-11

Jun-11

Jan-11

Aug-10

Mar-10

Oct-09

May-09

Dec-08

Jul-08

Feb-08

Sep-07

Apr-07

Nov-06

Jun-06

Jan-06

Aug-05

Mar-05

Oct-04

May-04

Dec-03

Jul-03

Feb-03

Sep-02

Apr-02

Nov-01

Jun-01

Jan-01

Aug-00

Mar-00

Median House Prices ($'000s) by State

1400.0

1200.0

1000.0

800.0

600.0

400.0

200.0

0.0

SYD Linear (SYD)

Source: REIA

Feb-18

Sep-17

Apr-17

Nov-16

Jun-16

Jan-16

Aug-15

Mar-15

Oct-14

May-14

Dec-13

Jul-13

Feb-13

Sep-12

Apr-12

Nov-11

Jun-11

Jan-11

Aug-10

Mar-10

Oct-09

May-09

Dec-08

Jul-08

Feb-08

Sep-07

Apr-07

Nov-06

Jun-06

Jan-06

Aug-05

Mar-05

Oct-04

May-04

Dec-03

Jul-03

Feb-03

Sep-02

Apr-02

Nov-01

Jun-01

Jan-01

Aug-00

Mar-00

Median House Prices ($'000s) â&#x20AC;&#x201C; Sydney

1400.0

1200.0

1000.0

800.0

600.0

400.0

200.0

0.0

MEL Linear (MEL)

Source: REIA

Feb-18

Sep-17

Apr-17

Nov-16

Jun-16

Jan-16

Aug-15

Mar-15

Oct-14

May-14

Dec-13

Jul-13

Feb-13

Sep-12

Apr-12

Nov-11

Jun-11

Jan-11

Aug-10

Mar-10

Oct-09

May-09

Dec-08

Jul-08

Feb-08

Sep-07

Apr-07

Nov-06

Jun-06

Jan-06

Aug-05

Mar-05

Oct-04

May-04

Dec-03

Jul-03

Feb-03

Sep-02

Apr-02

Nov-01

Jun-01

Jan-01

Aug-00

Mar-00

Median House Prices ($'000s) - Melbourne

900.0

800.0

700.0

600.0

500.0

400.0

300.0

200.0

100.0

0.0

BRI Linear (BRI)

Feb-18

Sep-17

Apr-17

Nov-16

Jun-16

Jan-16

Aug-15

Mar-15

Oct-14

May-14

Dec-13

Jul-13

Feb-13

Sep-12

Apr-12

Nov-11

Jun-11

Jan-11

Aug-10

Mar-10

Oct-09

May-09

Dec-08

Jul-08

Feb-08

Sep-07

Apr-07

Nov-06

Jun-06

Jan-06

Aug-05

Mar-05

Oct-04

May-04

Dec-03

Jul-03

Feb-03

Sep-02

Apr-02

Nov-01

Jun-01

Jan-01

Aug-00

Mar-00

Median House Prices ($'000s) - Brisbane

600.0

500.0

400.0

300.0

200.0

100.0

0.0

Housing Affordability

Housing Affordability

Source: ABS

NSW VIC QLD SA WA TAS NT ACT

Source: ABS

Apr-2017

Jun-2016

Aug-2015

Oct-2014

Dec-2013

Feb-2013

Apr-2012

Jun-2011

Aug-2010

Oct-2009

Dec-2008

Feb-2008

Apr-2007

Jun-2006

Aug-2005

Oct-2004

Dec-2003

Feb-2003

Apr-2002

Jun-2001

Aug-2000

Oct-1999

Dec-1998

Feb-1998

Apr-1997

Jun-1996

Aug-1995

Oct-1994

Dec-1993

Feb-1993

Apr-1992

Jun-1991

Aug-1990

Oct-1989

Dec-1988

Feb-1988

Apr-1987

Jun-1986

Aug-1985

Oct-1984

Dec-1983

Feb-1983

Apr-1982

Jun-1981

Population Growth by State 9000000

8000000

7000000

6000000

5000000

4000000

3000000

2000000

1000000

0

Population Projections by City 12,000,000

Population Projections

10,000,000

8,000,000

6,000,000

4,000,000

2,000,000

0 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 Sydney Melbourne Brisbane Adelaide Perth Hobart Darwin ACT

Source: ABS

Unemployment by State

Source: ABS

Questions?

Location: City / Suburb / Town

Location - City / Suburb / Town • • • •

Economic Outlook Population growth Levels of employment Proximity to closest major city, ocean, river and or town centre • Median house price of the suburb • Median house price of the neighbouring suburbs

Location: Activity / Handout

Location - City / Suburb / Town • Availability of lifestyle amenity (education, entertainment, retail and dining, fitness) • Availability of employment • Availability of public transport • Availability of road infrastructure • Demographics • https://www.realestate.com.au/invest • https://www.walkscore.com

Population Growth (med) by Increase

Source: Qld Gov Stat Office

Population Growth by Increase 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 2011 (b) Gold Coast

2016 Brisbane

Ipswich

2021 Moreton Bay

Logan

2026 Sunshine Coast

2031 Townsville

Cairns

2036 Mackay

Toowoomba

Source: Qld Gov Stat Office

Population Growth by Increase %

Source: Qld Gov Stat Office

Housing Affordability â&#x20AC;&#x201C; Qld Regions

Source: CoreLogic

Suburb Performance by Proximity to the CBD

Source: Place Projects

Suburbs To Watch - House Suburb Prices

Source: Place Projects

Suburbs To Watch - House Suburb Prices

Source: Place Projects

Case Study 1 - Suburb performance Best performing Inner Brisbane suburbs for apartment resales over the last 5 years

Worst performing Inner Brisbane suburbs for apartment resales over the last 5 years

Source: Place Projects

Case Study 1 - Suburb performance Worst performing individual apartment resales over the last 5 years

Best performing individual apartment resales over the last 5 years

Source: Place Projects

Questions?

Step 3: Finding a Property

Property: Type / Characteristics

4. Property - Type & Characteristics • • • •

Price Type (house, townhouse, apartment , land) Age (new, existing, warranty?)

Features (size, bedrooms, living spaces, bathrooms, car parking) • Ongoing land and/or building maintenance • Orientation (sun light)

4. Property - Type & Characteristics • • • •

Outlook (positive or negative) Tax benefits (building depreciation, fixtures depreciation) Scarcity of type (supply and demand) Potential to add value

Location: Property

Location – Property • Proximity to lifestyle amenity (transport, education, retail, hospitals, etc) – walkscore.com • Proximity to negative amenity (main roads, train lines and stations, industrial areas, etc) • School zone?

Location – Property • Streetscape (neighbouring houses, trees, road width, on street parking) • Council zoning • Negative Council overlays (flooding, waterways, transport corridors)

Location – Property • Realestate.com.au • Properties on market in vicinity

Location – Property • RP Data • • • • • • •

Property attributes Land size Last sale details Sales history On the market history – for sale On the market history – for rent Owner details

Location – Property • Brisbane City Council City Plan 2014 Interactive Mapping • • • •

Contours Aerial photo Zones & neighbouring zones Overlays - Bushland / Coastal Hazard / Flood / Transport Air Quality / Transport Noise Quality • LGIP - Roads

Location – Property • Physical drive by • Call agents

Questions?

Activity

Live research - 45 Deshon St, Woolloongabba • REA • Google Maps • RP Data • Sales Prices • Sales Campaigns

• CityPlan BCC Maps • • • •

Contours, Aerial Photo, Zoning, Overlays – Flood, Transport Air / Noise, LGIP – Roads

Live research - 388 Wynnum Rd, Norman Park • REA • Google Maps • RP Data • Sales Prices • Sales Campaigns

• CityPlan BCC Maps • • • •

Contours, Aerial Photo, Zoning, Overlays – Flood, Transport Air / Noise, LGIP – Roads

Questions?

Property: Aesthetic Appeal

5. Property - Aesthetic Appeal • • • •

Architecture Landscaping Colour palette Current presentation

Property: Design

6. Property - Design • Liveable floor plan (connected indoor / outdoor spaces, room sizes, etc) • Practical floor plan (storage, side by side garaging, etc) • Environmentally friendly (energy efficiency, water efficiency) Ex. natural light, cross ventilation • Occupant friendly (indoor air quality, Electromagnetic radiation (EMR), Radiofrequency (RF) • Technology

6. Property - Design • Storage • Room sizes • Living spaces connectivity

Property: Finishes & Inclusions

7. Property - Finishes & Inclusions • • • • • •

Colour Scheme Aesthetics Quality and warranty of fixtures Ceiling heights Heating / cooling type Occupant friendly (low VOC paints, toxin free building products, etc) • Environmentally friendly (LED lights, solar, water tanks, etc)

Property: Ownership Costs & Cash Flow

8. Property - Ownership Costs & Cash Flow • • • • • •

Can you afford to hold the property?

Land tax Body corporate fees Body corporate sinking fund Property Management fees Building maintenance

8. Property - Ownership Costs & Cash Flow • • • •

Garden maintenance Interest costs Depreciation Rental return

Step 4: Purchase, Due Diligence & Settlement

Purchase - Offers • Written offers work best and should include: • • • • • •

purchasing entity details and address price holding deposit deposit remainder settlement date solicitor details

Purchase - Offers • Clauses (ensure your solicitor approves first): • • • •

finance building and Pest due diligence clause change to the standard REIQ contracts requiring the property remain at the seller’s risk • fire safety compliance prior to settlement • all rubbish to be removed otherwise amount to be retained from deposit at settlement

Purchase - Process • Contracts • • • •

REIQ – Houses and Residential Land (17 pg) REIQ – Residential Lots in a Community Title Scheme + Discl St (30 pg) Off the Plan – Community Title Scheme + Disclosure Statement (139 pg) Off the Plan - House and Land

• Other Documents • Form 8 – Agent Disclosure • Electronic Transmission Consent

Purchase - Process • Contracts • • • •

Offer formalised by purchaser signing contract and paying holding deposit Vendor accepts offer an signs contract Contracts exchanged and dated Due diligence / special condition time lines begin

Due Diligence • Carry out full investigations as discussed above • • • • •

Property Due Diligence Purchase costs Ongoing ownership costs Depreciation Cash flow

• Satisfaction of other clauses • Notify your solicitor, don’t assume

Purchase - Process • Contracts • • • • • •

Contract conditions satisfied – contract unconditional Pay remainder of deposit Perform pre settlement inspection Arrange insurance Settlement occurs on contract settlement date Pick up keys

Questions

Step 5: Property Management

Management: Property Management

Management - Property Management • Who is the property manager?

• How many properties do they manage?

• Do they have a good knowledge of the property (security, services, etc) • Do they know your warranty of building and fixtures?

• Do they have relationships with the builder and/or trades who completed the work?

Management - Property Management • • • • • •

How do they achieve the best possible rent?

How do they manage enquires?

Where do they advertise?

What is their current vacancy rate?

Do they use professional photos?

How do they report to you?

Questions

Management: Caretaking

Management - Caretaking • Ensure the external aesthetic remains superior for the long term (gardens, compliance, lights, etc) • Who is looking after the outside or common property?

• Property Managers generally focus on the inside • The Body Corporate role is to administer the BC not manage the common property

• Is there a caretaker or gardener?

• How are they reporting to the owners?

• Does the Developer offer a caretaking service?

Questions

Step 6: Refinancing / Selling

Refinancing / Selling • Timing the Market • • • • •

Interest rates Vacancy rates Days on market Finance availability Supply / demand

• Maximising your sale price – staging, price research • Sale process – agents, marketing costs, sale types, etc.

• Finance – equity, refinancing

Questions

Selling: Case Study #1

Selling: Case Study #1 Numbers: Current Value Carpet Blinds Handyman Clean Garden Display Furniture

$ 208,000 $ 1,590 $ 420 $ 3,657 $ 140 $ 420 $ 1,800 $ 216,027

Selling: Case Study #1 Numbers: Total Costs Sale Price Additional Profit

$ 216,057 $ 230,000 $ 13,943

Questions

Further Training

Live Property Training First Home Buyer Course Duration: 3hr

Property Investing Course Duration: Full day Property Renovation Course Duration: Two day Property Development Course Duration: Two day