Author Archives: Terry Hansen

property prices

Do you understand property yield?

One of the first things you need to consider before purchasing an investment property is what your return on investment is going to be, or in other terms your yield.

What is yield?

Your yield is the measure of the future income of your investment and is worked out as a percentage based on a property’s cost, annual income and running costs. A property’s yield does not take into account capital growth.

You can quickly work out the gross yield of a property using the following formula:

Gross yield = annual rental income (weekly rental x 52) / property value x 100.

For a more accurate estimate of yield, i.e. one that takes into account expenses such as management fees and maintenance costs, it’s best to calculate a property’s net yield.

Net yield = annual rental income (weekly rental x 52) – expenses / property value x 100.

Net yield is generally more useful when doing your sums on a property, however it’s worth keeping in mind that it’s very difficult to accurately assess all expenses a property may have.

Yield vs. capital gains

One of the age-old property investment questions is whether to favour high yields or strong capital growth. Ideally a property would have both, however often investors need to decide which is more important to them.

Strangely enough, often a higher percentage return on investment is obtained from the lessor money spent. Higher long term capital gain opportunities however are more commonly from properties that show a lessor percentage return on investment, requiring a greater weekly / monthly contribution from the investor to hold on to it.

It is possible to have a property with high capital gain percentage and rental yields, but it is very rare.

It is up to each individual to work out what may work for them. A lot of people think that capital gains are king, however if a property is costly to hold onto it can place an investor under a lot of undue financial stress.

A higher yield can help an investor pay down their loan faster and can be useful in that it helps an investment property essentially pay for itself.

So which is the better investment? There is no accurate answer. Each investor needs to weigh up their objectives and how much risk they are willing to take on.

If you need any help we are certainly happy to discuss in the hope that we can assist you in determining what may be best for you.

airplane

Have your say on the Western Sydney Aerotropolis

The initial planning documents for the Western Sydney Aerotropolis have been released and the local community is being invited to have their say.

The documents include rezoning of 11,200-hectares of land around the Western Sydney Airport, to take advantage of the new economic opportunities it will bring to the region.

There are plans for nine new precincts, three of which will be the focus of initial planning and provide the impetus for the area’s growth. They include the “Aerotropolis Core” and the “Northern Gateway” precincts, located at the centre of the Aerotropolis, and the “South Creek” precinct, which will act as a green spine through the area.

These initial precincts will benefit from several key pieces of transport infrastructure already in the pipeline, particularly the North–South Rail Link, which will provide a link from St Marys to the Aerotropolis Core via the Western Sydney Airport.

The NSW Department of Planning and Environment’s executive director of Western Sydney and Aerotropolis activation, Brett Whitworth has said that the Aerotropolis will be a “catalyst for growth in Western Sydney” and will provide “the potential to provide up to 60,000 homes and contribute to 200,000 new jobs”.

“The Aerotropolis will be Sydney’s newest economic hub, helping to realise the vision of a 30-minute city, where people live close to jobs, schools, health and cultural amenities,” he said.

“Innovative planning for the land surrounding Sydney’s new 24-hour airport is critical to its success.

“Our department, working collaboratively with our city deal partners, wants to ensure the community has plenty of opportunity to help determine how we deliver a resilient and vibrant Aerotropolis.”

The first stage Land Use Infrastructure Implementation Plan is on exhibition now until October 12.

Those interested in learning more about the plans can head to a community drop-in session at the Bringelly Community Centre on September 15 from 10am to 1pm. This will provide people with a chance to chat about the plans with expert planners.

The plans can also be viewed online at planning.nsw.gov.au/aerotropolis where you can provide your feedback.

house

Why spring 2018 is a great time to buy a home

With the property market starting to head downwards and interest rates on the move upwards you could be forgiven for thinking that now isn’t the best time to buy, but we are actually in a very favourable market for buyers.

Here’s why.

Weaker property markets

After years of strong property demand in cities like Sydney and Melbourne things are finally starting to turn around for buyers. Sellers have definitely had the upper hand in property negotiations over the last few years, which has kept a lot of buyers on the sidelines.

Now that prices are starting to ease in some areas and there is less competition around, it should be a lot easier for those buyers who are in the market to snag the properties they set their eyes on.

Lots of spring sellers

It may not always hold true, but in general more homes tend to come onto the market during spring, which is great news for those looking to buy. There should be a larger choice of properties available up until Christmas when things are likely to slow down a little.

This gives buyers options and may make it easier to find the particular property they are looking for.

First home buyer incentives

It’s a particularly great time to get into the market if you’re a first home buyer. Both the NSW and Victorian governments introduced stamp duty discounts for first home buyers in July 2017, which can provide significant savings.

First home buyers can also take advantage of grants and the federal government’s First Home Super Saver Scheme, this allows first time buyers to make extra contributions into their super account to help them save for a home faster.

Competitive home loan deals 

While many banks are lifting their interest rates it’s important to remember that they still sit at some of the lowest levels we have seen in recent history. Plus, many banks offer up special deals over spring to entice new customers. It’s well worth shopping around to see what you can find. If you need any help finding the right home loan deal for you then you can contact Professionals Finance for assistance.

house

More interest rate rises from the big banks

The Reserve Bank may have kept the official cash rate on hold at their September meeting for the 25th consecutive month, but the same certainly can’t be said for the major banks. 

Westpac was the first of the major banks to lift their variable rates for both owner occupiers and investors (by 14 basis points) and now they have been followed by both ANZ and CommBank.

ANZ have announced that they will be lifting their variable rates for home buyers and investors by 16 basis points, taking effect from September 27, 2018.

CommBank have also said that they will be hiking their rates, by 15 basis points, from October 4, 2018.

All of the banks have cited increased funding costs as the reason behind the rate hikes.

Will we see more rate hikes?

CoreLogic research head Tim Lawless believes that the cash rate will remain on hold until at least January 2020 and that there may even be the possibility of a lower cash rate. However as we have seen the banks can and are raising their rates independently of Reserve Bank movements.

But Lawless says that the home loan market will remain competitive.

“Despite the outlook for a stable cash rate, but slightly higher mortgage rates, we can expect lenders to remain hyper competitive, particularly for high quality borrowers – those with large deposits, lower debt to income ratios and a strong credit history,” Lawless said.

“Even with mortgage rates starting to edge higher, from a historical perspective, rates remain extremely low which will continue to support housing demand. No doubt borrowers will be applying pressure on their lenders to ensure they are on the lowest rate possible.”

blacktown uni

New university could transform Blacktown

Blacktown City’s plans for a university are one step closer to being realised with the council calling for expressions of interest from universities to establish a campus in the Blacktown CBD.

A new university will help cater to Western Sydney’s rapidly growing population and is part of council’s plans to transform Blacktown into an education, residential and retail hub.

It’s estimated that by 2036 half of Sydney’s population will live in Western Sydney. At present however only 18 per cent of university places are in the Greater Sydney region.

According to Blacktown Mayor Stephen Bali MP, “There are 54,000 higher education students living within 30 minutes of Blacktown. There are 18,000 talented university students living in Blacktown City – but currently they all have to travel long distances to attend their courses.”

“Imagine how great it would be for today’s Year 7 school students to have an opportunity to study at a University right here in Blacktown when they complete their HSC,” Mayor Bali said.

A Blacktown University would open up a lot of doors for local young people and businesses and would be a great asset to the entire region.

It is understood that the project has already attracted a lot of interest.

“The EOI process ensures there is proper governance in place and that all potential University partners are treated in a fair and equitable way,” Mayor Bali said.

“A university campus in Blacktown is obviously needed, but for it to be successful it will have to collaborate with Council, our community and local businesses so it can meet the needs of our diverse community.”

Local businesses have put their support behind the project with Greater Blacktown Business Chamber, Vitex, and Sydney Business Park, all agreeing to partner with Blacktown City Council in moving forward with the concept of a university campus situated in the Blacktown CBD.

The EOI documentation was officially released on 5 September and will close on 5 December 2018.

Council will then work through the submissions and it is expected that they will announce the successful bid in early 2019.

 

Image via https://www.blacktown.nsw.gov.au/

property

How to get the property you want this spring

Temperatures are rising, flowers are starting to bloom and “for sale” signs are popping up across the neighbourhood, which means the spring selling season has arrived.

Spring is a great time to look for a new home as many sellers place their properties on the market at this time of year to take advantage of the great weather and increased buyer activity.

However while spring can be great because there is increased stock on the market, it can also mean that there’s increased competition as a lot of buyers like to lock in a home purchase by Christmas.

If you want to make sure you secure the home of your dreams this season then it’s best to head into the market prepared.

Research

First you need to figure out where you want to buy. Narrow your search down to a few key areas and figure out as much as you can about them.

Get to know property prices, the types of properties that are for sale and what types of developments are going on in the area. The more you know about an area the easier it will be to determine selling prices and what kinds of properties will be suitable for you.

Get pre-approval

It’s a good idea to get your finances in order before you start hitting the pavement.

Getting pre-approval from your bank or lender will let you know how much you have to work with so you’re confident in what you can spend when you’re ready to make an offer. Plus, having pre-approval lets sellers know that you’re serious about buying.

Visit lots of open homes

The more open homes you visit the better you will be able to understand the property market. Viewing properties online alone won’t provide you with the full picture. It’s much better to see properties in person so you can get to know what characteristics of a property you do or don’t like.

Visiting lots of open homes also helps you get to know a new area, which can be helpful if you’re not sure if there are some streets that are better than others.

Talk to agents

Don’t be afraid to get in contact with local agents to let them know the types of properties you’re looking for. They will be able to alert you when a property that meets your criteria comes on the market. You may even get the chance to be one of the first to hear about the property so you can swoop in and make the first offer if it’s the right one for you.

Occasionally there might even be a suitable property that is listed off-market, so the only way you will get the chance to hear about it is if you are on the selling agent’s books.

Know when to compromise

Finding a property that ticks all the right boxes isn’t always easy. Often in property you need to make some sort of compromise, whether it’s on the location, property type or how much you spend.

Focus on what is most important to you and try not to be weighed down by everything not being absolutely perfect. For instance, would you miss out on buying a property in the perfect area because it’s a little bit rundown, or worth a bit more than you thought?

If you’re looking to buy in outer western Sydney this spring and would like any information then contact Professionals Outer Western Sydney.

spring gardens

Calling green thumbs for Blacktown garden competition

Spring has arrived which means its time for everyone to tidy up their gardens for the annual Blacktown City Garden Competition.

Residents have until 5.30pm this Friday, 7 September to get their entries in, with the Blacktown City Council encouraging all green thumbs to enter their gardens.

Judges will pick out the best gardens in 12 categories, including best front garden, best sustainable garden, best community garden, and best educational facility garden.

Each entry will be judged on aspects including design, construction, maintenance and sustainability, and will be in the running to win a number of cash prizes.

“Last year, the Blacktown City Garden Competition attracted 72 entries, including 55 individual entries and 17 entries in the community, school and commercial categories,” Blacktown City Mayor Stephen Bali MP said.

Preliminary judging will take place between 10 and 28 September, with a final round of judging by industry experts set to occur in early October 2018.

The competition offers a great way for gardeners in the area to showcase their skills and hard work and any new techniques or sustainability.

To enter, simply complete an entry form at the following website – https://www.blacktown.nsw.gov.au/Community/Awards-scholarships-and-competitions/2018-Blacktown-City-Garden-Competition.

Invitations will be sent to all entrants to attend the Awards Presentation Evening later in the year.

flipping property

Are you prepared for higher interest rates?

Westpac has become the first of the major banks to lift its variable rates, and it might only be a matter of time before the others follow suit.

The bank announced that it’s raising its variable rates for both owner-occupiers and investors by 14 basis points, effective from September 19. This will affect new and existing customers.

Meanwhile, the Reserve Bank of Australia (RBA) has kept its official cash rate at the record low of 1.5 per cent since 2016 and there hasn’t been a rate hike for 8 years.

Lenders have been moving their rates independently up and down of the RBA for some time, but Westpac is the first of the Big Four to hike theirs.

The RBA governor, Philip Lowe, noted in Canberra on Tuesday that many borrowers have never experienced a rise in official interest rates.

“If we continue on this current improving track, as we expect we will, it is likely that the next move in official interest rates will be up, not down,” the governor said.

Lowe also urged borrowers to prepare themselves for higher rates.

Higher interest rates may sound daunting but there are a few things that borrowers can do now to help protect themselves against mortgage stress.

Shop around – Some lenders may be pushing their rates up but that doesn’t mean that there aren’t some great deals around still. If you’re unhappy with the amount you’re paying then find out what else is on offer from other lenders or try to negotiate a better deal with your current one.

Look for ways to save – If the thought of paying a higher mortgage rate is getting you down then find ways you can cut costs in other areas of your life. Cutting back on eating out, monthly subscriptions or other regular expenses may help reduce the financial impact of a rate rise.

Consider a fixed rate – Want to have more certainty about the rate you pay? There is always the option to move over to a fixed, or partially fixed, home loan rate. There are plenty of good fixed home loan deals at present, however it’s important to be aware that these types of loans can have restrictions.

If you want any assistance with finding the best home loan rate, get in contact with Professionals Finance.

home

How to find the best home loan

Choosing a home loan isn’t as straightforward as it may seem. While many people looking at choosing a home loan will try to find the cheapest interest rate, there are a number of other factors such as fees and account features that need to be considered too.

So what should you look out for?

A low interest rate – When it comes to mortgages the less you have to pay in interest each month the better. Most lenders will have an advertised rate and a comparison rate, which takes into account the cost of the loan after fees and charges are added.

You will need to shop around to find the best rate and possibly do some negotiating with your lender too, to get the lowest rate you can.

What added fees you might need to pay – Look out for home loan fees and try to avoid them where possible, as they can add up. Fees to look out for include application fees, property valuation fees, annual fees, late payment fees, exit or break fees, redraw fees or account keeping fees, just to name a few.

Any useful features – Some features can help you save considerably on your home loan. A popular feature is an offset account, which allows you to offset the money you have in it against your loan principal.

Other popular features include flexible payment options and a redraw facility. Keep in mind however that these features can attract fees or a higher interest rate so they may not be worth it if they aren’t useful to you.

Special perks – Lenders may offer special deals to help entice new customers over. These can include honeymoon rates (which are lower rates offered for a short period at the start of a loan) or other incentives such as frequent flyer points or fee waivers. These are all worth considering when looking for a good deal.

Home loans can be tricky to navigate. If you need any help finding a home loan that works for you then get in touch with Professionals Finance.

building

Building or renovating? Do you require council approval?

Building a home or developing a new site can be an exciting time, however you might be stopped in your tracks when you realise you need to get a development application (DA) across the line. 

Whether you are building a new extension or starting a building from scratch, you will need to have all necessary approvals in place from your local council to go ahead with your project.

Some small scale-renovations such as adding a pergola or carport, may be exempt from council approval, however it’s always best to check with council first.

If you do require permission then you will need to lodge an application with council so they can determine if your plans are suitable for the local area and meet all zoning and legal requirements.

What does council consider when it looks at your application?

Neighbours – Once you submit an application anyone can make a public submission in response to how it might affect neighbouring properties or the area in general. Your local council needs to take all submissions into account and address any concerns. A negative submission won’t necessarily mean that a development won’t go ahead, but they are something that a council will consider and they may draw out the application process.

Environment – Councils need to consider how a development will impact its surroundings. Any application should state any possible impacts on the environment and what steps will be taken to reduce any expected environmental harm.

Zoning – It’s always a good idea to check out local zoning or planning controls before planning any major build as these can dictate everything from the number of stories you can build to what paint colours you can use. In particular, look out for things like heritage conservation or being in a flood or bushfire-prone area as this can limit what you can do on your property.

Local area impact – How will the project have an impact on the local area? Will it lead to increased traffic congestion or drive down local property prices? These are things that a council will need to consider.

Site constraints – Not being fully aware of site constraints is a common reason for development delays. All necessary aspects should be taken into account so that a development makes the best use of the site it’s on.

When submitting a development application (DA) it’s best to be as thorough and as transparent as possible. Anything that hasn’t been considered at the start may just delay the process for all involved.

Get help from professionals such as draftsmen, town planners or engineers who can help you with your plans and make sure that you have considered all aspects of your project.

It is also a good idea to contact your local council early in the planning stages so they can provide you with all the information you need to get you off to the best start and to get your project approved with minimal fuss.