Learn what strategy works best and the top 3 common mistakes to avoid
There’s a tonne of information out there about real estate. It’s hard for a beginner to understand what to do and who to listen to.
Before we get to the 3 ways to make money from real estate, I want to share a strategy I’ve used over 2 decades in the industry. I’ll then share 3 great ways real estate rookies can make money.
And finally, I’ll give you a heads up on the typical mistakes I’ve made and I’ve seen others make in real estate.
Positive cashflow strategy is best. This is where the property earns more rental income than the mortgage and other costs.
Think of your income from your job. And costs you need to pay for every month such as food, utilities, going out, holidays, petrol, and more.
If you earn more than you spend, you’ll have money left in your pocket. Savings. That’s positive cashflow.
The same applies to property. If your rental income covers your costs, you have positive cashflow. It’s as simple as that.
Find sellers who are keen to sell an off-market property. They’re not easy to find, but they’re around if you know how to find them.
Old properties always have issues that can be used to negotiate a lower price. Before doing that, you always make sure the property is structurally sound and in a great area, amongst other things.
That’s how you make money as soon as you buy. You don’t need to wait years for its value to increase. You make money as soon as you buy.
There are 5 renovations we recommend to increase a property’s selling price for our customers. These include the bathroom, changing carpets, and repainting.
You need to buy the property at a decent price to make it worthwhile.
In time, if bought right, the property will increase in value. Consider aspects such as:
Many beginners get too emotional when buying and end up paying too much. Much more than what it’s worth.
Stick to your number and don’t pass it. Ask a partner or friend to stop you when you’ve reached your limit.
Key takeaway: Use your head and not your heart
Make sure you always ask for a building and pest report on your contract.
That way, if there’s an issue, like termites, you can back away and get your deposit back in full.
Key takeaway: Do your due diligence on the property.
I’ve had some clients fall into this trap.
Some people pay deposits on a house before contacting the bank, thinking there will have no issues getting finance.
Then they realise they can’t borrow what they thought they could – and lose their deposits.
Key takeaway: Do your due diligence on the property.
Buying property can be complicated. Yet you can fast-track your knowledge and make money faster if you follow a few proven tips we’ve learned over the past 2 decades:
Get an off-market property at a discount
Do all this with positive cashflow and don’t make the typical rookie mistakes. Make sure you use your head not your heart. Do your due diligence. And get financing early.
That’s how you can make money in real estate as a beginner.
If you need a hand finding the right property, give us a yell.
Contact us for your free, no-obligation, 30-minute consultation.
Buyers Agent News
Learn what strategy works best and the top 3 common mistakes to avoid There’s a tonne of information...
How to get the best price for your property
You’re thinking of selling.
What can you do so you don’t overspend on your property—but will spruce it up so it draws in the right buyers?
How can you get a frenzy of buyers offering top prices?
A few, carefully chosen renovations (renos) can make all the difference.
In my 2 decades working as a buyer’s advocate, I’ve found these are the top 5 renos (renovations) that help property owners consistently get higher prices.
These are simple and inexpensive cosmetic renos you can do to boost the value of your property and give it curb appeal.
This is one of the easiest ways to refresh your home. The right colours throughout the house can do wonders: inside and outside.
The outside is the first thing people walking by will see. First impressions count. And having a clean, appealing exterior will give people an idea of what the inside might be like.
Don’t forget to paint your front door, window trims, garage, and driveway.
Choose colours that work well for your home—and your neighbourhood. Your local paint shop or Bunnings can help you pick the right colour and figure out how much you need.
Painting tips
Now more than ever, more people are working from home. So adding a small home office as big as a 2m x 1.5m can add great value to your home.
You could build a new office. Or if you have space and are on a tighter budget and timeline, you could convert a space that’s not being used. For instance, a landing, hallway, or under stairs.
A desk, chair, and overhead shelf are all you need for a small, simple office. For an in-built office, you could order ergonomic custom pieces online.
Consider lighting, walls, flooring, soundproofing and connectivity. Also, keep in mind where furniture might go and what storage options could be used.
Office renovation tips
Replace old, worn-out carpet. New carpet can make the place look more modern and attract more buyers. It also saves them time and the hassle of getting it done themselves.
Great areas for carpets include bedrooms, staircases, walk-in robes, hallways, lounges, living rooms, and rumpus rooms.
Be careful about buying cheap carpet. Or spending too much:
Choose a carpet relative to the value of your property. For instance, for a moderately priced home, a medium-range, low-pile twist nylon is a good idea.
Neutral colours such as beige, cream, and light charcoals are a safe bet for pretty much any colour scheme. What’s more, these can make a room feel more spacious and calm.
Carpet tips
The kitchen is the pride of the house. A new kitchen can dramatically increase the value of a property.
These days budget kitchens can cost from $10,000 to $15,000 and could easily double—if not triple—your return.
You might get away with a partial reno: replace the benchtop. Install new cupboard doors. Ditch out old appliances. A fresh lick of paint might be all that’s needed.
If you’re doing a larger reno, consider storage space. Walkways. Traffic. And space for appliances.
Before doing a major kitchen renovation, get a plumber and electrician in to help you figure out where your plumbing lines and electricity points are – and work with these. Or get new these fed in where needed.
These are expensive to fix if you don’t get them set up from the start.
Kitchen tips
Bathrooms are as important as the kitchen and can add loads of value to your place. You can easily do beautiful bathroom renovations on a shoestring budget.
Planning is important. Bathrooms need to be functional. Spacious. And include clever storage that doesn’t make people feel closed in.
You could replace tiles in the shower or replace the bathtub enamel. Spraying antique gray spray paint on bathroom fittings can quickly change the look of your bathroom. Shop around to get a good deal on fixtures and fittings.
To keep costs low, it’s best to use current plumbing rather than moving your bathroom around. Research to find low-cost materials at the same quality as expensive ones.
Bathroom tips
You can get the best price for your property without overcapitalising with these 5 cheap, awesome renos:
If you don’t feel confident about designing and doing these renos yourself, you could get an interior design student and apprentice tradies from the local TAFE or a trade school.
Have a go and contact us Buyers Agency Australia if you’d like more reno tips that will add value to your specific property.
Buyers Agent News
How to get the best price for your property You’re thinking of selling. What can you do so...
If you’re planning to hire a buyer’s agent in Melbourne, it is important to understand the costs of their services. Unlike a real estate agent who represents both buyers and sellers, a buyer’s agent renders their services exclusively to buyers. Their relationships with sellers, strong knowledge of the Victorian real estate market, and impressive negotiating skills can make a complex purchase process relatively easy.
When considering what a buyer’s agent does, it’s crucial to recognise their role in simplifying the buying process, particularly in the intricate Victorian market. Understanding what a buyer’s agent is or a commercial buyer’s agent highlights their exclusive commitment to the buyer’s interests, not the seller’s. What is a buyer’s advocate, or what is a seller’s agent you might ask? It’s a specialised role focusing solely on representing the buyer’s needs and negotiating the best possible outcomes, and a seller’s agent is advocating for the seller.
Their expertise not only lies in market knowledge but also in ensuring that buyers are well-informed and supported throughout the property-buying journey.
Many factors determine the fees of a buyer’s agent. The amount of time spent on completing your purchase and the level of service provided are among the main considerations. The level of experience and expertise they possess also plays a crucial role in determining their costs. There are three fee structures or pricing models used by a buyer’s agent or buyer’s agency in Australia.
When considering what a buyer’s agent in Melbourne charges, it’s vital to understand the diverse fee structures they operate under. The fees reflect not just the time and level of service, but also what a buyer’s agent does – from property search to final negotiations. Each buyer’s agency in Australia may have its own pricing model, often influenced by the agent’s experience and market expertise. Understanding these aspects gives clarity on the value offered by a buyer’s agent, especially when evaluating their role in securing the best property deals for you.
If a buyer’s agency or agent provides additional services, like preparing property assessment reports or conducting due diligence, they may charge you additional fees. While some buyers’ agents include these costs in their fees, some others don’t. Make sure you request a full fee schedule before hiring a buyer’s agent in Melbourne.
When assessing what buyer’s agents do, it’s essential to consider potential extra costs for services beyond the standard scope. These can include in-depth property assessments or extensive due diligence, which some Melbourne buyers agents offer as part of their comprehensive services. It’s important to understand what a buyer’s agent and buyer’s advocate may charge for these additional services. Before engaging with a property advisor in Melbourne, asking for a detailed breakdown of all potential fees ensures transparency and helps you plan your budget accordingly.
If a buyer’s agency or agent provides additional services, like preparing property assessment reports or conducting due diligence, they may charge you additional fees. While some buyers’ agents include these costs in their fees, some others don’t. Make sure you request a full fee schedule before hiring a buyer’s agent in Melbourne.
When considering the additional costs of buyer’s agents, it’s important to understand the full scope of what a buyer’s agent does in Melbourne. This includes tasks beyond the typical property search, such as detailed market analysis and personalised property recommendations. Understanding what a buyer’s agent does can clarify their importance in the property buying process. These extended services, offered by a buyers agency in Melbourne, can be crucial in making well-informed decisions, so it’s essential to factor them into your budgeting.
Typically, the fees of buyer’s agents in the Victorian capital range from 1.2% to 2.75% of the property price. Fixed fee charges can range from $3,500 to $10,500, while negotiation services or auction bidding services cost just $500 + GST.
In understanding the cost of a buyer’s agent in Melbourne, it’s noteworthy that their fees vary based on the property’s value and the services provided. This fee structure is a key aspect of what a buyer’s agent does, as it often correlates with the extent of their involvement in the purchasing process. What is a buyer’s agent’s role in this scenario? They offer tailored services, from property search to auction bidding, each impacting the overall cost. When you hire a buyers advocate in Melbourne, these costs reflect their commitment to securing the best property for you at a fair price.
The short answer is ‘yes!’ Besides saving you the time and energy spent on searching for a house and going through the complex purchase process, their contacts and negotiating skills can help you save thousands of dollars. They handle all aspects of the purchase process and represent your best interests to make sure you land your dream home, that too at an affordable price!
Hiring a buyer’s agent in Melbourne is beneficial, as they play a crucial role in what is often a stressful and time-consuming process. What does a buyer’s agent do? They streamline your property search, utilise their extensive network, and employ expert negotiating tactics, which can lead to significant savings. Understanding what a buyer’s agent and a buyers advocate offer, especially in Melbourne’s competitive market, highlights their value in ensuring you don’t just find a property, but secure it at the best possible terms. Their expertise is instrumental in navigating the complexities of the Melbourne property market.
Buyers Agent News
If you’re planning to hire a buyer’s agent in Melbourne, it is important to understand the costs of...
What to watch out for and find a good investment
We all love a good bargain, don’t we?
And what better bargain is there than to invest in an old house at a great price and rent it out.
So why isn’t everyone doing it?
Today you’ll find out what catches people out when it comes to investing in old homes. By old homes, we mean established homes that may have been built more than 15-20 years ago.
You’ll also find out what could make an old house a good investment.
Let’s dive in.
Old houses generally attract lower rental rates. It’s hard to compete against modern properties which include new appliances, central heating and cooling, and energy efficient ratings.
On top of that, new homes may be easily customised to your needs. And built within areas with new facilities.
All this increases the rental for new homes. And reduces it for old homes.
You can expect to do maintenance on old houses. It might be obvious immediately. Or down the track. Either way, you’ve got to expect to fork out for maintenance and include it in your budget.
This is not an issue for brand spanking new homes.
The government hands out grants if you’re buying a home for the first time. If you’re buying the house to invest, a common strategy is to live in it then rent it out later.
But the catch to this grant is they’ll give it to you only if you’re buying a new home – or a home that’s been significantly renovated. Check out the conditions for each state on the First Home Owner Grant website.
So you could get a bargain on an established, old property. But if you get such a great price on it, your property probably isn’t going to qualify for the grant.
On top of that, you won’t get a depreciation allowance for an old property – only for a new one.
All this isn’t looking good for established properties, is it? Let’s see whether there are any advantages to scouting for one at all.
Carefully choose your location. And do the right renovations so your house looks clean. Liveable. And looks great from the outside (curb appeal).
This will prop up the value of your house which will help you get a higher rental.
Old houses can suck a budget dry pretty quickly. Focus on the big things: make sure your house is structurally sound before settling.
Take the time to get a professional building survey done. The cost is small compared to the reassurance you get—and the money you’ll save.
You’ll know exactly what the issues are, so you have an idea of how much it’ll cost to fix if you buy the property.
The government gives out the first home buyers grant to give families a leg up—but also to help out the construction industry.
That’s why they want people to buy new houses. Or houses with plenty of work done to them.
These create work and jobs in the construction industry. So you might be able to get an old house with enough work done to it to get a first home owners grant.
When it comes to depreciation allowances, you won’t get them. But if you get an awesome deal for the property – and it’s in an area set for capital growth – you could save more than the tax breaks you’d get from a new property.
Every month I speak to sellers who are keen to sell a gold nugget of a property. They’re not easy to find, but they’re around if you know how to find them.
Old properties always have issues you can use to bargain down to a lower price.
It doesn’t mean you get any old house. You buy one that’s structurally solid—so you make money as soon as you buy. And you don’t need to wait 8, 15, or 20 years for its value to increase.
If you decide to renovate, subdivide, or extend, you’ll boost the value of your property.
What that means is you’ll multiply your returns and fast track your financial plans—and your lifestyle plans.
At Buyers Agency Australia, we know property investing can be daunting—especially if you’re not working in the industry, day in and day out. It can be costly and scary to know what to do, and who has your back.
That’s why here at Buyers Agency Australia, we have you covered.
Contact us for your free, no-obligation, 30 minute consultation.
Buyers Agent News
What to watch out for and find a good investmentWe all love a good bargain, don’t we? And...
A key aspect of investing is working out your long-term financial strategy. You need to know the amount you need upfront and what you’ll need after the purchase.
This is a crucial step that needs to be done early and in detail, being as conservative as possible to prepare for worst-case scenarios. Careful planning will help you avoid financial and emotional stress down the track.
There are a few areas to consider. The 3 aspects we’ll look at today are:
Firstly, what is equity?
It’s the difference between the value of your property and how much you owe on your home loan. For instance, if Jack and Mary’s home is worth $500,000 and they’ve got $300,000 debt on their home loan – they’ve got $200,000 of equity in their home.
Jack and Mary’s home: $500,000
Amount owing on home loan: $300,000
Equity: $200,000
A common way to buy investment property is to use the equity in a current home. It means you may not have to come up with any cash at all – or very little for a deposit. That cash can instead be kept in reserve for renovations or other expenses.
The maximum home equity you can use for a deposit is typically 80% of your home’s value less the balance of your home loan.
For instance:
Max equity for Jack and Mary’s home: $100,000: $400,000 (home value) – 300,000 (amount owing)
So Jack and Mary may have $100,000 of equity for their deposit and other buying costs such as stamp duty and settlement fees. If they need more, they’ll need cash.
Note: It’s not a given that you can use the maximum equity in your home. The bank will look at your age, other debts, your income, and other factors.
Paying in cash means:
Equity:
Generally, equity is the most common way to buy an investment property as not much cash needs to be used. However, every circumstance is different. It’s best to check in with a finance professional who will help you work out what’s best depending on your financial situation and investment strategy.
Key takeaway: There are pros and cons to using cash or equity. Equity will likely be suitable most of the time and can fast track your investment efforts. Get professional guidance.
Many investors will borrow to invest. Serviceability is your borrowing power – how much banks will lend you to buy an investment property.
This affects what you can afford to buy.
Experienced investors take serviceability one step further: they look at future serviceability. What can you afford to borrow after you buy this property?
Considering future serviceability is important if you want to grow your portfolio.
In general, lenders use the same formula:
Gross income
less tax
less existing commitments
less new commitments
less living expenses
less buffer
= your monthly surplus (i.e. the amount left to repay your mortgage).
The factors included in the calculation might be slightly different across lenders. They generally ask for your monthly expenses, annual income, type of loan, repayment structure, current interest rate, and estimated monthly repayments.
Key takeaway: Serviceability is your borrowing power and it’s helpful to consider how much you can borrow now – and in the future.
In general, the deposit on a property could be 10% or less of the property’s value. However, to avoid lender’s mortgage insurance (LMI), many buyers fork out a 20% deposit.
The bigger your deposit, the less you have to borrow. But since interest paid on an investment loan can normally be claimed as a tax deduction, investors have less incentive than homeowners to put up a large deposit.
Key takeaway: A deposit reduces the amount you borrow. Check your financial situation and investment strategy to work out what deposit amount will be best for you.
Careful planning done early is key to a successful investment. Today we’ve looked at ways to fund a property, cash or equity. We’ve explored why your purchase depends on your borrowing power or serviceability. Finally, you’ve seen that a typical deposit is 20% though there are times when it might suit to pay less.
If you’ve been umming and ahhing about investing, planning can help you understand whether to go ahead or not.
Contact us for your free, no-obligation, 30-minute consultation.
Buyers Agent News
A key aspect of investing is working out your long-term financial strategy. You need to know the amount...
It’s a common question that’s hotly debated amongst experienced investors – and may be confusing for new investors.
Today I want to share with you my thoughts on this topic from my 2 decades of education and insights gained from my experiences buying property myself – and for others. I’ve bought new properties and renovated old properties, here in Australia and overseas.
A common reason many investors buy new investment properties is for cash flow and tax savings. Newer properties draw in tenants like Zooper Doopers to kids, so you’re likely to get higher rentals with low vacancy rates. Not to mention the tax incentives – you can get depreciation allowances for fixtures and fittings. And the average investor could claim 70-80% back in tax expenses.
New home investors like that they can plan their costs which helps them manage cash flow. They know there’ll be no unexpected maintenance since builder and appliance warranties have them covered. You only need to pay stamp duty on the land part of your purchase.
New properties are easy. Low risk. And avoids the potential ickiness that could come with buying old properties.
There’s a tradeoff for anything easy and low-risk. For new homes, that tradeoff is purchased price and value. You see, developers expect to make a profit, and new properties need to be marketed – and where do you think they recoup those costs?
Yes. In the price of the new property. Which confuses the true price of your property. But they can do it because it’s new and there’s no established value to refer to – to rely on. This leads into the risk associated with new properties: what is their real value?
It’s fickle. When there’s an influx of new property, say in a new housing estate, a new property’s value may be diluted. How do you make an informed decision when there’s no historical data? Also, new properties are more sensitive to the market: when the market slows, a new property’s rate of growth slows and loses value.
By far the best part of buying an old property is for the opportunities you don’t get with new property. The opportunity to get great deals. And the opportunity to add value.
You see, from my experience, I’ve discovered sellers sell for a reason you can always negotiate to your advantage. Add to that, because it’s an old house, you know what it’s worth – and can enjoy capital growth as soon as you buy. Not 7, 10, or 15 years later as with new properties. You enjoy capital growth immediately when you get a great deal on old houses – when you buy well at – or below – market value.
So you make money as soon as you buy. Then, on top of that, you’ve got the opportunity to renovate, subdivide, or extend. These will supercharge the value of your property. What that means is you multiply your returns and fast track your wealth.
All this more than outweighs the tax benefits you don’t get from an old property.
There’s the potential problem of buying a lemon you continually need to fix up. But that’s where the plan for refurbishments – and having an incredible building inspector – can save you. What’s more, you of course need to buy an old property that ticks all the boxes to give you strong capital growth.
For instance, you may find a great investment buying an old home in a great, established area with people who earn well. Live in gorgeous, solidly built period homes. And enjoy plenty of quality amenities and infrastructure. Where the land value is worth far more than the physical house…
My experience has shown buying a well-selected old house is the way to profitable investing and faster wealth.
Old homes can feel like a boat leaking water when it comes to maintenance. The key is to make sure the home is structurally sound before settling which can easily be checked with a professional building survey.
Lower rental rates are common because people love shiny and new – which is what they’ll get after an old place is revived, and so much more. If you’ve ever seen a period home renovated in a well-to-do area, you’ll understand how much character, appeal, and prestige comes with living in one.
Then as mentioned, the taxman doesn’t give out depreciation allowances for old properties – but the savings you get from negotiating a great deal outright and the boost in value you get from renovating can pretty much cover – and most likely soar above the tax benefits you can get from a new property.
There are pros and cons to new and old properties. However, my experience and expertise has allowed me to consistently find huge bargains on old houses in great areas. This has helped my family – and my clients – boost the value of their properties, and fast track their wealth. And you can profit as soon as the purchase is made.
Want to multiply your returns and fast track your wealth?
At Buyers Agency Australia, we know property investing can be daunting – especially if you’re not working in the industry, day in and day out. It can be costly and scary to know what to do, and who has your back.
That’s why here at Buyers Agency Australia, we have you covered.
Contact us for your free, no-obligation, 30 minute consultation.
Buyers Agent News
It’s a common question that’s hotly debated amongst experienced investors – and may be confusing for new investors. ...
Many of us Aussies know at least one family who has moved from a city to a regional town over the past few years, because of COVID.
It’s tempting to be lured by Pied Piper’s flute and trail along with the rest to the next new fantastic place to live.
What we want to emphasise here at Buyers Agency Australia is that no matter what new trend seems to be happening, the fundamentals of good property investing doesn’t change. It’s important to know if these trends are new, old, or simply a fast track of a growing trend.
Today we want to share a few crucial things to consider if you’re tossing up between buying an investment property in a major capital Aussie city vs a regional town.
Now it’s important to note that each Aussie state and regional town is different. These are general considerations, yet fundamental considerations every property investor needs to look at.
Capital cities are well established with plenty of amenities and infrastructure – with constant plans for more. These bring long-term benefits for the economy such as creating more jobs which is pretty important for paying down a mortgage in the city.
A larger population and a strong economy bring more opportunities for workers and businesses, including investment from global companies. All this feeds into each other. Then there’s the hustle and bustle of city life. More shops. More cafes and restaurants. More entertainment. More of everything.
The downside of having such a large population is all these people need housing. This naturally leads to more competition and high house prices as both homeowners and investors bid as high as they can for the properties they want.
Of course, then families are stuck with high mortgages for fulfilling the great Aussie dream of owning a home. And investors who might provide rentals to families who can’t afford that dream, well, they’re also left with big investment mortgages. So mortgage stress tends to be high in cities. Rental yields low – and capital growth is what many investors are banking on.
Properties in regional areas generally offer better value in lower populated areas, which means there’s a lot less competition for housing than in cities. You’d be looking at higher cash flow from strong rental yield, less capital growth.
The appeal of regional areas has been particularly obvious with the mass exodus of city siders looking for a seachange. Add to that the luxury of less traffic, stress, and bustle and you can understand why the price of properties has soared in regional areas for instance, in south-east Queensland.
Still, this is the lucky country and there are so many underrated regional areas around Australia. The government response to the overflow in cities is decentralisation. For instance, in Melbourne, government departments have been moving to Geelong and Ballarat.
The new infrastructure makes it even easier to travel to and from these regional areas from Melbourne. The plan is to create suburban hubs that give people lifestyles similar to those they’d enjoy near the city.
Keep up with what’s going on in Aussie regions through the Department of Infrastructure, Transport, Cities and Regional Development and Regional Development Australia.
A property investor needs to be careful about the demand and supply in regional areas. It’s far more fickle, with the population and economy reliant on tourism and large employers. We’ve seen how tough regional areas have had it with international tourism disappearing.
It may be a matter of those areas adapting and reinventing themselves – to attract local tourism and regional hubs that thrive in their own right. There are fewer services, amenities, and infrastructure in many small towns, so you’ve got to look past the quaintness and chilled holiday feel of the town to look at the hard facts and figures. For instance, look up the value of regional homes on CoreLogic’s home value index.
There are valid pros and cons of cities and regional areas. You can find great properties in both, depending on where you look, what you’re looking for, and who’s looking for you. What COVID has shown us is things change quickly – and the average investor can easily be carried along with the wind.
It pays to anchor down and look objectively at the situation: having a solid property investment strategy can help you understand quickly what properties and areas make sense for your goals, finances, and your stage of life. That should always drive your search for property – not the other way around.
If you’re keen to set up a sensible retirement strategy that will help you maintain the lifestyle you deserve, let us help you get started.
Book your free, 30 minute consultation today.
Buyers Agent News
Many of us Aussies know at least one family who has moved from a city to a regional...
