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5 signs you’re ready to ditch the renting cycle

by ShelMarkblog In Uncategorized

18 January 2019

Do you feel like you’re stuck in a renting cycle?

How do you know when it’s time to give renting the flick and buy your first home?

Here are 5 signs you’re ready:

1. You want to own an asset that will grow in value over time rather than fork out money on an asset owned by your landlord.
This is called capital growth. As your property value goes up, so does your equity (the difference between the value of your property and the balance on your mortgage). Later on you could potentially use your growing equity for things like a home renovation, a deposit on your next home, or property investment.

2. You are seeking greater stability.
The risk when renting is that you never know what the owner’s intentions are. If he/she decides to sell, you have no choice but to look for somewhere else to live (unless they sell to another investor and then you have to wait and see if they put the rent up). Owning your own home gives you stability.

3. You’re tired of being limited in terms of what you can and can’t do to make your home your own.
Are you tired of not being able to update the carpet, install an air conditioner, paint the walls or mount your TV on the wall? Buying a home means you have freedom to make changes as you see fit.

4. You have worked out that you can afford the mortgage repayments and other ongoing costs.
With historically low interest rates, a mortgage can work out to be more affordable than paying rent. Just be sure not to stretch yourself too thin. Don’t borrow to your limit as interest rates can’t stay this low forever. What’s more, there are some ongoing costs involved in buying a home that you don’t need to worry about when renting, like council rates, strata fees and property maintenance and repairs.

5. You have saved enough to pay the deposit (generally 20%) and other upfront costs.
Even if you are struggling to save 20%, it’s worth investigating your lending options. Some financial institutions will lend against a lower deposit as long as you meet certain criteria. Seek advice from a mortgage broker who can compare loans for you.

Think outside the box – consider ‘rentvesting’

Love the neighbourhood you live in but can’t afford to buy there? How about buying and renting at the same time?

This is known as ‘rentvesting’. It involves living in a rental property while buying an investment property in a more affordable area.

Make 2019 your year!

Now is one of the best times to buy in Perth in many years. But experts say don’t wait too long if you can afford to do it now.


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Planning to invest in 2019? Here are 10 tips for success.

by ShelMarkblog In Uncategorized

11 January 2019

Have you set yourself a New Year’s resolution to invest in property? If so, congratulations! You have selected a great time to buy. However it is important not to jump into the investment market blindly. To get the most out of your property investments and to lessen the associated risks, take a look at the following 10 tips as suggested by leading Australian property investment expert, Michael Yardney.

1. Educate yourself
Subscribe to blogs, online forums and publications from reliable sources such as realestate.com.au, Investor Assist, and Australian Property Investor, to name just a few to learn the do’s and don’ts of property investing.

Research property prices, land tax and government charges as well as socioeconomic factors of the area you are interested in to determine whether or not it represents a good long-term investment prospect.

Michael Yardney says first time investors must understand how property markets work and “not believe the myth that all properties increase in value”.

2. Seek advice

Speak with local real estate agents and brokers to help you better understand the current local marketplace for the area you wish to invest in.

You may also wish to consult the services of an independent property strategist, mortgage broker, financial planner and/or accountant to help determine your investment strategy and borrowing capacity and locate a good high growth area.
A team of independent professionals will help you avoid buying a property based on emotion, which is the last thing you should do when investing in property (leave the emotion for buying your home).

3. Save early

Get into a habit of making regular deposits into a high-interest savings account so you can show your lender that you have financial discipline. It’s also important to set yourself a realistic budget if you are truly serious about investing in property.

4. Consider a family guarantee

Banks generally require you to come up with at least a 20% deposit of the purchase price (unless they allow you to take out lenders mortgage insurance, in which case a lower deposit is allowed).

The other option if you are brand new to the market is to consider using a family guarantor. This is where an immediate family member allows the equity in their property to be used as extra security for your home loan.

Say your parents are willing and able to be guarantor for you. Michael Yardney says to ensure you split the loan in two portions: the portion of the loan they are guaranteeing and the portion they are not guaranteeing. Then you should work hard to reduce the portion your parents are guaranteeing so you can release them as quickly as possible.

5. Consider borrowing options

Co-borrowing is another viable option for young investors. This is when two or more investors agree to share the costs of ownership. If you both have similar financial goals and circumstances this can work well.

Along with sharing the loan cost, the borrowers share additional costs such as stamp duty, strata fees or legal charges, as well as ongoing costs such as maintenance and repairs. Just ensure that all the necessary legal documents are in place first to avoid problems (seek advice from a solicitor).

6. Shop around for a competitive loan

The investment loan market is highly competitive. Do the right research and comparisons and you are likely to find a mortgage product with advantageous features like an offset account, the ability to make additional repayments, a redraw facility and minimal ongoing fees. Such features will allow you to lower your mortgage repayments and interest charges so you can focus on servicing your debt and reaching your investment goals sooner.

7. Pre-approval

Once you’ve found the right home loan, apply for pre-approval. Why? Because having pre-approval in place gives you greater negotiating power once you have made an offer an a property as you’ll be considered a preferred buyer over those who don’t have pre-approval in place (they are considered a greater risk).

8. Demonstrate financial discipline

The ability to save and practice financial discipline is a crucial part of real estate investing and getting approved for finance:
Follow these three fundamental rules:

1. Spend less than you earn,

2. Save the difference, and

3. Invest the difference and keep re-investing it until you have a big enough deposit.

Michael stresses, “Learn to sacrifice and don’t borrow more than you can afford, especially in a low interest rate environment.”

9. Plan for contingencies

Don’t assume everything will go smoothly. When you purchase a property – especially an older one – things can and do go wrong. It’s crucial to budget carefully to allow for contingencies. These could include the hot water system needing replacement, the tenant losing their job and no longer able to pay the rent, the oven breaking down etc. etc. Ensure you have enough funds in the bank to cover repayments and other expenses at all times.

10. Location & property considerations

Keep the following 3 variables top of mind before you dive in:

1. Your budget (determined by your lender).

2. The location – never compromise on this.

3. The type of property you buy – Michael says, “I’d rather buy an apartment in a great location, if that’s all my budget allowed, than a house with land in an inferior location.” Location is everything.


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