Fortunately for you, this article will outline some of the top methods of increasing your rental yield so that you don’t go missing out on the potential earnings that countless of other property owners do.

Furnishing

It is common knowledge that the more stylish and well managed a property is, the more it will rent for. Unfortunately, many landlords make the mistake of seeing a property as it is rather than what it could be and be worth.

Although it may not be needed or even worth the investment, sometimes it can pay to offer your investment property as already furnished. This will appeal to those tenants who need to move somewhere quickly, and will also mean you can charge a little more rent than if it were just the empty property.

Spare bedroom

This applies mainly for a property that has a garage or spare space that could be much better utilised as a new bedroom or study. Transforming a space to a new room could yield an enormous increase on your rental yield, especially considering the minimal work that is required seeing as it’s just a redressing.

Parking

Depending on the tenant and location, adding a spare off-street parking spot can be the deciding factor for someone contemplating rent. If your ideal renter is travelling around a lot and not using public transport, this add on should be heavily considered.

Adding off-street parking is not separate from the property, this means that your total property value will rise as a result of this added luxury.

Pro pets

Inspect the location where your property is, is it a pet safe area? Or more business orientated? What type of tenants will be interested in your property? If the answers point towards a pro pet demographic, then you ideally want to allow it. This may or may not apply to you, but if it does, you should know that you are disregarding much of your target market if you disallow pets.

Proximity

This applies if you have not already yet purchased your property to rent out, or are looking to relocate. There can be much said about location that you will find in just about any real estate manual or guide, but if there is one niche to target in relation to it, students would be it.

Choosing an area close to where students study will in itself give you a lot of potential tenants, and it also means you won’t have to spend a lot of money on the touch ups that normal tenants would require.

Applying even one or two of these tips will certainly increase your property rental yield. Although they are all practical, ensure you study the circumstance in regards to the tenants, location and so on before making any decisions.

More than anything, conduct in-depth research on each of the 5 ways before taking action, remember this article acts as a general guide on the methods rather than a step by step on executing them. Contact us today to discuss this further.

But unlike most of those tenants, Ms Rossi also owns four investment properties across three states.

She is among a growing breed of real estate investors who chose not to own their own home. Known as “rentvesting”, the strategy sees people using investment property growth to build a deposit, or they rent a property that fits their desired lifestyle rather than what they can afford to buy.

“There is no benefit for me in living in what I own,” said Ms Rossi, 34, a digital consultant, lifestyle blogger and co-founder of online wedding marketplace Capriess.

She said building wealth through property investment was a major goal, and renting while investing freed up cash flow for investments and her businesses. “These properties are purely part of my investment strategy … this allows me to increase my cash flow and live a luxurious city lifestyle at minimal cost.”

Research by ME has found that one in 10 first home buyers are choosing to buy as an investor while renting a place to live.

“Renting is usually cheaper than owning in a given suburb, and as a tenant you’re free to select a neighbourhood that meets your lifestyle preferences,” said ME head of home loans Patrick Nolan.

He said rental properties that rose in value could improve investors’ equity to buy their own home later, but they needed to consider expenses such as insurance, rates and repairs.

“More importantly, your investment property will be subject to capital gains tax. Unlike an owner-occupied home, which is tax free, any profit you make on the sale of a rental place can be taxed.”

Metropole Property CEO Michael Yardney said the rentvesting trend was likely to continue because it helped people who moved around a lot for work, travelled for long periods, and wanted to live in suburbs that were priced out of their buying budget.

“Rentvesting suits the lifestyle of many millennials, allowing them flexibility in where they live, giving them the opportunity to travel and at the same time grow their wealth,” he said.

“It’s a lifeline for those who are trying to gain a foothold in a property market that’s essentially a moving target.”

Mr Yardney said the traditional belief that “rent money is dead money” was a sticking point for some people, but renting while investing could be used as part of an effective overall investment strategy.

Source: http://www.news.com.au/finance/money/investing/investing-while-renting-is-a-growing-trend-for-real-estate-owners/news-story/6087848b1c77d079bfdc7881590d3cfe

Sydney IT accounts manager Rob Cooper is one homebuyer who’s looked outside the square. He rents in Woolloomooloo but can’t afford to buy there, so he’s purchased a rental property in a trendy city suburb more than 1,000 kilometres away, in Adelaide.

The median house price in Adelaide is $455,000 compared to Sydney’s $900,000.

“So, West Croydon is the suburb. It’s about 7km away from the city and it was just under $700,000 for a three-bedroom house,” Mr Cooper told 7.30.

“I feel it’s good value for what you get and certainly has the potential to grow, which is the main thing.”

Mr Cooper is part of the generation dubbed “rent vestors” — people who rent where they want to live and buy an investment property somewhere they can afford, with the help of tax perks like negative gearing.

He bought the rental with the help of Bryce Holdaway’s property-investment firm.

Mr Holdaway, a buyer’s agent, described the purchase price as “laughable”.

“In some cases you can’t even pick up a one-bedroom apartment in the same distance, let alone a three-bedroom house on a parcel of land,” he told 7.30.

Mr Holdaway first saw an opportunity in Adelaide about 18 months ago, because homes were affordable and rental returns were good.

“The reason we went to Adelaide were the three Ls — location, land and looks,” Mr Holdaway said. “You can get terrific locations … within 5km of the Adelaide CBD that’s got a beautiful period home on a 600 or 700 square-metre land, well under $1 million.

“Being in that early part of the growth cycle, where you could pick something up that seemed ridiculously cheap by Melbourne and Sydney comparison, was really enticing.”

There is no official data to show how many homes are being snapped up by investors but according to realestate.com.au there had been more than 1 million internet searches on South Australian properties from the eastern states in the past six months alone. The number of searches from Victoria was up 68.6 per cent.

Find out more from the original source: http://www.abc.net.au/news/2017-08-01/cant-afford-sydney-or-melbourne-house-investors-look-to-adelaide/8748210

The difference is usually in the timing.

I’m not talking about timing of the market where you buy at the bottom and sell at the top, (as if you can ever accurately pick those times anyway). No, I’m talking about you and the time you are right to move from investing to speculating.

You see, there is a significant difference between investing and speculating and to understand what I mean by that I think it’s instructive to look at the definition of each one.

According to Investopedia.com

“Speculation is the act of trading in an asset or conducting a short term financial transaction that has a significant risk of losing most or all of the initial outlay with the expectation of a substantial gain.”

While investing is defined as;

“Investing is the act of committing money or capital to a long term endeavour such as real estate with the expectation of obtaining an additional income or profit.”

One method has high risk attached to it and the other is a measured, long term approach to making money. Each method can make you money, no question about it. Looking at it another way we can say that your risk level will decide which way you will invest.

Searching for big profits quickly falls into the speculative camp while investing for the long term falls into the investor category. Again, both types can make money but the risk of losing it goes up with the level of speculation involved.

At CPS Property we want all of our clients to be better off after they have seen us. For most people this means that they are either new to investing or need more education in the fundamentals of property investing.

To fulfil this need we created our CPS Methodology and Asset allocation which is used to identify potential growth suburbs and to select the right property at the right price in the right location.

A long term investor will work their way towards a property portfolio using the same basic fundamentals each time. This type of methodology provides consistent results over the long term and is symptomatic of a systematic approach to successful investing.

By applying the key criteria we identified suburbs that our competitors weren’t recommending which made us pioneers if you like. Not everybody agreed with our selections but the interpretation of the data was very clear.

Even today, I still remember a potential client handing back a contract for a 1 bedroom Studio in Surry Hills priced at $420k because they thought there wouldn’t be any growth in that area after the GFC – I should mention that the same property is now selling in Surry Hills is $750K, just on 5 years later.

Naturally, we have identified other suburbs with similar results so we have no problem applying the CPS Methodology to locate new opportunities.

It’s worth pointing out that the CPS methodology cannot be used to identify opportunities for speculators. It utilizes data that can be interpreted for long term investment, reducing the risk to our clients. It’s a serious long term solution to investing in property.

Another difference between the two investor types is an Investor can benefit from the advice of a Financial Planner. Long term low risk investments fit nicely into a Financial Plan. After all, a Financial Plan is looking to get the result you are looking for, over a given time frame, and in line with your risk profile. It would be difficult, to say the least, to design a Plan that incorporates high risk, short term investments and still be confident of success.

The fundamentals we apply for our clients are designed to provide an acceptable level of risk in conjunction with an achievable Plan using a property that fits our methodology.

We also like to educate investors on how they can improve by reviewing their current property portfolio and borrowing position. Listening to the noise in the media and avoiding educating yourself is a sure way to create confusion.

Given that this is the message we have been preaching since 2005 there is little reason to change a successful formula.

Jacob O’Neill

Principal.   

1. 75,000 new homes are expected to be built across Sydney in the next financial year, which is double the long-term average of 40,000, and Councils are under even more pressure to rezone more land for housing as part of the state government’s determination to increase the supply of new homes in the city.

2. Not only that, the recent budget committed a further $118 million over the next four years to deliver new infrastructure, housing and employment initiatives, review land use and infrastructure strategies for priority growth areas.

3. Another $19 million will be used to support the construction of 30,000 new homes in priority precincts, and almost $70 million will be allocated to fast-tracking the assessment of major projects, and helping merged local councils run planning systems.

4. The Planning Minister, Anthony Roberts, said the government’s “number one priority” was to get more houses built in order to make new homes more affordable. “We are working on many fronts to make owning a home a reality for more people, by streamlining and simplifying the planning system so housing approvals can be fast-tracked and are continuing to release and rezone more land.”

5. Combined with the reduction of stamp duty for first home buyers purchasing properties between $650,000 and $800,000, this is all good news.

Find out more from the original source: https://www.nsw.gov.au/improving-nsw/projects-and-initiatives/first-home-buyers/

Renovating: a timely exercise

Renovating refers to the more complex changes that can be made to a property including changes to the floor plan, bathroom or kitchen remodels, or other structural changes.

Renovations require constant planning and execution, decision-making and solutions, and financing. There’s no denying that renovating is the most popular way to increase the value of your property, however it may not strategically be the right choice.

It’s important to be educated about the location of your property in terms of population, demand, rental yield and future and current infrastructure. These factors will all contribute to demand from tenants. When renovating, it can be easy to overcapitalise on your upgrades. If you then struggle to secure the right tenant at the right price, it can put pressure on your cash flow.

Doing your research and seeking advice from a real estate professional is paramount before undergoing any renovation exercise so you don’t overcapitalise.

Improving the right amount

The mindset of a homeowner versus an investor should be very different when it comes to upgrading your property. As an investor, removing any emotion is paramount to making financial decisions. Simple improvements can make a big difference to a rental property and can cost much less. These may include a fresh coat of paint, updated flooring – whether that be polished floorboards or new carpet – and new light fittings. Instead of renovating a whole new kitchen, simply change the cupboard doors. Similarly with the bathroom, instead of ripping everything down, try to upgrade the vanity, shower screen and fittings.

These smaller improvements can cost as little as $5,000 while adding as much as $10,000 to the property and increasing the rental amount by $50 a week.

These smaller adjustments to your property can add value to your property, attract quality tenants and won’t entice you to over invest for the location. To discuss your investment options, contact CPS Finance today.

What do I need to know?

• All deductions relating to the cost of travel to investment property will cease as at 1 July 2017.
• Investors who purchase plant and equipment (such as dishwashers and ceiling fans) after 9 May 2017 will be able to claim depreciation deductions over the life of the asset. However, owners of a property will not be eligible for deductions on plant and equipment purchased by previous property owner. This will essentially reduce capital gains made on future disposal of the property.
• Foreign owners will be charged a fee if their property is not occupied of available on the rental market for at least 6 months of the year. The fee is estimated to be at least $5,000 per annum.
• Foreign and temporary residents will not be eligible from the main residence exemption which excludes private homes from capital gains tax.
• From 1 July 2017 the CGT withholding rate will increase by 2.5% to 12.5% and the withholding threshold for foreign tax residents will reduce from $2 million to $750,000.
• Foreign ownership in new developments will receive a 50% cap meaning that any new development will need to ensure that less than 50% of the purchasers are foreign residents.

If you’d like to understand more about how the new budget might affect your property portfolio or aspirations, please contact CPS Property today.

If there is one thing for sure, it is that high-end renters want an apartment that stands out from the norm on a grand scale, the following are some features that will accentuate and affirm these expectations of yours.

Luxury Features

There is no doubt that some of the best benefits that come from purchasing or renting a high-end apartment are not even in your living space. You should expect no less than several facilities such as a working gym with views of the surrounding city, pool area, accessible storage, and outdoor areas such as open rooftops.

Exceptional living space

This includes everything from simple kitchen appliances to the materials used for bench tops.

Views overlooking the city or your surroundings are expected and should be one of your main focuses if you value it. Fortunately, this is always a given if you are renting on a top floor.

In addition to the views, your apartment should always be provided with enough sufficient light during the day that you don’t need to use any of the electronics, as well as an abundant amount of space to move around.

Important factors to remember are simple things such an efficient sound system, congruent colors, working appliances, and quality materials used on your furniture, which should be marble, stone, or something of similar value.

Location

Although the buyer chooses the location, you should expect any high-end apartment to be positioned in a place that is central to many high importance venues and areas. This means that areas such as shopping centers, parks, gymnasiums, public transport, and doctors should all be within walking distance.

Of course, you can’t expect everything you want to be perfectly positioned around your building, but there should be an expectation for high-end apartments to have these luxuries more than anything else, all you need after that is some personal research to find the optimal one.

Consistency

It is true that the main attraction and expectation is to have a quality living space, but if the rest of the building does not meet these standards, then it is truly not a high-end apartment. You should expect everything from the lobby to the halls to depict what the apartment standard is.

A good way to test the above is when entering the building for the first time, are you surprised when looking at your potential living space due to the incongruence with the rest of the building? The answer will tell you a lot. Consistency means that everywhere you go in the building whether it be where you live, swim or train, are all depicting high-end quality.

It is always natural to have expectations when buying a new place, especially when putting labels such as high-end on it, which is why it is integral always to do your research and seek knowledge from professionals.

The fact is, to secure a mortgage loan, a lot of boxes have to be ticked, so be sure to make yourself aware of this crucial step in the house purchasing process.

Stay consistent with your job situation

Job security, as you may know, is one of the main criteria selections for lenders to decide whether they trust you or not. The absolute last thing you want to do before a mortgage loan is quit or change your working arrangement in a way that severely affects your finances.

This still applies whether you’re securing a mortgage or have a current lender. If there is any shift in your employment and income status, banks and lenders are forced to reevaluate you, which could mean trouble.

Do your research

As you become more aware of your job security, you also need to know your job situation for the industry you’re in so that you can find the best mortgage broker. You will find that many lenders and brokers have a very conditioned selection criteria, which makes it hard for individuals who are self-employed or contractors.

Ensure that when you do your research, you find a mortgage broker who is compatible with your situation.

Be clear on your credit score

For the amount of time it takes to find out what your credit score is, it is mind-boggling as to how many people never review it until the last minute. Often this lack of initiative can lead to rejection of mortgage application due to the individuals being unaware of their low score.

The simplicity of this step shouldn’t downplay its importance, ensure that you clean your credit history and handle any problems regarding it.

Don’t let lenders control your budget

Oftentimes, banks and lenders are quite generous in the fact that they will initially offer you a larger loan even if you cannot afford it.

This may seem good on the surface, but down the track, you are going to be put in a high-pressure situation, and as a result, face the consequences.

Ensure that you dictate your budget before you even ask for loans, and never be tempted to spend higher than your budget if they’re willing to lend a larger amount.

For more info

Contact us for more information and advice on your property investments.­

Deductions apply for any property you own that is available for rent, hence excluding your home or personal holiday accommodation. Listing with agents can help prove your properties are available for rent as the proper documentation will be in place.

Below is a list of items which you can claim as deductions against rental income this year which are either deductible immediately or after a few years of owning the property. Further below is a list of items that are not deductible, and usually questioned by the ATO. This will assist you in compiling your information and make it easier to prepare your income tax return. You can also use this information to improve your decisions in relation to managing your investment properties.

DEDUCTIBLE – Immediately

Expenses relating to the maintenance and management of your investment property, including interest on loans, can generally be claimed immediately, against your current financial year’s income.

Property Management & Maintenance Expenses

• Advertising for tenants – directly by you or where the agent charged you
• Body corporate fees or Strata Title fees and charges (Special levies for capital works on a building can only be depreciated at 2.5%)
• Cleaning
• Gardening/Lawn Mowing
• Pest control
• Security patrol fees

Rates & Taxes

• Water rates, charges & usage
• Council rates
• Land tax – first time owners have to lodge an initial land tax return with the Office of State Revenue in each state. They will not chase you up and they will charge additional interest for late lodgement, so you must initiate this

Property Agent

• Fees/commissions – including GST
• Postage & petties
• Statement fees
• Bank charges/fees
• Lease document expenses
• Letting fees

Administration Expenses

• Stationery used to maintain your rental records
• Postage on documents relating to property management
• Telephone calls relating to property management – ATO prefers to see a diary
• Legal expenses relating to debt collection or tenant problems
• Electricity & gas – where not covered by tenant

Insurance

• Landlords
• Building
• Contents
• Public liability

On Acquisition – from the solicitor’s settlement letter

• Balance of council rates
• Balance of water rates
• Balance of body corporate fees

Repairs & Maintenance

• Plumbing
• Electrical
• Handyman

Repairs and maintenance relate to wear and tear or damage as a result of renting out the property. The idea is that an expense is considered a repair when the functionality is being restored.

For example – fixing broken glass on a window is considered a repair, while replacing the whole window frame is an improvement. Renovations, improvements, replacements and extensions are treated differently to repairs and maintenance. These falls under building costs, and are usually deductible at 2.5% per year for up to 40 years.

Repairs made immediately after purchase of the investment property or maintenance to make the property suitable for rental are considered to be of a capital nature – part of the cost of the property and can be depreciated. They are not deductible as the ATO considers the lower price of the property reflects its state of disrepair.

The ATO is particularly vigilant to catch people who are claiming expenses described as repairs when they are considered to be improvements.

Interest & loan account fees on loans to finance investment properties

• For the interest to be deductible the loan must have been applied to acquire an income producing asset e.g. rental property
• Where loans used for both investment property and private assets the interest has to be apportioned based on how much of the principal was used for which purpose. This usually happens when people are using a Line of Credit facility.

Travel expenses to

• Inspect property
• Maintain property
• Collect rents

A full deduction can only be claimed if the sole purpose of the trip relates to the property. Where the inspection is combined with a holiday, expenses must be apportioned.

Cost of preparing a Quantity Surveyor’s report showing

• Depreciation expenses
• Special Building Write-off

Seminars

• Cost of attending property investment seminars – only to the extent that they relate to operating or maximising the return on currently owned properties

Where money is spent on relevant seminars before any property is acquired, there will be no deduction available.

DEDUCTIBLE – Over a number of years

Borrowing Expenses

• Loan Application fee
• Lender’s legal fees
• Title search fees
• Lenders mortgage insurance
• Stamp duty on mortgage
• Mortgage registration fees

These are deductible over the period of the loan where the loan is less than five years. Otherwise deductible over five years.

Depreciation on Plant & Equipment (decline in value of depreciating assets)

• Carpets, vinyl, linoleum and other removable floor coverings
• Hot water systems, heaters and solar panels
• Air conditioning units
• Blinds and curtains
• Light fittings
• Swimming pool filtration and cleaning systems
• Security systems

Depreciation on the building construction (also called Capital Works Deduction)

• Your total capital works deductions can’t exceed the construction expenditure. No deduction is available until construction is complete.

Set of assets

• To be depreciated in accordance with their effective life.

For assets costing $300 or less, you can claim an immediate deduction for the entire cost. You can’t do this if the asset is one of a set of assets that together cost more than $300, making it a deduction over a number of years, for example, if you buy four dining chairs each costing $250, you can’t treat them as separate assets to claim an immediate deduction. Note that if you only rent your property for part of the year you will not be able to deduct the full amount of your expenses.

NOT DEDUCTIBLE

The following items are either not deductible or considered to be of a capital or private nature by the ATO.

On Purchase

• Purchase price
• Stamp duty on purchase
• Legal/conveyancing fees
• Pest & Property inspection
• Sourcing Fee
• Renovations immediately after purchase
• Repairs immediately after purchase

On Sale of a property

• Legal/conveyancing
• Advertising
• Agent fees

Pre-Purchase expenses including (especially if property was not then purchased)

• Attending seminars to acquire more property
• Cost of reports on property prior to purchase
• Travel to inspect property prior to purchase

Always remember to keep proper records in order to make a claim, regardless of whether you use a tax agent to prepare your tax return or you do it yourself.