A common trait of wealthy people is that they own real estate. They don’t rely on shares alone to maintain or grow their wealth, they look to property. But for many people investing in property seems risky, scary and just too hard.

But it should be a part of your wealth accumulation planning.

Wouldn’t it be great to have another asset that produces income for you while you are alive, and then something you could pass on to your children or family in your will?

Investing in property can provide security and freedom

Real estate is an asset and wealthy people own assets that produce income. It’s one of the smartest ways to make money. Where else besides property can you buy an investment with a 10 percent deposit and have a renter pay off the rest of the investment for you?

Wealthy people own real estate because it is an ideal investment that provides:

1) passive income/cash flow –  it can provide a foundation for positive monthly cash flow and permanent passive income. The moment your rents exceed your monthly expenses you have cash flow. There is no limit on the amount of years that you can collect rents on any given property.

2) appreciation – over time property values generally rise. As Australia’s population expands the demand for property will increase, and demand drives appreciation. This is happening now.

3) tax advantages – there are huge deductions available to investment property owners. You can claim for a whole raft of things like advertising for tenants, owners corporation fees, council rates, land tax, depreciation, mortgage interest and borrowing fees. Even losses are tax deductible.

4) leverage – using someone else’s money to buy an appreciating asset is a smart move. By using the bank’s money you can leverage your own resources, and in a low-interest environment where your property is growing in value, coupled with a renter helping to pay your loan, you can let time and appreciation work for you.

Check out this property investment opportunity

If you are thinking of investing in property then take a look at our video on buying an investment property in Mooroolbark at Paperbark Place. The opportunity is exciting.

An article in The Age took a look at the question of whether it is cheaper to rent or buy a property. While it may seem cheaper to rent in the short term, say two-three years, if you take a longer view then the answer becomes clear; buying is the way to go.

According to the author there are four key reasons or costs for why buying is better than renting, they are:

1. Frequent moving costs

Tenants move house more often than a home owner.  If you move every couple of years, with each moving costing around $5,000 you can add an additional $50 onto your weekly rental costs.

2. Rising rental expenses

The beauty of being a home owner is having the advantage of fairly stable mortgage repayments, if you have a fixed rate mortgage or a similar set up. Owners don’t have to worry about the landlord increasing their rent every year.

3. Owning a growing asset

You’ll never own your rental property. However, home owners gain an asset that increases in value over time, where a tenant is left with nothing to show for their spent money.

4. Long term – think of your retirement

The last thing you want to be doing in retirement is paying rent. You’d still have a regular expense that you can’t escape, and now have little income to pay for it. This is where ownership can give you security and freedom.

If you are looking to buy a property, and say goodbye to renting, check out the 2 and 3 bedroom townhouses we have available at Paperbark Place in Mooroolbark. You can find out more at www.fastlovehomes.com.au/paperbarkplace

You can read the full article here: http://news.domain.com.au/domain/real-estate-news/what-is-renting-really-costing-you-20150330-1m8gr1.html

An article in the weekend Age paper outlined that real estate agents are saying Melbourne’s property market has turned, with the eastern suburbs now experiencing boom sales conditions, and buyers are struggling to buy the properties they want.

According to their own analyst Dr Andrew Wilson, sellers were enjoying Melbourne’s best market in four years, but the keenest buyer competition was in the east and the north-east.

A question now being asked is will sellers push up reserve prices? Nelson Alexander sales director Arch Staver said “in a boom market you can be guaranteed of one thing – vendor reserves start to go up”.

Don’t be one of the crowd hustling to buy an existing property, check out the new townhouses we have for sale at www.fastlovehomes.com.au/paperbarkplace

You can read the full article here: http://news.domain.com.au/domain/real-estate-news/balance-of-power-swings-away-from-melbourne-home-buyers-20150321-1m4n1q.html

Keen property investors will want to watch our latest video on the benefits of investing in property in Mooroolbark. We have put together an overview of how smart buyers can get a jump start on other investors.

The video highlights the low vacancy rate, strong capital growth and good equity prospects for investors who get in early with a purchase in Paperbark Place.

More detail about the investment opportunity can be found at www.fastlovehomes.com.au/invest and you can download a copy of our assessment of the return on investment from a two bedroom, two bathroom townhouse.

We have already sold 25 percent of stage 1 so interested buyers need to act quickly.

If you would like to secure one of these investment grade townhouses please contact Tony Smith from Max Brown Real Estate in Croydon on 0411 424 964 or 131 629, or email tonys@maxbrown.com.au

Stamp duty is basically a tax on your property purchase and is often the biggest cost of buying a home. However, clever property buyers know that many state and territory governments offer stamp duty savings or concessions for some properties including off the plan homes. Generous grants are also available to first home buyers to help them cover the costs of buying a new property.

Stamp duty savings

You can often make substantial stamp duty savings if you buy off the plan. Some state governments in Australia offer bonuses and reductions or have reduced stamp duty to encourage new development. In Victoria, the full rate of stamp duty applies on fully built homes, however you can receive generous concessions when you buy off the plan. The further along the construction of the property the less the stamp duty savings you get.

Avoiding stamp duty

The simple reason that you get a stamp duty saving for off the plan sales is because at the time you enter into the contract the stamp duty is based on the value of the land and not the property (as the house is not built yet).

For example if you buy a $400,000 home in Victoria off the plan (before construction starts) you will be entitled to approximately $16,000 in stamp duty savings. Once construction starts you can then claim a percentage of the stamp duty savings depending on what stage of the construction you enter the sales contract.

According to the State Revenue Office of Victoria typically, for single storey developments, the following indicates the percentage of construction at the various stages:
– 15 per cent for base (slab/foundations etc)
– 30 per cent for frame
– 65 per cent for lock up
– 90 per cent for fixing
– 100 per cent for completion.

The exact amount of savings you make depends on the price you pay for your property as that is what it is calculated from. So to get the maximum savings you need to buy the property off the plan before construction has started.

The stamp duty concession is designed to help encourage new building activity and give home buyers a tax break.

First Home Owners Grant

In Victoria, if you entered a contract after 1 July 2013 to build or purchase a new home, a payment of up to $10,000 is available for eligible first home buyers.

The grant is designed to help buyers with the costs involved with buying a first home. The grant provides some financial support to help make it easier for people to buy their first home.

Coupled with stamp duty savings, first home buyers can get a great jump start into their first property, if they buy a home off the plan.

You can find out more about Victorian stamp duty savings and the First Home Owners Grant on the State Revenue Office website www.sro.vic.gov.au

Other stamp duty and concession links
• NSW – www.osr.nsw.gov.au
• QLD – www.osr.qld.gov.au
• SA – www.revenuesa.sa.gov.au
• TAS – www.treasury.tas.gov.au

When you buy an architect-designed home you will get a beautiful home, thought out and designed by a professional who has completed at least five years of study at university and finished two years practical experience before obtaining their professional registration.

This focus on learning how to best design homes results in smarter layouts, higher overall quality, better energy efficiency and a general sense of style to the finished property.

Love where you live

All these elements, often the attention to the smallest details, make living in the home more enjoyable, and should lead to a higher resale value if you ever decide to sell. The layout, style and functionality of your home should stand the test of time.

Some homes are designed by a draftsperson. Traditionally a draftsperson prepared technical drawings and plans under the direction of an architect. It only takes about one or two years to obtain a qualification to do technical drawings.

Architects produce better results

Generally the difference in the end design between an architect and a drafty is pretty stark. Flick through the pages of any home design magazine and you won’t find homes designed by a drafty!

Who would you prefer to design your home, an architect or a drafty? Let us know.

Some people who live in large family homes may find that the kids have flown the nest and they no longer need such a big place, so they can use the equity in their home to buy a smaller, cheaper place (right sizing we like to call it) and the use the difference to fund or supplement their lifestyle.

Do you know what equity is and how you get it?

Equity is basically the difference between what your home is worth (market value not what you think it is worth) and what loan amount may still need paying off. For example, if your home is worth $500,000 and your home loan is at $300,000 then you have $200,000 in ‘equity’.

The beauty of equity is that banks and other lenders will let you access that amount to fund other purchases (not usually the whole amount mind you but a good chunk like 80 percent). So you could use the equity to buy a new car, take a holiday or put down a deposit or buy an investment property.

Don’t forget that once you start using your equity you will increase your loan amount and have to make increased repayments.

If you are buying an investment property and then using the rent payments to help you pay off the larger loan then you may be on to a winner as you pay off a loan with help, while potentially having the property increasing in value, and thus also creating additional equity.

You need to be sure that you are calculating all the costs involved with buying an investment property and not just doing some simple numbers that look great. Get some help from your accountant or financial adviser if you are unsure.

Using your equity can be a smart way to buy an investment property or fund a nice little lifestyle.

Have you ever used equity to buy another property or fund your lifestyle?

When you throw a stone into a calm pool of water you get ripples moving out from where the stone landed. In property, the ripple effect occurs when a suburb becomes so popular it becomes unaffordable for many people who want to live there. This rise in popularity and prices can often push buyers into neighbouring suburbs to try and buy properties at more affordable prices.

This increased interest in neighbouring suburbs will then often lead to an increase in prices, and this is known as the ripple effect.

Croydon vs Mooroolbark 
For example if you are looking to buy a house in Croydon, you might find that prices have increased beyond your budget. In order to stay close to Croydon you look at the suburbs next door like Mooroolbark, Kilsyth or Chirnside Park to see if you can pick up something that suits your needs and budget. 

You might find that prices are five percent lower than Croydon and that you prefer to save some money and wait for the ripple effect to increase the popularity of the suburb and value of your property.

In the neighbouring suburb, you might find better value with the same attractions and conveniences like train stations, shops, parks and schools. Smart buyers and investors will often look at the neighbouring suburbs of booming and popular suburbs to get ahead of the ripple and boost their capital gains and equity in their property.

So if you are having trouble getting into a suburb that you like, try looking next door to see what value you might get there.

Have you ever used the ripple effect to your advantage?

For most people, a home is undoubtedly the biggest investment of a lifetime. Typically, but not always, the value of a house rises over time due to many reasons including:
• inflation
• capital investment
• mortgage rates
• supply and demand
• proximity to schools, shopping, parks and other attractions
• population changes
• infrastructure improvements
• crime levels; and
• desirability of an area.

An understanding of why property values go up or down can help you make sound real estate investment decisions. Here’s a couple of key things to keep in mind when looking to buy a new property.

Basic Demand and Supply
In 2013 Melbourne enjoyed a rise in demand for property that led to a general increase in prices. Not everywhere, mind you. Overall, house prices rose by 1.4 percent in December 2013. With a 2.2 percent spike in Melbourne, according to the RP Data-Rismark home value index. The constantly rising need for housing in Melbourne is based on shifts in population. Rise in demand is supported by other positive indicators, including consumer sentiment, population growth, clearance rates, interest rates, and number of sales.

The Melbourne property market has registered remarkable growth as young buyers seem to be eyeing more affordable smaller units and suburbs. A dwelling in the middle and outer suburbs of Melbourne is expected to cost less than the median value of $563,000. Other homeowners are selling their family homes for good prices and right sizing (shifting to a smaller home at a lower price that is more suited to their needs) and using the cash leftover from the two transactions to fund their lifestyle.

Mortgage Rates
The level of interest rates can affect the demand for real estate. Falling mortgage rates tend to lead to greater demand for property and faster increases in property prices. With an increase in mortgage rates, the demand for property tends to come down and vice versa. Currently, Australia is enjoying very low interest rates which is making property investment an attractive and more affordable option for many people.

Population Growth
Population growth will also affect the availability of homes for buyers. Melbourne and Victoria is growing by thousands of people each month. The increased demand for property often leads to higher prices. Improved housing affordability and low interest rates have released significant pent-up buyer demand built up over recent years, with an increasing number of looking to buy now rather than later.

Location location
The location of a house is one reason that can significantly affect its value. The proximity to schools, shopping centers, parks, colleges and cultural facilities can fuel demand for such a property, thus causing its value to rise.

Our next development in Mooroolbark called Paperbark Place ticks many of the boxes for a solid property investment. It is well located close to local shops, Mooroolbark train station, parks, pool, Eastlink, hospitals, the Yarra Valley and much more. And the local police station is also within 200 metres of the address, boosting a sense of safety and security.

The development offers a range of housing types from single storey two bedroom units to double storey three bedroom homes. Find out more about Paperbark Place in Mooroolbark and see if this may be the next property for you.

Or share below what other factors you think affect property prices.