February 2012 - 7 Ways to Capitalise on Economic Uncertainty
February 1, 2012 / Written by Thirst Creative
By Rich Harvey, Managing Director propertybuyer
Welcome to your March propertybuyer market update.
In this edition we will look at;
- 7 Ways to Capitalise on Economic Uncertainty
- Hot Property Deals
- Client Stories
- Seminar 15th March - Get Smart with Property in 2012, How to Get Ahead of the Pack
- Property Market Wrap
1. 7 Ways to Capitalise on Economic Uncertainty
In speaking with investors, home buyers and developers every day, I am sensing people feel a great deal of uncertainty and are unsure what to do next. Many are looking for “signs” of a turnaround in the economy or are simply saying they will sit back and “see what happens.”
Warren Buffett, of the world’s most successful investors, has said that during times of uncertainty, there are also periods of greatest opportunity. Here are seven ways that you can position yourself for success in the current economic climate.
1. Get your personal finances in order.
This means creating and following a budget. It means speaking to a finance broker and getting a pre-approval in place (if you don’t have a top notch mortgage broker we can recommend one for you). The pre-approval costs you nothing – just some time to gather your pay slips, rental statements, assets and liabilities and other docs.
It also means not putting off those hard decisions about what is a priority for you in life…..perhaps you’re thinking about moving house, doing that renovation, starting a new career or finally getting around to buying an investment property or taking control and setting up a self managed super fund. Whatever decisions are at your door step- putting them off won’t get you any closer to achieving them.
2. Build a buffer and safety net
As a savvy investor, it’s critical that you budget for unforseen expenses and events. Create a line of credit or an offset account that has enough money to pay your mortgage and any other shortfall from your property portfolio for at least 3 to 6 months. Make sure you have income protection insurance as this is one of your greatest assets – your personal ability to create income. Insure your properties – building/ contents and landlord insurance. This does not cost much but gives you great peace of mind knowing that if a tenant defaults or damages the place you are fully covered. And while you are getting insured consider the benefits of trauma insurance and life insurance for your family’s sake.
3. Build the right team of experts
Trying to do everything in life yourself simply takes more time and does not necessarily guarantee you a better result. I remember trying to manage my first property myself to save the management fee…..at first the tenants were all sweet and light, but then fell behind in rent payments, would not return calls and it got messy. I quickly learned that it’s far better to give this task to a top property manager who sorted out the mess and got better tenants at a higher rental. It’s the same with buying property. It takes time to sort the good from the ugly, and find true value in an uncertain market. My team of buyers’ agents are sifting through properties every hour finding undervalued properties, positive cashflow properties with yields of 9% to 11%, off- market deals, properties with instant equity or others from distressed vendors.
You will need the following EXPERTS on your team if you really want success: Buyers Agent, solicitor, finance broker, quantity surveyor, tax accountant, property manager, building inspector. Each of these experts needs to be qualified and licensed in their field and you can leverage your time and knowledge to help achieve your goals faster.
4. Understand market dynamics
To take advantage of uncertain economic conditions you need to understand the key drivers of individual
property markets. While we see quoted statistics about the “median price” of housing in Brisbane or Sydney,
these figures can mask what is really happening at ground level. Savvy buyers need to drill down to look at the key price points of a suburban market. Are there more sales in the $500k to $750k range than in the $1m plus range. Where is the sweetspot for value in the suburb? What is considered affordable in the area?
You will need to uncover the GROWTH and YIELD drivers for the areas you are shortlisting. Is there new
infrastructure such as a new freeway being developed that will cut travel time by 15 minutes? Is there a new
hospital that will increase demand from tenants in the area? As an investor you want to buy in areas that have a diverse range of employment drivers and where there is likely to be consistent growth.
5. Research Intensively
There are hundreds of different tools available to property buyers today. The top two web sites, realestate and
domain provide buyers with over 800,000 listings to choose from. Throw in the 15,000 suburbs Australia wide
and you have a recipe for options anxiety. It’s no wonder many people get overwhelmed and do nothing but
research in circles. As buyers agents we have developed a range of sophisticated research techniques that
enables us to spot good value properties very quickly. You have to firstly narrow down the areas you want to buy in, then begin the process of shortlisting specific properties. You must identify the local median price
movements, the past 2 years sales history and have inspected at least 50 properties in the target area. Note that your research will be time sensitive….the good properties don’t hang around forever. More research will give the confidence to move forward with a decision as you will have a basis of comparison.
6. Long term perspective
Whether buying a home or investment property, you need to take a long term perspective. Interest rates will
move up and down in rhythm to the economic cycle. Property prices will ebb and flow according to supply and
demand in a local area. One of the keys to success I have found, is to buy more actively while the market is
down. It’s hard to pick the precise bottom of the market but there are several areas where this is happening
now.
7. Take action
There’s no point berating yourself for bad decisions in the past, or getting upset that you missed the last property boom. You only have the future to look forward to. 2012 is a year of uncertainty, but it is not a year for the saving buyer to sit back and do nothing. Procrastination will not get you any closer to your goals.
2. Hot Deals
Scouring the market for deals this month we have uncovered some sensational deals…
1. Positive cashflow properties in Sydney!
Would you like to own a positive cashflow property and achieve yields of
9%++ and enjoy capital growth with the property located in Sydney?
We specialise in sourcing specific sites which allows for the construction of
a 1 or 2 bedroom flat behind existing homes. We project manage a licensed
builder and have negotiated a discounted volume rate for our clients for
granny flats starting from just $66,000. Call us today to find out more on
1300 655 615.
2. Positive cashflow in regional areas
We’ve uncovered multiple cashflow positive properties with price points from $320,000 to $480,000 and renting from $500pw to $1000pw giving yields in the range from 8% to 10%+.
3. Gladstone
Pre-register your interest in 4 bed 2 bath 2 car houses priced from $500,000 and renting from $650pw to
$1000pw. We will get an allocation released to our client before public release.
4. Commercial properties for SMSF’s
In Sydney commercial properties from $250,000 for office suits with tenants in place 9% net yield with long term leases.
5. Hunter Valley
Have a wide range of opportunities with units, townhouses and houses from $300,000 to $500,000 with both strong yields and capital growth projections. Our researchers have identified some excellent opportunities with blocks of units and townhouses in one line with yields between 8% to 9% and priced between $1.0m and $1.5m. Call today on 1300 655 615 for a friendly chat with my team or click here to send an email inquiry
3. Client Stories
Here is a selection of feedback from some of our happy clients last month:
Buyer type: Investor
Buyer's brief: Overseas expat investor looking for a Sydney apartment in good condition with good yield
Asking Price: Auction $700,000 +
Purchase: $692,000
Appraised Value: $710,000
Saving: $18,000
Buyer's Agent Comment
Goh and Finuala were living in Singapore and seeking a renovated apartment in Sydney close to amenities such as transport, shops and cafes. After 2 weeks I presented four properties, two of which were of particular interest. We attempted to buy one of them but withdrew our offer after I discovered some major issues in the strata inspection. Consequently, we then pursued the second property and successfully negotiated the deal well under the expected market price. Following settlement, the property was immediately leased for better than a 5% gross yield, an excellent result for a unit in the lower north shore.
What our clients say:
We live in Singapore and had wanted to buy an investment property in Sydney for about a year, however with work we just never had the time to invest in looking properly for the right unit. We were starting to get concerned that we would never get the time to get this done. When propertybuyer were recommended to me I contacted Matt and we had a preliminary discussion about what to expect and how the process worked.
From our first conversation Matt was friendly, down to earth and totally professional, however the attribute I appreciated most was his direct approach and honesty. He had expert market knowledge great attention in all areas of our engagement. He was clear on his advice on the properties we viewed and when we got to the final stages on the preferred option he had a clear strategy for negotiating the best deal. We would definitely contact Matt for our next property purchase and would recommend his services to anyone looking to purchase a property.
Goh & Finuala (Recruitment Managers)
4. Seminar - 15th March, Get Smart With Property in 2012 - How to Get Ahead of the Pack
When economic uncertainty abounds, there are many opportunities to capitalise and get ahead. But it is crititcal you have a strategy, do your research and get the right panel of experts on your side . At this seminar you will gain powerful insights into the property market and how to navigate the way forward whether you are a home buyer or property investor.
- Outlook for property prices in 2012
- Develop a strategy that’s right for you
- What’s happening on the Northern Beaches
- How to identify hot suburbs likely to boom using a revolutionary new research tool
- When to sell, when to buy
- Clever ways to make an existing property tax effective
- How to maximise your borrowing capacity and select the best lender
- Seven fatal mistakes property investors must avoid
- How to survive the impact of Europe and US debt crisis
Date: Thursday 15th March 2012
Time: 7.00pm to 9.00 pm (6.30pm for registration)
Venue: DEE WHY RSL CLUB, REEF LOUNGE
LEVEL 3, 932 PITTWATER ROAD
Investment: Single $19, Double $29
Book now at this link: http://www.stickytickets.com.au/7642
Telephone enquiries: 1300 655 615
All attendees will receive the very first preview of Australia's first suburb capital growth desktop and mobile research App called "Boomtown". Boomtown launches in March 2012 to the open market and Propertybuyer has exclusive access as part of our proprietary research program".
