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Research: James Miller, Helen Sykes, Melanie Jarvis-Vaughan, Peter


Guthridge, Mark Gregory and Shawn Willis
Edited By Kizzi Nkwocha (c)
Published by Mithra Publishing 2015
Sponsored by The Australian Property Place.
www.theaustralianpropertyplace.com

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All rights reserved. No part of this work may be reproduced or transmitted


in any form or by any means, electronic or mechanical, including
photocopying, recording, or by any information storage or retrieval system,
without the prior written permission of the copyright owner and the
publisher.
This book is presented solely for educational and entertainment purposes.
The authors and publisher are not offering it as legal, accounting, or other
professional services advice. While best efforts have been used in preparing
this book, the author and publisher make no representations or warranties
of any kind and assume no liabilities of any kind with respect to the accuracy
or completeness of the contents and specifically disclaim any implied
warranties of merchantability or fitness of use for a particular purpose.
Neither the authors nor the publisher shall be held liable or responsible to
any person or entity with respect to any loss or incidental or consequential
damages caused, or alleged to have been caused, directly or indirectly, by
the information or programs contained herein. No warranty may be created
or extended by sales representatives or written sales materials. Every
company is different and the advice and strategies contained herein may not
be suitable for your situation. You should always seek the services of a
competent professional.

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Also by Mithra Publishing


Escape Your 9-5 And Do Something Amazing
Customer Service
SocMed: Social Media For Business
How To Start A Business With Little Or No Cash
Facebook For Business
Social Media Marketing: Write Up your Tweet
Getting Your Business LinkedIn
Its That Easy! Online Marketing 3.0
Business, Business, Business!
Mind Your Own Business
Insiders Know-how: Running A PR Agency
Insiders Know-how: Caring For Your Horse
Energy Efficiency
Social PR
Visit us at www.mithrapublishing.com

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"I will tell you how to become rich. Close the doors. Be fearful when others
are greedy. Be greedy when others are fearful."
- Warren Buffett

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"How many millionaires do you know who have become wealthy by


investing in savings accounts? I rest my case."
- Robert G. Allen

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"It's not how much money you make, but how much money you keep, how
hard it works for you, and how many generations you keep it for."
- Robert Kiyosaki

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The property experts that have contributed to this book

Garth Davis

Adrianna Huester

Craig Merrett

Linh Whyatt

Darina Snell

Zaki Ameer

Geoff Boyd

Stephanie Brennan

Evelyn Rose Norman

Joylene Hay

John Carney

Scott Pendlebury

Andrew Crossley

Julie Crockett

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Welcome to The Australian Property Book


About Kizzi Nkwocha
How To Avoid the Traps In Property Investing
Property Investment: Introduction & Strategies
Kick Starting Your Investment Journey.
15 ways to make profit from buying property under market value
Should You Move and Sell, Or Improve and Stay? Get Your Timing Right!
How to avoid the common mistakes made when investing in property
Understanding Cash Flows for Investment Properties
Preparing for your new home
How to maximize profit potential from your investment property
First Impressions Count: How To Achieve Your Market Potential When
Selling a Home
Guide to buying and selling property in Australia
Australian Property Is A Team Sport
Profiting from improving your property
Overcoming the Fear Factor
Shady Advice versus the Right Advice
Optimizing your property investment portfolio
Investing That Spans The Generations

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Welcome to The Australian Property Book


The Australian property market can be a complex and often bewildering and
daunting prospect for first time buyers and investors. Many would agree that
the market today presents a very different picture from 40 years ago. Back
in the 70s, the Aussie dream of owning your home outright was a very real
possibility. But Australia is now hot property with overseas investors rushing
to claim their piece of the pie. Today, we contend with one of the most
expensive property markets in the world.
The industry is constantly evolving, with new trends surfacing and changing
the shape of our housing forever. Our population is growing, were leading
busier lives. All of these factors influence how and where we choose to live
and where we invest our money. That is why The Australian Property Book
is such a valuable asset for both new-comers to the industry and seasoned
operators.
Produced over the course of two years and with contributions from 18
property thought leaders, The Australian Property Book is an insightful,
practical and informative guide for anyone seeking to buy, sell, rent, manage
or invest in property in Australia.
When working on this book our core goal was to separate the signal from
the noise. We set ourselves the daunting task of providing valuable advice
and insight that will not only help our readers save time but, I hope, also
save and make money. Although there can never be a one size fits all
approach to the Australian property market, I believe The Australian
Property Book goes some way to making it easier for you to navigate your
way through the market and emerge wiser and wealthier. Enjoy.
Kizzi
Kizzi Nkwocha, Editor of The Australian Property Place.

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About Kizzi Nkwocha

Kizzi Nkwocha made his mark in the UK as a publicist, journalist and social
media pioneer.
As a widely respected and successful media consultant Nkwocha has
represented a diverse range of clients including the King of Uganda,
mistresses of President Clinton, Amnesty International, Pakistani cricket
captain Wasim Akram, campaign group Jubilee 2000, Dragons Den
businessman, Levi Roots and world record teenage sailor, Michael Perham.
Nkwocha has also become a well-known personality on both radio and
television. He has been the focus of a Channel 4 documentary on publicity
and has hosted his own talk show, London Line, on Sky TV.
He also co-presented a weekly current affairs program in Spain on Radio
Onda Cero International and both radio and TV shows in Cyprus.
His books have included the fiction novel, Heavens Fire, the business guide
books: Business, Business, Business!, Mind Your Own Business, Insiders
Know-How: Public Relations and the international bestseller SocMed: Social
Media For Business. His second fiction book, The Prophecy Of The Popes,

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is due out in December 2015. In 2011 his team won the SIPA award for social
media. Nkwocha now runs a successful consultancy training people on how
to use social media for business.
His consultancy is at www.socialbiztraining.com
Follow Kizzi on Twitter: https://twitter.com/kizzinkwocha

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How To Avoid the Traps In Property Investing


Investing in property is a great thing to do. However, you really need to know
what you are doing before you go diving in head first. You need to get some
quality education on property investing and you need to have a great team
of advisers and experts around you, to help you, and support you. You need
a good mentor who understands property, who is experienced, and who is
successful. You will need to have a good accountant, good finance broker,
good settlement agent / solicitor, because these members of your team will
give you the best advice and suggestions, on how, why, where, and when to
do your investing.
If you want to be successful with property you are going to need to buy
multiple properties, over time, and create a portfolio of properties. The
strategy I am recommending is a buy and hold strategy, and having a long
term view on their appreciating values.
Where possible I recommend building a portfolio with a minimum of about
5 properties, which would give you a portfolio of property valued at
approximately $2,500,000 or more. This excludes your own home that you
live in.
You will need to pay special attention to the risk management of your
portfolio. To me, if you own 1 investment property, investors tend to treat
that as a hobby, but once they own more than 1 investment property, they
need to treat their property portfolio as a business. They need to treat their
property business seriously.
Below are 16 main key areas where you need to be very aware, as an
investor, as these areas can be full of traps for the uneducated, and I will
do it on my own investors.
1). Strategy
Your strategy is the most important starting point. What is your goal? What
do you want to achieve from property ownership, and what is your time
frame? Is property investing the best vehicle for you? If you are an 18 year
old person wanting to start investing in property, you will have a very
different strategy to say a 60 year old person who is looking to purchase their
first investment property. The best strategy is to try and start investing in

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property as soon as you can, as young as you can, but also only when you
can afford to.
2). Ownership Structure
Before you purchase a property, you need to know what you plan to do with
it. What is the main reason for buying the property, and when do you plan
to sell it? This is going to help you understand what ownership structure you
need to purchase it in. For example if you are going to buy and hold long
term, it may be best to purchase the property in your personal name, or in
both personal names, if you are purchasing with a partner. If so, what is the
best ownership type, joint tenants, or tenants in common? Tenants in
common allows different ownership percentages which might be a big
advantages for making the most out of tax deductions for example.
If you are planning to buy and sell property as a strategy, then you might
decide that buying the property in a company name may be the best for you.
If you are looking to protect your assets from any potential legal claims, then
it may be best to purchase your properties using a trust structure, but trusts
come with some challenges, especially when trying to finance the property.
When you are deciding on what structure to purchase in, it is vital that you
get expert advice from your accountant.
3). Finance
Once you have worked out what your strategy is going to be, and in what
structure, your next important step is understanding your finance abilities,
and capabilities, and how much the banks are prepared to lend you. You
must understand interest rates, and also whether interest only loans, or
principal and interest loans, are going to help with your particular strategy.
My suggestion is to definitely use a good Finance Broker, and one who you
know, like, and trust.
What about cross collateralised loans versus stand-alone loans? Try and not
have your loans cross collateralised by your banks, as the banks do like to do
this, to get security across your entire property portfolio. At certain times in
your property journey this might be a good option to do, or your only option
to do, but in my opinion in most cases it is a trap. Get stand-alone loans. Also
work closely with your Finance Broker to understand the pros and cons of
fixing your investment loans, versus having variable interest rates.

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4). Cash Flow Positive or Cash Flow Negative


It is very important for a property investor to understand the cash flow of a
property BEFORE they put in an offer to purchase it. They need to know what
their mortgage is going to cost per week, what the anticipated rent will be,
any council rate fees, body corporate fees or strata fees, and other expenses
etc.
Investors need to understand the dollar amounts per week, and whether
there is a cash shortfall or cash surplus. Is the net result that this property
will be making cash per week for the investor, or will it be costing the
investor?
5). Understanding Negative Gearing
Tax minimisation is a smart strategy. However, tax avoidance is breaking the
law. Negative Gearing is a legal way for property investors to legally minimise
their tax. If this is legal, why would you not use it effectively? Talk with your
accountant and find out whether having negatively geared properties is the
best strategy for you, or not. It can be very good for certain investors, but
also very dangerous if it is not fully understood by other investors.
6). Understanding the PAYG Tax Variation
The tax savings you get from negative gearing can be claimed at the end of
the financial year, or else they can also be claimed back sooner too. Your
accountant can apply to the Australian Tax Office, on your behalf, to do a
PAYG Tax Variation. This means you pay less tax each pay time, which means
you are getting your tax refund back much quicker, rather than waiting until
the end of the financial year for it.
7). Dwelling Types
What is the best type of dwelling for an investor to buy? Should an investor
purchase an off the plan unit, or a new established dwelling, or a second
hand property? There is no right or wrong answer. It depends on the
individuals circumstances, and each type of dwelling type has its pluses and
minuses. Off the plan purchases come with higher risk, but they potentially
have a higher return. With off the plan it is very important to make sure you
have a fixed price contract. Get expert advice on what type of dwelling will
work best for your needs at that point in time.

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8). Location of Properties


Spread around where you purchase your properties. Buy them around
Australia. That way you minimise your risk, and open up more opportunities,
whilst keeping your land tax as minimal as possible. Properties in a capital
city generally offer better capital growth opportunities, but conservative
rental yields, whereas properties in country areas, or mining areas, will tend
to be bought for their potentially better cash flow opportunities.
9). Understanding Loan to Value Ratios (LVRs) and Lenders Mortgage
Insurance (LMI).
How much will your bank lend you? You might have an option to purchase 2
properties if you borrow at a 90% LVR, or only 1 if you purchase 1 property
at an 80% LVR. How many properties should you purchase? Again there is no
right or wrong answer, it is about understanding what you can do, then
making an educated decision to say this is what you are going to do, and
why, as it fits in with your overall strategy. Some investors have a higher risk
threshold, and some have a lower risk threshold. Get advice on the risks
versus the opportunities.
10). Understanding The Importance of Depreciation Schedules
A Depreciation Schedule must be done as soon as the property settles. This
is a very important tool, because this schedule shows a breakdown of all
depreciation deductions that can be claimed, each year, for the next 40
years. Your accountant will use this depreciation schedule to help reduce the
amount of tax you have to pay each year.
11). Importance of Insurance And Insuring For The Correct Amount of
Cover.
Property Investing is a business, and as an investor you have to manage your
risk. Be very mindful to take out the necessary insurances, and keep them
updated and current with the current property values and replacement
values. Some of the insurances that need to be understood, and then
actioned are, Landlords Protection Insurance, building insurance, and
personal insurances, like life insurance, income protection insurance etc.
12). Use a Qualified Property Manager
Some property investors property manage their own properties. I personally

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do not think that is a good idea, and I think it is risky. You need to find a
quality Property Manager to manage your property, and manage your
tenant. The cost of a Property Manager is a tax deduction, so why would you
not use one? The different current Tenancy Acts around the country are a
minefield for the unqualified. I definitely recommend using a good Property
Manager.
13). Time - BE PATIENT
What is the biggest mistake property investors make? They get impatient
and sell too soon!
Get involved in your property portfolio. Know what is going on with your
properties, and what is going on in the different property markets. Do not
be a passive investor. Keep asking questions, so you can keep learning, and
you can then make educated decisions.
14). Do Not Sell Too Soon
Yes, the biggest mistake property investors make is that they sell too soon.
Property values work in cycles. Values can go up, and even down sometimes,
and no one can accurately predict when that will happen. Price growth is
driven by many factors, including how much demand there is, how much
supply there is, interest rates, investor confidence, employment rates,
government grants etc.
Property values do go up, and property values will double over time.
Have a look at this graph below where the data is courtesy of RP Data. It is
their Pain and Gain report for the quarter ending June 2014. It shows that of
properties bought and later resold, the best capital growth profits were for
those purchasers who held their properties for 15 or more years. Some 95%
of those purchasers doubled their money or more in that time period. Hold
on to your properties for the long term, and do not sell them too soon.

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15). Once You Have Got Some Property Investing Knowledge TAKE
ACTION.
A trap for certain individuals is that they become paralysed with
information overload. They go looking for too much information on certain
properties and in the end they cannot make a decision on what to do. It is
important for property investors to do their research before they purchase
a property, but then take action. Successful people are those who take
action.
16). Stay Involved In Your Properties
Know what is happening in the market regarding rents, and property values.
Do not be too passive as an investor, you need to stay involved and
informed. If your properties are strata / body corporate properties, get onto
their committees, to find out what is going on in the development.
In conclusion, investors must develop knowledge, build a good team around
them, take action and purchase, then purchase multiple properties as and
when they can afford to.
They must continually monitor their property portfolio, keeping up to date
with changes in the finance market, tax markets, etc. BE PATIENT, do not sell
too soon and have a long term view in investing. Manage your risk. I am

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passionate about property, and passionate about helping people. I hope you
have a fantastic journey with property, please be patient, and take a long
term view for your properties.

Garth Davis

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About the author

Garth Davis Property Investor


Garth Davis emigrated to Perth, Western Australia in 2002 from Zimbabwe,
Africa. When he arrived in Perth property prices were at the early stages of
their boom. Garth did not have any knowledge of property investing until he
arrived in Australia but then made it his business to mix and mingle with the
most knowledgeable property people, and he attended many property
expos, conferences and workshops to gain as much knowledge as possible.
Garth got educated in property investing, and surrounded himself with a
great team of experts and mentors, and took action and started purchasing
well located properties around Australia.
He enjoyed the industry so much that he took up full time work in the
industry. Garth is a very successful property investment coach and he won
many national awards for the company that he worked with for 10 years,
and he created many raving fans. Garth has helped over 500 investors get
into property, and a high percentage of those investors have gone on to
purchase multiple properties with his expertise and support.
Garth and his wife plan to continue building their portfolio and are keen to
purchase some more properties in Brisbane and Perth relatively soon as well
as some properties in Sydney and Melbourne when the markets there are in
a buyers market part of the cycle.

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Garth can be reached on icghd@bigpond.com and is happy to offer free


advice and recommendations on property investing in Australia. He is happy
to help novice investors as well as advanced investors

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Property Investment: Introduction & Strategies

Investing in a property is a decision driven by a number of factors.


Homeownership provides shelter and security, while often decreasing the
financial stability due to mortage expenses and greater responsibilities. Both
commercial and residential properties can be bought for development and
selling, making a great investment for real estate connoisseurs who opt to
increase their income.
What makes Australia a great place for property investment and how can we
take advantage of the local real estate market? We will discuss these
questions in the next part of this chapter.
The Australian Real Estate Market
Australia the country with the lowest population density in the world.
Statistics from 2014 indicate that in Australia there are only 3 people per sq.
meter. Thats less than Canada and Iceland, and only Greenland beats this
record with 0 people per sq. m.
Having that in mind, the Australian government has been encouraging
homeownership for the past few decades. By adding tax reduction and
additional benefits for young people and future investors, who wish to own
part of the land, the country has aided the property investment market for
years. Today, speculators say the so-called Australian property bubble is
soon going to pop. Property bubble is a term referring to the overvaluation
of real estate. Since the property demand has been increasing rapidly over
the years, prices have followed that lead raising roughly equally to the
property search and income increase of the Australian families. Due to the
high market expansion and inconsistent price hike in the last decade,
speculators previse a crash of the estate market. It is expected that the
bubble pop will drop the property prices significantly to meet the
investors potential. This process has been expected for the past decade and
might or might not start at all in the following years. Yet, it is an important
base for the consideration of a property investment and gives owners
further perspective of the countrys real estate market.

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Property Market Statistics

Financial: Purchasing a property requires high financing, yet


according to the Australian Bureau of Statistics1, the proportion of
homes with and without mortgage has dropped by 10% for the
period between June 1996 and June 2010.
Regional: The Northern Territory of Australia has the highest rate of
rented properties and the lowest homeownership rate. This is due
to the regions young population and highly mobile workforce.
The Australians preferences for urban vs detached housing shows
that in 2010, out of the 5,7 million owned homes, 88% lived in a
separate house. Most rented housing is indicated to be either
apartments, flats or units.
Age Group: Most first-time home buyers are in the age group below
35 years. They are followed by homeowners between 35 and 44.
Family Status: Most dwellings are purchased by couples and families
with children. They are followed by lone homeowners who are third
in the charts for home-ownership. Single parents with one or more
children prefer renting instead of paying mortgage.

Property Types
Getting to know the real estate market is the first step to investing. Having
deep knowledge of the property types and the current state of the local
estate market can aid both homeowners and real estate investors on their
journey to acquiring their goals.
Residential Property Types

ABS - Australian Bureau of Statistics - http://www.abs.gov.au/

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Townhouse: Also known as villa or unit, the Australian townhouse


represents a small-size housing which is often build with a
community focus. This type of property provides little or no land
along with the unit. Most townhouses, available on the market, have
around three bedrooms and sometimes feature fitness or TV rooms
and other community amenities.

Retirement Communities: This housing type is usually located in the


more populated regions of the country. The retirement community
housing limits residents by age, featuring homeowners who have
entered their retirement age. The retirement property features
mainly apartment buildings with well-structured communal
facilities. Parks and lounge areas are an inseparable part of this
housing type.

Rural Housing: The rural properties throughout the country present


a perfect option for future homeowners who wish to purchase a
significant amount of land along with the house. The rural housing
can be divided into two basic types: established farms and
undeveloped land. ( Foreign investors who plan on acquiring a rural
property will often be unable to develop it and will need to pass a
series of requirements. )

Golf Property: Some Australian regions, such as Nerang, feature


new residential constructions built on golf course complexes. The
site of these properties can vary, yet the view is almost always
impressive. Most of the golf residences are part of gated
communities which offer housing security and a lot of additional
services.

Coastal Residences: The Australian coastal real estate features


mostly housing in condominium style which can be also purchased
separately. The countrys largest cities are built on the coast which
presents a lot of quality homes.

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Apartment Properties: Also referred to as flats, in the UK, they are


mainly located in the central city parts and come in a wide range of
sizes. Factors such as location, nearby facilities and amenities keep
the apartment prices up. Buying a flat with three or more bedrooms
would often cost more than purchasing a house with satisfying yard
size.

Unit Properties: This property type is part of a terraced residential


building and feature a small-size living area with limited outdoor
space. The unit buildings are created for communal living with
shared parking spaces and waste disposal. Units normally feature
two bedrooms and lower rent and purchase price, therefore are
considered to be a convenient choice for a starter home.

Commercial Property Types

2
3

Office: Building with commercial function which houses and


provides working space to companies, agencies and self-employed
individuals. The offices include single-tenant properties, small office
buildings, services offices and downtown skyscrapers.

Retail: Property unit which sets an operating space for peddles,


small shops and other retail companies.

Industrial: This property type comprises a number of buildings with


various size and functionality. Listed as industrial property can be
anything in between the following: Warehouses, Distribution
centres, Flex2 and R&D3 properties, as well as other Big Box4

Flex - lightly zoned buildings

R&D - research and development


Big Box - large industrial properties, with signature box structure above 5000
square metres.
4

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properties. A defining characteristic of industrial space is Clear


Height. This is the actual height of the building from the top to the
bottom of the steer girders.
Heritage Property Types
-

Historical Housing: Residential building which is connected to the


local or national heritage. A property can be heritage listed for being
ociated with people, events or places with historical importance.

Heritage Land: Often an undeveloped land featuring flora and fauna


of national or local importance. Historical grounds are also heritagelisted and can comprise gardens and landscaping linked to a
building, person or event part of the local history.

Property Investment: The Basics


There are three main reasons for purchasing a property. Residential
buildings can be acquired by investors for renovation and resell. They can be
purchased by homeowners who are interested in occupying them
themselves or renting them out for financial benefits. Houses can also be
bought for land banking5. Same goes for commercial properties which can
be either used by the investor for workspace, leased to other companies or
turned into a land banking investment.
Reselling and development of property requires further knowledge of the
basic rules of property investment. But first, we need to take a closer look
at some terminology.
Property Valuation vs. Appraisal

Land Banking - The process of aggregating properties for future resell or


development.

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Valuation and appraisal are two terms which are often being mistaken as
interchangeable. Yet, behind their meaning hide a series of factors which can
indirectly affect a housing deal.
Appraisals are property price estimates, usually conducted by a real estate
agent. The appraisal is based on knowledge and experience of the local real
estate. Appraisals are done free of charge and have no legal standing. When
requested by potential vendors, appraisals tend to be overstated. Home
appraisals can also be done with the help of free, online tools6 which can
help a homeowner get familiar with the local property prices and therefore,
put an orienting price on his house accordingly.
Valuation is a formal, systematic process which determines the actual value
the property from an independent point of view. It is a complex combination
of research and real estate knowledge and in most Australian states,
valuations have to be conducted only by a qualified valuer. Property
valuation may have a legal standing and be used when obtaining a loan for
property purchase, drawdown or refinancing.
Property valuations are affected by a number of factors regarding the overall
state of the property, its location and features:
-

Physical location
Local Council Zoning
Accessibility ( by vehicles, pedestrians or nearby off-street parking )
Building Layout
Structure, condition and possible faults
Planning restrictions
Encumbrances or caveats

Online Local Price Guide for Australia - http://www.homepriceguide.com.au/

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Maximizing Property Valuations: The property valuation is mostly


determined by factors beyond our control. Luckily, a decently presented
property with no ongoing renovations and a clean, appealing look can
sometimes do miracles for sellers. Any improvements made on the property
in the past years might be of value for the final price estimation.
Quality Appraisal
Purchasing a new dwelling requires a thorough quality check to ensure there
wont be any unexpected expenses or troubles in the future regarding grand
repairs, pest removal and even noisy neighbours. The list will guide you
through the process of appraising7 your future investment and considering
the pros and cons of purchasing a given property. Have in mind that
commercial buildings and properties above the standard price might need a
check from a qualified valuer prior to selling or purchasing.
Outdoor Indicators
Locality: The strongest factor which brings most homeowners to a given
property at first place is the location. The propertys proximity to community
facilities, med centres, schools and shops is of prime importance for the
overall life-quality it provides. Most investors make the crucial mistake of
purchasing an otherwise lovely house without researching the
neighborhood, first. Even though most properties in the area might keep a
reasonable price, it will most certainly drop in the future if no regional
upgrades are conducted. When considering the purchase of a housing unit
or commercial building, investors need to watch out for several factors
which determine the level of resilience of the locality.
7

Shops & Malls


Kindergartens & Schools
Medical Centres
Parks & Amenities

Differences between appraisal and valuation are explained in the section Selling
Techniques & Information

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Offices & Facilities

Sights & Views: Most high-end properties on the real estate market feature
a number of amenities which add to its overall value. The proximity of the
residence to nature sights along with impressive balcony views of both
natural and urban landscapes can raise the end price significantly. This factor
counts mainly for the residential market and attracts customers willing to
top the original price in order to, say, wake up by the flickering sun rays
refracted in the ocean. The prices of such properties are usually higher than
others, yet they present a great investment option for future resell with high
profitability, due to increased interest of connoisseurs and foreigners. There
is a number of nature landscapes and sights which could add to your
propertys sell price according to the buyer's taste.
-

Beaches
Parks
Lakes
Camp sites
Picnic spots

Playgrounds
Cafes
Restaurants
Venues
Night Clubs
Bars / Pubs

Crime Percentage: Doing a complete research of the locality is one of the


first tasks a future buyer should cope with. Even though the area may seem
quiet and well regulated it might not be so welcoming to newcomers. The
crime percentage of the region does not always depend on the overall
quality of residential structures. Therefore, being far from the slum or right
next to the local PD8 wont give you as much protection as expected. Taking
a look at the website9 of the Australian Institute of Criminology might give
you a slight idea of the crime percentage in the country organized by locality,
crime types and more.

8
9

PD - Police Department
Australian Institute of Criminology - http://www.aic.gov.au/

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Indoor Indicators
Pests: Youve spotted a wonderful property with new furniture, pretty garden
and freshly-painted walls, and whats more - its way below the normal price
for the locality its in?
Experience tells us there are rarely Australian townhouses which feature low
cost, convenience and beauty. Due to the overpriced urban dwellings and
high demand, property owners sometimes choose to lower the estimate of
their property in order to make a quick sell. Yet, in most cases, the
discounted price speaks of a hidden problem, such as pest infestation. Pests
are sometimes the result of badly maintained buildings, but they can also
depend on the locality the property is built in.
Before purchasing a property, the investor needs to make a complete check
for the most common housing pests. The check can be done either by the
buyer or by a certified pest removal agency.
-

Flies can be found in rubbish, under eaves, in animal faeces, near


open septic tanks, in food leftovers, spoiled products and more
Cockroaches inhabit dark, warm areas with high moisture. The
drains, sewage, kitchen and the area around the heating duct are
their most common habitat. They can also be found between wall
insulation, in the attic or basement.
Mosquitoes prefer cool, damp places with little or no light at all. They
live around water ponds and storage tanks along with septic tanks
and natural bodies of water.
Fleas prefer sandy areas, but will live almost anywhere animals can
be found. They need blood to breed and will bite humans, as well.
They can often be found in bedding and clothing along with animal
living areas.
Bed Bugs need blood to develop and grow. The hide in wall cracks
and dark places during the day, and feed by night.

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Previously infested housing buildings and offices have a 60% change to be


attacked by pests again, if the property is not treated as required. Therefore,
infestations lower the price of the property in spite of its overall quality.
Plumbing: Old plumbing can be a serious issue which may lead to severe
property damage. If not taken care of in time, rusty pipes and badly-fixed
leaks may do more harm in the future. There are several key spots which
require professional attention before a home is purchased.
- Main Sewer: No clogged drain should be taken carelessly. Some
cases have witnessed drain clogs to be the harbinger of a bigger
damage. Small ground leaks or even a collapsing sewer line might be
the reason for many plumbing issues which give the fake idea of
being just a minor issue.
- Toilets: Toilet leaks are relatively easy to detect and are often the
cause of the following signals: light discolouration and warping
around the toilet base; damp floor and loosen tiles
- Garbage Disposal: Old disposal systems might cause continuous
clogging, but are not usually a precursor for major damages.
- Water Heating Systems: The lifespan of these systems is between 5
and 10 years depending on the use. Old, badly maintained water
tanks might cause severe housing damage and need a professional
inspection prior to the house purchase.
Other plumbing issues that future homeowners should look out for are:
-

Low water pressure


Broken fixtures and tap ware
Blocked or faulty sewer pipes
Faulty storm water system
Old hot water systems which need replacement

Structural Issues: While your real estate agent wont be able to say much
about the buildings foundation, ceiling and siding quality, it is a good
practice to turn to a structural engineer. Truth is, most sellers dont even
suspect there is a problem with their homes structure and therefore

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appraise their property according to the overall appearance and quality.


Thats why, unlike some visible issues which significantly lower the end price,
you know if a home is well-constructed and maintained until you make a
thorough check. The structural checklist can be divided into three main
sections: foundation, walls and ceiling.
-

10

Foundation: There is an old, simple trick which can help you


determine if there are any significant issues with the foundation of
a property. Drop a marble on the floor and see how far away it will
roll and make note of its velocity. The marble method works for
indicating severe foundation damages. Any larger slope could mean
an expensive repair.
Ceiling: The lowered, easy-to-install dropped ceilings might hide
significant issues in the insulation and ducting. Beam ceilings should
be checked for aging and other structural damage. Vermiculite
ceilings, also known as Popcorn ceilings, provide good insulation and
soundproofing, yet fell out of favor in the late 80s. Vermiculite once
contained a dangerous amount of asbestos, an ingredient which
causes lung problems and nature pollution. Asbestos removal is a
serious job which should not be taken carelessly. It requires
professional assistance and has to be removed by a certified
company. This should be considered when planning on purchasing a
house with vermiculite ceiling. Get in touch with the EPA10 in your
locality to get further information about handling asbestos ceilings.
Walls: Plaster walls might hide previous wall cracks. Wood molding
needs to be repainted and polished every once and a while. The
insulation behind plasterboard walls might not provide enough air
to the walls and keep the airborne moisture inside.
If you spot cracks in the wall, watch out for structural
inconveniences, such as removal or damage of supporting walls.

EPA - Environmental Protection Agency

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Buying and Selling: Strategies for Success


There are a lot of techniques for property selling that real estate
connoisseurs wont tell you. Renting out a room to students or selling
downsizing your living area by selling a house and purchasing a smaller one
for profit are only a fraction of the methods which homeowners use. The
current state of the Australian property market and the investors potential
make space for some higher-fetch strategies which, with determination and
a pinch of luck, can bring a high amount of profit.
HMO Investment
Also called Buy-to-Let11, the investment in a house of multiple occupancy
combines creative thinking and high organizational skills to bring innovative
investors a greater income. It is compiled in the process of purchasing a large
house and renting out separate areas of it to different occupiers. This way a
dwelling, which could be rented to a single family for about 1000 AUD, can
be also divided to different sections depending on the bedrooms number
and be leased to separate renters for 300 AUD each. For about 4 renters, the
final rent amount will be 1600 AUD which is a 600 AUD additional profit.
Websites like FlatMates12 can offer investors a rough idea on the prices and
trends on the HMO investment market.
The difficulties of this strategy include financing the purchase, organizing the
full occupation of the house and a few legal considerations. Whether or not
the renters would be listed as tenants, lodgers or boarders and financing the
house purchase, has an affect on their rights on the property and leave the
homeowner liable to different laws. While tenants have more rights on the
dwelling, boarders, on the other hand, must receive certain services such as
laundry, food, etc. The HMO strategy can provide a considerable amount of
profit for the investor, but needs to be considered carefully.

11
12

HMO means House of Multiple Occupancy and is also called Buy-to-Let


Flatmates - https://flatmates.com.au/

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Property Development & Selling


Purchasing a property for renovation and future selling is another great
strategy. It holds a few concerns regarding houses on mortgage. In some
cases, the homeowner is liable to pay a redemption penalty for selling earlier
than he agreed on. Flipping a house, a term used for property development,
requires further knowledge of the trends in the local real estate market and
depends strongly on the houses appearance and structural convenience.
Construction is a great part of this strategy and depends on the dedication
and skills of the assigned building company. John Wilson, a property
investment whiz, suggest that homeowners offer their builders a shared
venture deal to keep them focused on the construction by guaranteed them
their time investment will be worth the pay.
Property development is a long process which requires the assistance of
construction experts, real estate agents, house removals and after-builder
cleaners. The investment may seem higher at first, but if done right, the final
renovation would drastically raise the propertys selling price.
Buying Property on Auction
Property auctions are getting more and more popular in Australia and
throughout the world. They provide low-cost housing for the person who
offers the highest bid. The problems which this strategy holds are tied with
building and pest inspections as well as the ability to beat the competition.
A smart hack to ensuring youll get the property is getting the highest bid
prior to the auction. This can happen only if you work with a motivated seller
who would be happy to receive the desired money without launching the
auction.
Attending an auction requires signing formal documents in most states and
there is protection from fake bidders who make high bids for the benefit of
the seller. The auction strategy is a great opportunity for real estate
investors with an eye for detail who wish to renovate and resell.

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Renting on AirBnb
What AirBnB has made possible over the years is an excellent opportunity
for open-minded travel lovers and homeowners to rent their housing out to
tourists. The trend which brings most profit to renters is offering a culturallyauthentic or uniquely designed residential space, preferably in proximity to
local sights and monuments.
Renting on AirBnB is a process which closely resembles hotel ownership.
Homes which get the most reviews on the website are usually the ones
which offer the benefits of locality, hospitality and housing comfort.
Despite the possible income uncertainty, this strategy holds many
advantages and opportunities for high profit for a small financial investment.

Adrianna Huester

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About the author

Adrianna Huester is a real estate whiz and marketing strategist who works
in the house removal sector. She works with companies in Australia,
helping them bound with their customers and provide quality services
tailored by their clients needs. She is eager to share her knowledge of the
great opportunities the Australian real estate market offers for property
investors and homeowners.
She currently works with Fantastic Removals Melbourne, a Victoria-based
company which delivers removal and cleaning services to homeowners,
tenants and property investors in the residential and commercial sector.
Website: http://www.fantasticremovalsmelbourne.com.au/

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