Beneficial for buyers and investors, gentrified neighbourhoods offer affordability and a strong potential for significant capital growth. Redfern, Paddington and Woolloomooloo are great examples of areas which have undergone substantial facelifts in recent decades – each with a booming property market.

Flatmates.com.au chief executive Thomas Clement has recognised significant shifts in Sydney’s up-and-coming suburbs, saying “As areas become gentrified, rental prices tend to go up considerably. Mr Clement identified more interest in the inner east, just north of the airport, concluding that “beach suburbs… have seen an increase in those looking for a new place,” he said. (Source: News.com.au, 2016)

We’ve exclusively identified Sydney’s next boom suburb as the strongest investment opportunity of 2017 due to the following 8 reasons:

1. Lifestyle amenities, including shopping, restaurants and education facilities
2. Affordability for buyers and renters
3. Significant reduction in social housing
4. New transport infrastructure, including the Light Rail and Metro line
5. New neighbourhood developments
6. Tight supply with vacancy rates sitting at three per cent for over a decade
7. Local household income increases
8. Central location for future population and jobs growth

This suburb is a desirable location for buyers wanting to have it all – proximity to coast, location close to CBD, perfect for families or SINKS and DINKs, as well a full suite of leisurely amenities. We believe it is a wonderful opportunity for buyers and investors looking to increase their capital wealth.

Contact CPS Finance today to find out more about Sydney’s next boom suburb and receive our free market deep dive report.

Benefits of buying old

There are a myriad of benefits to buying an older property, all of which will either help cash flow, capital growth or equity.

• An older or established property offers the opportunity to add value to the existing structure, and therefore potentially increasing your equity in the property quite quickly. Whether it be a cosmetic makeover or a full overhaul, having the scope to improve on the existing property is a wise investment option for those willing to outlay construction costs to reap the rewards long-term.
• A cosmetic makeover to your investment can also improve the rentability of the property and therefore the rental return.
  Dependant on the style of property, there is a potential to subdivide the property to allow for an additional income stream with a dual occupancy property, or granny flat.
• Established properties are lovely to maintain their value or experience minimal fall during a slow marketing period, whereas newer properties are often more heavily affected by these movements and rely on the market solely to increase their value again (as there is no scope for renovation or upgrades.)

Benefits of buying new

Aside from the shiny newness of a fresh property, there are some significant wins for an investor purchasing a new property.

• Many would argue the biggest benefit to purchasing a new property is the tax incentives. There is significant scope for depreciation which are a helpful way to minimise your tax. A new property allows you to claim on the building value including fittings and fixtures. The ATO will also provide a substantial refund if the property is positively geared.
• The newer the property the more likely you are to attract buyers should and when the time arises to sell the property. The bones of the property including plumbing and electrical should still be in good condition easing a buyers mind for potential expenses upon purchase.
• Along with more buyer interest, comes more interest from renters. If you have a new property, you’re likely to attract quality tenants who will pay decent rent and make rent payments on time.
• Similarly to purchasing a new car, having a newer property does bring peace of mind that everything is in the best possible condition from the outset. Knowing the plumbing and electrical are new, the walls are freshly painted and the property presents well, is enough to ease an investor’s mind for years.

There are many pros and cons to purchasing either a new or older property. If you’re after wealth as a long-term solution, our advice would be to invest in an older property where there is larger scope for improvements. However like with any major investment purchase, it does depend on your individual circumstances and objectives. Seeking the help of trusted professionals will be able to guide you in the right direction.

Contact CPS Finance today to discuss the options available to you.

The most efficient way to claim these tax benefits is through a depreciation schedule; a report undertaken by a surveyor, usually when the property is purchased. The surveyor is responsible for providing a physical analysis of a property, clearly identifying materials used throughout the building (including fittings and flooring), internal and external wall treatments and appliances. An estimated value is placed against these items and depreciation is calculated based on the age and value of the property. Most properties regardless of their age can offer investors substantial tax benefits through obtaining this schedule.

Although depreciation can be an annual tax deduction, only one depreciation schedule is required for the property rather than a new schedule each year. However, it should be updated on an annual basis should the property need major repairs or undergo renovation. With Australians spending over $100 million every week on renovations, undertaking a tax depreciation report has never been so important.

There are certain assets within a building that generally have a higher depreciation value, including timber floorboards, air conditioning and solar power systems. Other items which are more commonly claimed for depreciation include hot water heaters, appliances and bathroom accessories, as well as smoke alarms and exhaust fans.

With all of these assets in mind, the cumulative deduction over a five year period can save the investor tens of thousands of dollars. However, to qualify for these tax benefits, it is suggested investors complete a depreciation report for the property as near as to the date of purchase as possible. If you don’t obtain a tax depreciation report then you cannot claim for these substantial tax benefits.

For advice on your investment property and how to claim depreciation, contact CPS Finance today.

How to diversify your property portfolio

Location

It is easy for an investor to favour an area that has proven to be successful for them in the past by providing strong capital gains or high rental yields. However, investing in the same location several times over makes you more vulnerable should natural disasters, population fluctuations or declining employment rates occur. If all of your properties are experiencing the same economic or market changes, it could place strong financial pressure on your assets.

Price point

Another diversification strategy involves purchasing properties at different price points, providing more flexibility should a property need to be sold. Instead of purchasing a property with your entire budget, splitting this over two assets allows you to free up cash by selling one asset, instead of two. It is important to note, diversifying your property portfolio does not mean compromising on the quality of your investment – quality always trumps quantity for long-term investment goals.

Style of property

The benefit of investing in different style properties, is appealing to different segments of the market. For example, purchasing a townhouse in a suburban area will attract the right rental market and candidates. Both re-sale potential and rental demand will benefit from purchasing the right style property in the right locations.

Residential vs. Commercial properties

The fourth diversification strategy is purchasing commercial property as an alternative to residential assets. Investing in commercial property is more focused on rental return of the asset and the security of tenure which is directly linked to the covenant on the property. Generally speaking, net returns are higher for commercial than for residential meaning that most outgoings are paid for by the tenant.

Although investors may not be able to control the property market, local environmental changes, infrastructure or the economy, they can learn to minimise risk within their portfolio through diversification.

Contact CPS Property today to learn how you can offset risk through diversification of your property portfolio.

Four things to consider when seeking out your first property purchase

Location, location, location.

No surprises that the location of your property will play a big part in its long-term success. Research suburbs and locations with signs of strong growth in infrastructure, minimal unemployment, access to public transport and high capital gains.

Find the right price

Once you have found a suburb or area you are keen to invest in, investigate the median house price for the area. Whether the property is renovated or not does not matter at this stage, however if there is room for renovation or improvement it means there is greater scope to add value to the property. As a rule of thumb, it is suggested to consider properties within 10% of the median price which is a good way to know you’re not over-investing.

Future potential

When purchasing your first home, consider your situation in five years time, and how the property will appeal to as many people as possible – including buyers and tenants. Placing emphasis on the long-term investment potential will help you to decide whether to retain the property as a rental, or sell and reinvest. Once you’ve determined these goals, certain features will become more important. For instance, access to public transport (namely trains) will be an attractive asset for renters, but might deter some buyers due to noise pollution.

Get the right finance

Speaking to a financial professional will help ensure that your loan is tailored to your long-term property goals and objectives. Understanding your cash flow, ongoing property costs and potential future rental yield will prove critical information when you decide to tenant or reinvest the property. Laying down the correct financial foundations at the beginning of your investment career will prove to be extremely beneficial in the future.

Like with any investment opportunity, it is advised to set out future goals and objectives before determining how to achieve these. Planning is key to ensure that in the future you can maximise value from your investment.

Contact CPS Property to discuss investment advice today.

Here are 10 easy renovation ideas that instantly increase your property’s value, including painting your interior and updating your patio.

Read the full article on onthehouse.com.au

Looking to sell your property? Contact CPS Property.