So for the average Joe who is not the next Mark Zuckerberg or young millionaire, pay attention. The 4 wealth fundamentals you’re about to read are not only practical and realistic, but integral to your success.

Goal

When it comes to building wealth, always start with the end in mind. By knowing your goal, all your other decisions and actions will be better guided towards its attainment. Although it’s the most simple, it is also fundamental.

Ask yourself – How do I want to live after I retire? Comfortable? Lavishly? The answer will help find the solution to the next question which is – How much would I need in my retirement for this lifestyle?

Once you know this information, you need to create a flexible plan that can be adjusted as time goes by.

Income

At the foundation of your wealth building strategy will be your start up capital, which usually derives from the income you create.

There are a lot of factors that you need to take into consideration when it comes to income. One would be whether you know if your present income is going to be stable, increasing or decreasing in the future based on your circumstances and career. The answer will dictate how freely you’re able to spend or how cautious you should be with the money you’re currently making.

Aside from living expenses and leisure, your income should be set aside for a smart and proactive savings plan. This is a factor that is highly recommended especially if you’re young, as the earlier you begin the longer you have to build this up.

Investing

Only after your savings plan is set up and active, should you start investing. Every other factor in building wealth is based on surviving. The reason why investing is so important is because it’s geared towards thriving and having a great future instead of just preparing for a “rainy day”.

In many cases, time is the most important factor in investing, oftentimes more important than the amount you invest due to compound interest. The most important component is that you start as soon as possible, even if it’s a dollar that you can build on over time.

Expenses

Without a doubt, expenses are the one factor that if you get wrong, can cause failure for the rest of the fundamentals. The fact is, if you’re spending more than you’re earning, not only are you losing money, but you cannot save, invest or create a prosperous future for yourself.

If this is the case for you currently, feel good that you came across this article. Have a look at your weekly expenses, what are the musts and what are the purchases that don’t really matter?

This could be as simple as cups of coffee, excessive shopping or anything that you feel you do to an excess. Although cutting these are small at first sight, in hindsight you will find they build up to massive savings and will tip you over the scale to more income than expenses.

There are many more facets and factors to learn of course, but these tips will give you a basis of understanding on what to initially pay attention to. Wealth is a major component in our lives, so making these fundamentals a focus will be one of the most important decisions you make. Contact us today to discuss further. 

Although this seems like an ultimatum between the two, the truth is that you can be involved in both. This article will delve deep into both sides of the coin so that you can better delegate your funds to each one.

Paying off the mortgages

Focusing on paying off a mortgage can have its pros and cons. It’s always optimal to be aware of both. This section will give you insight on the main four factors that you will be both gaining and missing out on when paying attention to this area.

Advantages

Certain return

When most people think of paying the mortgage, it’s usually associated with clearing debt rather than making money. In fact it’s both. Every cent off the mortgage allows you to collect interest that would have been spent on the mortgage. Perhaps the best part about this is that there are limited risks, it is a guaranteed return.

Piece of mind

The main reason why people focus on mortgages rather than investing is because of a tendency to choose safety over risk. Perhaps the best benefit of paying off a mortgage is that you gain certainty that cannot be equaled in the volatile share market. Although you’re not playing to win big, you are securing your future in the sense that you won’t have an overbearing mountain of debt.

Disadvantages

Tunnel vision

Although tunnel vision may work well for athletes or anyone competing in certain industries, it does not apply to this. By focusing all your energy on paying of the mortgage, you can very often miss extremely lucrative investment opportunities that would otherwise have paid you a much higher return. Although you’re securing your financial safety, you might also be missing out on your financial freedom.

Eggs in one basket

Like the above, sometimes putting all your eggs in one basket can work. If safety and security is your priority though, this can often-times backfire when you place all your attention on your mortgage. When your capital is involved in only one asset, if anything goes wrong you have nothing to fall back on.

Splitting Funds Between Mortgages and Investing

Alternatively to the above, it is possible to use your capital for both options. Although you will be diversifying your focus, there are benefits as well as the negatives that you will come across.

Advantages

Potential for large return

The beauty of investing in things like shares is the potential for long term income that is likely to be more lucrative than what you would save in interest by paying off your mortgage. This also allows you to better pay of your home whilst having excess cash to spend.

Asset diversification

We mentioned that putting all your eggs in one basket is not always the best option when it comes to money. This is why investing alongside mortgages is phenomenal for securing a safe future. This means that if one of your assets is performing poorly, it is likely that another will balance it out.

Compound interest

If you have ever heard of the term “making money work for you”, this would be the closest thing to it. The compound interest effect of investing cannot be overstated when you give time for it to grow. This is why if you choose to go down this route, invest as soon as possible even if it’s only a dollar, so that you can begin taking advantage of this principle.

Disadvantages

Experience required

Although not much, a decent level of understanding is required if you desire to be successful in investing. This can be a negative or positive depending on your situation. If you are in the situation where you lack the experience or knowledge, either learn or find an individual who knows what he or she is doing.

Higher risk

The potential for bigger gain also comes with the potential of a large loss. The risk in investing is real and must be minimised when making decisions as to where to put your money. Factors such as unexpected market fluctuations and so on all happen regularly. A long term approach is much more ideal for minimised risk as opposed to a short term approach which rarely works out.

As you can see, both options are viable depending on your personality and circumstance. If you are someone with confidence and experience in investing, the latter will always be ideal. Alternatively if you’re not, you can always minimise the amount you put in initially compared to the mortgage so you can at least get your feet wet.

Interested in learning more about investing? Contact us today!

Although it seems like much of the work is already finished if a property is tenanted, this can very often be a negative. If you are in this situation or it relates to you, carefully study this article so that you can be certain that the tenanted property you’re looking at is right for you.

The Potential Pitfalls of Diving Straight in

Before assuming the best and going for the purchase, detailed research must be conducted as to why the property is still tenanted and is it for the wrong reasons.

The most common pitfall is that the tenants are substandard. Often-times this is the very reason as to why the property is up for sale in the first place.

Management disagreement can sometimes be the issue, especially when the current tenant has unrealistic expectations. A very real and potential scenario could be that you’re forced to put a property manager in charge, and that shift of responsibility and routine for the current tenant causes issues.

Often-times it is not advised to investors if a tenant is short term or not. Many of the times when they are, the rental price is elevated which at first sight will create an attractive deal for the investor. When price is the deciding factor,  you will be in for a shock when it comes time for the tenant to leave. Not only do you need to find a replacement, but one at standard market price.

In rare cases, tenants can be quite opportunistic or even greedy, for lack of a better word. This can be common when the investor is a beginner. As soon as you take ownership, there may be unrealistic material demands made upon you for improvements that the other vendor did not consider.

These are just some of the potential pitfalls that could arise. Although there are more,  the foundation you need is research. As an investor looking into a tenanted property, you must be willing to put in the time to find out as much as possible to be certain that the property is tenanted for the right reasons.

The Importance of the Lease Agreement

So you’re now certain that the property is tenanted and none of the above or other issues are apparent. There are certain variables that you will need to look at to avoid any silly mistakes, and these involve the tenants.

A common thought that ponders around new investors heads is whether they’re eligible to kick out tenants or not. This would especially be critical to know if they fall into one of the negative categories mentioned above. This brings us onto the lease.

Is the lease fixed term or periodical?

A fixed term is exactly what it sounds like. For whatever period the contract is set (usually 6-12 months), it cannot be terminated unless the tenant and new owner make an agreement. Alternatively, a periodical lease is the opposite. A monthly contract is usually the case in which the tenant can be granted 60 days notice to vacate.

Aside from the above, it is critical you know other details about the lease so that you’re in control. What is the amount of bond held? Are inspections held, and how often? How much does the tenant currently pay in his or her current contract? All these questions can be answered in the agreement or with a bit of investigation and communication.

As always and as mentioned with tenanted properties, research comes first. Use this information as a guideline as to what to look out for immediately, with every different circumstance there may be a different factor involved with the tenant. It’s worth going to the trouble of finding out as much as possible before making an investment that could be potentially detrimental. Contact us to research your next investment.

Despite there being many, the following fundamental factors will serve you incredibly in determining whether an apartment is lucrative or not.

Research

As basic as it is, research will be the starting and most important step in your investment. You must be able to decipher between what’s hot and what’s not.

In your search, find out what’s in demand and in what areas. Aside from the internet, speak to experts, view local ads and do everything you can to collect as much data as possible.

Location, Location, Location

As overused as this term is in real estate, it’s still the most fundamental to your investment’s success. More than the apartment interior itself, the location will have the biggest influence on the interest of tenants.

Make sure you aim to invest in a major city if possible, and to avoid rural areas. If your capital does not allow for this, then be sure to find a deal that will have proximity to hot sites where a large population resides.

Parking

An apartment with an enclosed locked parking garage cannot be understated, especially if you’re purchasing in an area that may be near a high crime rate sector.

If your tenants are forced to park outside, this will be a big turn off for certain individuals. When possible, always ensure there is designated parking space that is safe, the extra cost will be worth it.

Renovation

This depends on your budget and the state that the apartment is in. If you are financially comfortable and the apartment space is rundown, then renovation should be high up on the priority list.

There are not many things that will better yield an impressive return on your money than fixing up an apartment so that it attracts your ideal tenants. The risk is attracting the opposite due to your lack of respect towards the property.

Public Transport

Although this is tied in with location, it deserves its own heading. If buying in a city is too out of your budget right now, make sure that wherever your purchase, it has convenient access to public transport.

The fact is that most people commute to work, and if your location does not allow for this to happen in an easy way, you simply won’t gain half as much attention as you could.

Background Check

This applies mainly to new apartments, be sure to research not only the developer, but the builder as well. This means credentials, past work, what tenants say from their other projects and so on. Most people don’t take the time to conduct it despite its massive returns in data.

This alone can save you a whole heap of money if you find out that all their past tenants and associates are not happy with the work they have done, and the opposite is true as well. If you’re unsure about the apartment’s credibility or sustainability, a background check will give you enough information to come to your own conclusions.

When applied, these 6 factors in choosing an apartment will skyrocket you ahead of the masses when beginning to invest in apartments. Some of these do take effort, but that is what will ultimately eliminate the risk of your investment and increase the chances of a massive return.

More than anything, be patient and don’t rush into anything when it comes to choosing an apartment. To get started on your investment journey, contact us today!

With all investments there comes risks, but fortunately with granny flats that risk is minimised greatly. Read on so that you can get a perspective of both sides of the coin when it comes to protecting your money whilst also growing it with this potentially great investment choice.

Advantages of Granny Flats

Affordability

Whether you’re purchasing an already established granny flat or building it from scratch, it is remarkably more affordable than a standard property. The power in this is that if you’re new to investing or just tight on funds, you can wet your feet in the market without as much risk.

Asset

If you are purchasing a granny flat as an addition to your current property as opposed to a separate standalone, it will add value to your residence. The power in this is that if and when you sell your house, you earn the added value on top of its already existing rental income if there are tenants.

Risks Involved

Substandard Tenants

This applies especially if they are in proximity to you. When renting out, there is always the risk of having less than ideal occupiers. Be sure to have a certain criteria for who you want to occupy the granny flat. Bad tenants can far outweigh the financial gain and even create a negative cash flow in certain situations.

Unexpected Charges

Additional funds must be set aside when those unexpected costs arise.You’d be surprised at what can arise during a tenant’s stay or just standard costs that weren’t anticipated, so preparation for these potential situations is a must.

Overcapitalisation

Generally the banks will not increase the value of your property that much compared to the capital you initially invested. This means that you could potentially be spending $100,000 on a granny flat, and the banks will only raise the value by $75,000.

Rules and Regulations

In every state there are different rules and regulations, so this must be something researched by yourself. Despite the division in rules, there are fundamental regulations that apply nationally, so ensure you’re aware of these:

• Granny flat space  should not exceed 60 square metres (can vary slightly across states).
• Must have differentiated access from main property.
• Primary property already has zoning permission.
• Primary property owner owns the granny flat.
• One granny flat per property.
• Property exceeds 450 square metres in space.

As you can see, like every investment, granny flats have their ups and downs. In the current Australian economy with the affordability crisis, they are a great option for investments due to their low initial costs.

Ensure that you conduct research in not only the points addressed in this article, but in relation to the tenants you’re considering or the area you’re buying in. This will always be a viable option for investment, and if you’re a beginner, it is ideal due to its massive price saving compared to standard properties.

Keen to learn more about investing? Contact us today!

Right now you may be on the fence as to whether to move out solo or with another individual. Consider these options for the latter.

Tenants in Common

Ideal for individuals who don’t want equal ownership, ‘Tenants in Common’ depend upon the agreed shares of each party which may be something like 70/30. This also means that if one party dies, rather than their interest passing on to the other tenant, it goes on to the individual’s estate and will.

Joint Tenants

The most common form of ownership, particularly for husbands and wives is ‘Joint Tenants’. Essentially what this arrangement entails is that both parties have equal shares. Alternatively to Tenants in Common, if one party passes away, all the shares are transferred to the other individual through rights of survivorship.

Although this is universally the most common option, it is not always the best. For example, in the situation where one party is earning remarkably more than the other, an arrangement such as Tenants in Common may be more appropriate in certain situations which will be discussed below.

These options are polar opposites which can make it hard to decide, however, fortunately there can be some flexibility in certain cases. There are different situations that can arise which would combine both. An example would be if a third party was involved that desired a smaller share, whilst the first two parties would share the greater half. This would result in a Tenants in Common and Joint Tenants relationship.

How to Determine What Option to go With

Whether you go with Joint Tenants, Tenants in Common or a combination will solely depend on your circumstances and personality. There are certain factors and situations that call for one option over the other. The below points will provide you with some insight as to what option may be more appropriate for you depending on your conditions.

Joint Tenant

• Both parties are in equal or similar income brackets.
• Ideal for married couples or business partners.
• Continuity – you desire to keep ownership of the property for whatever means if the other party dies.
• Financial stability – will not go into turmoil if other party becomes deceased.

Tenants in Common

• You earn significantly more or less than the other party.
• You do not want full ownership if the other party passes away.
• Financially cautious (lower income party).

Both options are advantageous depending on your situation. The final decision would have to be made between the two main parties or more, to come to a conclusion if you’re set about moving out with someone. Ideally if there are more parties involved, a combination may be the best option.

Although Joint Tenant has historically been seen as the default option in most cases, this is beginning to change as people have begun to act more consciously with their capital in property purchasing. At the end of the day, it will come down to your research as well as your knowledge to choose the option that’s best suited for your circumstance.

Want some help deciding which option is best for you? We can help! Contact us today.

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.

Although unfortunate, it is a fact that frivolous lawsuits are an issue and people are taking advantage of our legal system. Wealth can be acquired throughout an entire lifetime, and taken away by one superficial claim. This article will go about explaining the different ways you can protect yourself from this fact so that you never have to suffer from a frivolous creditor.

Individual ownership of assets

The best way to shoot yourself in the foot in terms of asset protection is to own investment properties in your own name. In the case of being sued you are at risk of losing everything under your name.

Many people would argue the tax benefits and cost effectiveness you would receive by using your own name, and they would be right, but the argument for the potential loss is a much better one if your focus is on protection.

Company structure

An alternative to individual ownership is using a company structure, which is characterised by being a separate legal entity from the owner. In the case of asset protection, this is a much safer and wiser choice as the risk is transferred to the shareholders in the company.

The issue with this structure is that if the individual happens to own all the shares in the company, much of the asset protection benefits you would receive from this form of ownership would dissipate.

Trust fund

Typically, property investments owned in a generic trust are the way to go over the above examples. The benefit of this is clear, the individual does not own the asset, but rather the trust does. The individual however, does control it.

During the situation of a lawsuit, a person with a trust does not bear any potential loss or risk that a company structure and individual ownership do. The only caveat is that you must know what trust is right for you for many reasons including tax effectiveness; whether you’re a business or on your own will have a lot to do with this.

What about insurance?

Many individuals mistake asset protection for insurance and make the fatal mistake of choosing one over the other. The truth is, both supplement each other and are mandatory. Having insurance provides many benefits towards asset protection including legal fee assistance, funds to settle lawsuits and so on.

Now that you’re aware of the main forms of ownership in relation to protecting your assets, you can judge your situation and make an informed decision. Contact us to discuss your investment options.

The 5 tips in this article are foundational life lessons of those who have crossed the property investing path before:

Head over heart

Like poker players, experienced property investors all know to leave their emotions at the door. This is not a home that they’re buying for their three children and wife, this is a vehicle through which they intend to make money with.

If you’re a beginner reading this, your tendency will be to go with your emotions because of the thrill, which is why you must internalise this lesson and take it with you to avoid that trap.

Listen to others

At the end of the day, the decision is yours to choose which property you want to invest in. However, although this is true, getting several third party opinions can go a long way for many reasons. Like the above tip, emotions can get in the way of rational decisions, which is why getting a logical third party opinion can help in giving you perspective.

Despite your experience or lack thereof, there is almost always one or two things your investor buddies know that you dont, which is why it’s essential to gain this birds eye perspective. If you are a beginner, this tip should go without saying.

Building inspection

One mistake that is unfortunately prevalent is not having a building inspection. Experienced investors realise that this mandatory in order to avoid any unexpected expenses down the road. Aside from this, you do not want your tenants giving you a hard time for any hidden faults or insects crawling around once they move in.

It’s a business

There is a misconception that investing is a “side-gig” towards your real job and that it should be treated as such; this is a mindset that will lead you to failure. Whether this is your only source or just a side source of income, you need to treat investing like you would treat your own business.

This means that the activities conducted by you should involve standard business procedures like setting up financing, protection, relationships with other smart investors and so on. Like everything in life, you get out what you put in, and unfortunately you’re at risk of losing a lot of capital if you treat this with little regard.

Long term > short term

Many people are overly dramatic about the short term fluctuations in investing, and how to seize them. The problem is that these are quite unreliable and very volatile. On the other hand, long term charts provide a very good scope of statistics that are much more proven to be profitable if followed.

In terms of property investing, going in for the long haul is much smarter than short term gains. Of course, there are situations and people who profit of the latter, though for the general public it’s much like gambling.

So remember, if you’re just beginning in the world of investing, you could save years of heartache and pain by learning from others mistakes instead of making them yourself. To get started on your investment journey, contact us today!

The benefit of this method is purely financial, the investors return on rent is in direct proportion to their fraction of the property. Many individuals do not have the means to make such large investments in properties, and as a result use fractional investment as an alternative.

Low start up fees

With fractional investing, you can literally start with as low as $75 and own part of a property. Although this is a low entry, you do miss out on some of the benefits that traditional investing involves. Factors such as in person inspections are not included with low investments, rather you just gain a slice of the returns.

It’s no surprise that with the opportunity of low risk, fractional investing is attracting a lot of young people. With the Australian market as expensive as it is, this form of investing targets a very large market of people who desire to put their money to good use, but cannot afford absurd prices or don’t want to take massive risks.

Where to find fractional investing platforms

Like other forms of investing, there are different mediums through which you can operate to succeed in fractional investing. BrickX and DomaCom are two of the main companies in Australia that allow you to invest in fractions with there own unique advantages.

BrickX

With a minimum requirement of only $100, the BrickX online service allows you to buy “Bricks” in a unit trust. Bricks as labeled by the company allow the individual holder to receive returns in proportion to their investment, they can be compared to shares. The notable benefit of this being is that there is no minimum holding and the investor is able to list there bricks for sale whenever they want.

DomaCom

With a Managed Investment Scheme structure, Domacom allows investors to invest in properties using not only fractional, but crowd funding methods also. The company has quite a low minimum entry at $75 and is regulated as a managed fund. One of the unique aspects of this company is that they offer a bookbuild process that allows investors to collect their funds together and invest in any of the hot properties in Australia.

With the Australian property market still showing high prices and not giving any signs of reversing as of yet, fractional investing has nowhere to go but up. Society at large and young people in general can barely afford the demands of the market, let alone spending their money on a full property for the purposes of investing. Fractional property investing is just beginning in terms of its popularity, and may be the next mainstream way for Australians to invest. Keen to know more about fractional investing? Contact us today.