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 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.

Just east of Ipswich, and within a half hour drive of Brisbane’s CBD, lies Greater Springfield – one of Australia’s most ambitious master-planned cities.

With two rail stations, and direct, non-stop access to Brisbane airport, Greater Springfield’s vision is to become a world-class regional city and services hub by 2030. And by the time development is complete, an expected $85 billion will have been spent on infrastructure and commercial and residential construction.

Greater Springfield has been carefully designed around three key pillars – Education, Health and Technology – ensuring that sufficient infrastructure and employment opportunities are available to support the rapidly growing population – tipped to reach 138,000 by 2030.

In our latest Spotlight series, we take a look at each pillar, and provide some compelling reasons as to why you should consider this region as part of your investment portfolio.

Pillar 3: Technology

As the final key pillar, Technology has been an important driver in Greater Springfield’s establishment as an innovative ‘smart city’.

Greater Springfield has its own Digital Master Plan – a digital eco-system that businesses can easily connect to and integrate with their own products and systems.

The Greater Springfield community also has access to intelligent platforms and data to enhance their lifestyle, health, education and business performance.

This investment in technology and development of a state-of-the-art working environment has resulted in companies, such as GE, relocating their state headquarters to the area, and plans to entice tech giants such as Google and Microsoft being discussed.

Technology fast facts

• Digital Master Plan includes interconnected network of infrastructure and services, allowing community and businesses to easily connect and collaborate
• $230 million Polaris Data Centre, Australia’s leading purpose-built technology facility
• GE Australia State Headquarters
• State-of-the-art dark fibre network throughout the CBD
• IDEA City precinct, designed to encourage innovation, entrepreneurship and research
• Intelligent platforms to enhance residents’ lifestyle, health, education and business performance.

Greater Springfield investment opportunities

With apartment development at unprecedented levels in the Brisbane CBD, we’re looking to the west for its exciting investment potential.

Greater Springfield’s focus on the key pillars of Education, Health and Technology means that population growth is well supported by significant investment in infrastructure and employment.

Housing is currently affordable, with good capital growth prospects and no signs of slowing down in the near future.

We have a variety of off-market investment properties in Greater Springfield that are only available through CPS Property.

Please contact us today to learn more about Greater Springfield, or to arrange your free property investment consultation.

Information and images sourced from Greater Springfield.

In reality, Australia’s residential investment market is dominated by people who, having bought their own home, have moved onto buying an investment property. These small-scale investors own 83 per cent of all investment properties.

Previous research shows that real estate investors tend to be married, wealthy males with high income and full-time employment.

A typical rental housing investor is a high-income earner or family partnership, owning one or two dwellings as an extra income source. The probability of becoming a residential investor tends to increase with age and homeowner status, but declines after the age of 65.

With home ownership rates in Australia at around 70 per cent, the Australian Bureau of Statistics (ABS) reports that residential investment represents, on average, 35 per cent of all housing finance, while the rest are all owner-occupiers. This means residential investment is an important part of the mortgage market and banking system.

Most residential investment is centred around rent or resale; only a small proportion goes on construction of new homes. And residential investment by corporations or big companies represents only 8 per cent of the market.

Private data from a major mortgage provider used in my research (for the period 2003-09) reveals what the typical real estate investor looks like. They are on average 42 years old, 72 per cent are married, and fewer than two-thirds of investors get finance with a co-borrower. Only a third of investors are female.

According to the same data, residential investors have an average net monthly income of $8,600, or $103,200 a year. But if we exclude the 100 investors with a net monthly income over $100,000, the average net monthly income becomes $6,617, or $79,404 a year.

Residential investors, financing the property with a mortgage, have on average $934,091 in net wealth (50 per cent of investors have $581,541 in net wealth). Some of them have diverse portfolios; six sources of investors also own shares with an average value of $4,884.

The data also show that direct residential investors are mainly professionals, in management positions, small business-owners, or workers with a skilled trade. Overall, 27 per cent are self-employed, relative to the 19 per cent of self-employed owner-occupiers.

Where they invest

The data reveal that direct residential investors invest mainly on existing houses, as do owner-occupiers when buying a property. The ABS reports only 3 per cent of investors’ financial commitments are destined for construction of new dwellings.

Our data shows that residential investors are more willing to invest interstate or in a different postcode than owner-occupiers. While almost half of residential investors invest in a property located in a different postcode to where they live, 11 per cent of residential investors buy properties in states other than the state where they live.

Most residential investors choose rural and regional areas to invest. Many residential investors choose to buy property in big metropolitan cities like Sydney and Melbourne.

However, the top 10 postcodes chosen by residential investors to buy property (between 2003 and 2009) include Cairns (QLD), Mandurah (WA), Torquay (VIC), Mackay (QLD) and Launceston (TAS).

Why do they invest?

Our research shows the main reasons for accessing finance to buy a house, other than to live in it, are income and wealth accumulation.

Some investors invest because they see it as a long-term, secure, “bricks and mortar” investment. To these investors other types of assets (such as shares and bonds) may seem harder to understand and it may be more costly to enter these markets.

A proportion of real estate investors see it as a source of permanent income, while others speculate on the potential capital gains in real estate and invest expecting to increase their wealth.

This reason becomes more prominent during periods of strong house price appreciation. For example, between 2003 and 2009 year-to-year average house price inflation has been 8.9 per cent.

Academics have also argued that the Australian taxation system motivates — rather than facilitates — housing investment, as investors are able to access 50 per cent deduction on capital gains and negative gearing. Another motivator to invest in real estate may be more mortgage finance access; for example, between 2003 and 2009 the average 12-month housing credit growth has been of 14.6 per cent.

Of course there are other reasons to invest, such as moving up or down and maintaining other property as an investment, or getting a holiday home and keeping it as an investment too. There are also “unintentional” real estate investors that may have inherited or acquired property.

Most residential investors are your average Australians, who invest in rural or regional areas as a secondary source of income and to gain equity. So when thinking about who is the typical Australian retail investor, you could probably look at your neighbour.

Source: http://www.abc.net.au/news/2017-08-01/who-is-the-typical-investor-in-the-australian-property-market/8764504

What is a dual occupancy property?

A dual occupancy property offers two incomes to an investor by way of two separate living spaces and therefore two tenancy opportunities. Common examples of a dual occupancy property include a granny flat, duplex or dual-key property. Although these property types all have the potential for rental income, there are various differences between them which will affect investors.

Different types of dual occupancy properties

• Granny flats: typically the size of a studio or one bedroom apartment and located to the rear of an existing, larger property. Generally speaking, a granny flat will require council approval before building the property, as well as being allowed to accept tenants into the property.
• Duplex: two properties which are adjoined or share common walls, such as a house divided into two separate properties, and can therefore be sold separately.
• Dual occupancy: not too dissimilar to duplexes, dual occupancy properties share common land but do not have to be adjoining or share common walls.
• Dual-key property: typically one property with a shared front entrance door and hallway and potentially additional living spaces such as the kitchen and living room. However there is a section within the property which is locked and rented out to a separate tenant, for instance a bedroom and ensuite.

The benefits of dual occupancy properties

There are several benefits of dual occupancy investment properties. The main factor being the ability to maximise the potential of one block of land. Essentially this means improved cash flow and reduced maintenance costs. Furthermore, they are a smart decision for investors looking to grow and diversify their property portfolio.

Source: build, 2016: http://www.build.com.au/blog/5487

A dual occupancy property delivers a superior cash flow and therefore allows an investor the opportunity to pay off their mortgage at a faster pace.

To discuss your dual-occupancy  investment options, contact CPS Finance today.

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.

The decision may be one of the biggest financial investments of your life, so it is only right that you learn from your predecessors who have gone through the trial and error process instead of making the same mistakes.

Exceeding Budget

Perhaps one of the most common mistakes and most detrimental when taken out of hand is spending more than you’re allowed. This goes back to when we were younger and saw something that was way too expensive, though our emotions got in the way and we found ourself digging into our pockets or credit cards. It may seem tempting, but you must resist this to avoid having a massive debt in the future.

Dismissing viable advice

The key word in this is viable, often people do take advice, but it is from their friends and families. Although these people love you, unless they possess professional knowledge, you should take their input with a grain of salt in regards to buying a home.

Look out for reputable financial advisors, independent mortgage and financial brokers to guide you, not only will this take a lot of the stress off your shoulders, but they will also show you the way from people who have “been there and done that”.

Ignoring job security checks

Applying for a home loan is obviously a very integral part of purchasing your first home, this won’t happen if banks and money lenders don’t see you as viable.

Becoming clear about what your current job status is and what it says about your security is something a lot of people don’t pay much attention to.

This mistake is something so small yet could potentially be so big; you need to ensure that before purchasing your home, you aren’t drifting between careers and have a sound foundation so that your success for home loans is assured.

No pre-approval

So you have the job security, being qualified is not enough to start property hunting safely. As mentioned earlier you must not exceed your budget, for this to be possible you need to first know what that budget is.

Once you’re qualified, finding out what the lenders will give you is integral, this will allow you to have a filter for the houses you can and cannot afford.

Not only does this save a lot of time, but it also saves you from going back on past decisions and creating emotional pain.

Get professional advice

For an important topic like this, the more professional advice you receive, the better. Contact us for more information regarding property investment.

We take a retrospective look at median dwelling values across the suburbs of Australia to show the deterioration of more affordable housing across the capital cities.

A retrospective look at median dwelling values across the suburbs of Australia shows the bracket creep that has occurred over the current growth cycle, highlighting the deterioration of more affordable housing across the capital cities over the past five years.

At the end of 2016, 7.6% of suburbs nationally had a median house value under $200,000 and 5.9% of suburbs had a median unit value below $200,000.  To put these figures into some perspective, 11.4% of suburbs had a median house value of at least $1 million and 3.0% of suburbs had a median unit value of at least $1 million.

Over the five years to the end of 2016, there has been a substantial decline in the proportion of suburbs with a median value below $400,000.  At the end of 2011, 53.5% of suburbs had a median house value of less than $400,000 and 69.8% of suburbs had a median unit value of less than $400,000.  By the end of 2016, the proportion of suburbs with a median value of less than $400,000 had fallen to 41.0% for houses and 55.3% for units.

Suburb median values by value range,

National, December of each year

A five year retrospective look at the individual capital cities highlights the significant shift in the proportion of suburbs with a median value under $400,000, particularly in Sydney and Melbourne.

In 2011, the proportion of total suburbs with a median house value below $400,000 across each capital city was: 21.2% in Sydney, 28.9% in Melbourne, 40.9% in Brisbane, 40.5% in Adelaide, 31.1% in Perth, 69.2% in Hobart, 2.1% in Darwin and 1.1% in Canberra.  Units offer a more affordable option highlighted by the proportions of suburbs values below $400,000 at: 38.8% in Sydney, 48.2% in Melbourne, 81.7% in Brisbane, 94.3% in Adelaide, 59.8% in Perth, 92.7% in Hobart, 53.3% in Darwin and 44.6% in Canberra.

Suburb median values by value range,

Capital cities, December 2011

By 2015, the proportion of suburbs with a median house value below $400,000 had shifted to: 1.2% in Sydney, 12.2% for Melbourne, 31.4% in Brisbane, 29.5% in Adelaide, 15.5% in Perth, 55.7% in Hobart and 0.0% in both Darwin and Canberra.  For units, the proportion of suburbs with a median value of less than $400,000 in December 2015 were recorded at: 10.9% in Sydney, 34.9% in Melbourne, 64.4% in Brisbane, 87.7% in Adelaide, 37.2% in Perth, 88.4% in Hobart, 51.4% in Darwin and 50.5% in Canberra.

Suburb median values by value range,

Capital cities, December 2015

The proportion of suburbs with a median house value of less than $400,000 at the end of 2016 was recorded at: 0.1% in Sydney, 6.3% in Melbourne, 29.2% in Brisbane, 28.0% in Adelaide, 18.9% in Perth, 52.1% in Hobart and 0.0% in Darwin and Canberra.  For units the proportions were recorded at: 6.5% in Sydney, 31.8% in Melbourne, 62.7% in Brisbane, 85.1% in Adelaide, 46.4% in Perth, 88.4% in Hobart, 57.6% in Darwin and 45.8% in Canberra.

Suburb median values by value range,

Capital cities, December 2016

Five years ago every capital city except for Darwin and Canberra had at least 20% of suburbs with a median house value of less than $400,000.  At the end of last year, it was virtually impossible to find houses for less than $400,000 in Sydney, Darwin and Canberra while less than 7% of suburbs had a median house value below $400,000 in Melbourne.  Across each city there has been a substantial decline in more affordable housing over the past year despite the fact that outside of Sydney and Melbourne there has been only moderate value growth over the period.

Even units have recorded a fairly substantial decline in the proportion of suburbs with a median value of less than $400,000 over the past five years.

At the end of 2016, looking at both houses and units, 20.5% of Sydney suburbs had a median value of less than $600,000 compared to 38.5% of suburbs having a median value of at least $1 million.  To further highlight deteriorating housing affordability in Sydney, 34.6% of suburbs had a median unit value of less than $600,000 at the end of 2016.  In each other capital city, a higher proportion of suburbs had a median house value of less than $600,000 than the proportion of suburbs with a median unit value of less than $600,000.

If you’re interested in starting or growing your property portfolio, contact CPS Property today.

What is stamp duty?

Stamp duty is a tax, charged by the government, from the sale of a property. It covers the costs of things like changing and transferring the title and ownership of the property. Each state or territory government sets their own stamp duty, and you are required to pay it for property purchases within 30 days of settlement. The amount you will need to pay is set in relation to the value of the property, meaning the more expensive the property, the more stamp duty you will need to pay.

How much is stamp duty?

The fees vary greatly depending on property value, what state or territory you live in, and if you qualify for any concessions or exemptions.

For many new buyers, stamp duty can be a bit of a surprise, so it’s a good idea to know ahead of time how much you’re likely to owe. There’s plenty of online stamp duty calculators available, and can save you from being underprepared. While the calculators won’t be an exact, locked in amount, you’ll get a fair idea and can budget accordingly.

What else do I need to know?

When saving and preparing to purchase a property, ensure that you factor stamp duty into your budget, and you’ll save yourself a lot of stress down the track. There are concessions and exemptions on stamp duty, such as concessions for first home buyers and different rates for buying land, so depending on your personal circumstances you may qualify for one. Again, these differ by state or territory, and have quite a few restrictions so, like all things in property investing, make sure you do your research and speak to professionals for extra guidance.

To get started on your property journey, contact us today.

Investing in purpose built student accommodation allows you as an investor the opportunity to participate in Australia’s largest non-resource export sector, Tertiary and Further Education. The benefit of this hugely rare opportunity is it’s highly resilient nature to economic instability.

There has been significant growth in tertiary enrolments in Australia over the last decade, against the ongoing backdrop of chronic undersupply of purpose built student accommodation. In turn this provides the potential for high occupancy rates and growing returns.

Located in Australia’s most popular destinations for tertiary students, investors will be attracted by the combination of significant annuity-style income together with the potential for capital growth.

What you need to know about this investment opportunity:

•       Asset backed, strong yielding investor returns
•       Anticipated IRR 15% to 18% p.a. net of fees (comprising yield and capital growth)
•       Targeted initial cash yield of 10.5%+ p.a. (once fully operational) payable quarterly, rising to 13.0%+   p.a. from year 3 onwards
•       Significant tax deferred component
•       Prime CBD locations close to Universities, transport and amenities
•       Investment term between 3-7 years with compelling exit opportunities

If you’d like to discuss student accommodation as your next strategic investment purchase, contact CPS Finance today.