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Categories : For Sale, Stock Sheet

INVESTORS SHOVE OUT FIRST HOME BUYERS

Wednesday, September 25th, 2013

bigstock-housing-team-844036AS low interest rates prompt a fresh surge in real estate activity, a Battle Royale is looming between first-home buyers and property investors.

Sadly for the first-home buyer crowd, it's a one-sided contest.  Low interest rates help both parties with their repayments, but investors typically have more financial firepower when it comes to a bidding war.

Data released this week by mortgage broker AFG shows that investors snapped up between 28 per cent and 50 per cent of all mortgages processed in August, depending on which state you live.

And the RP Data-Rismark Home Value Index reported the strongest quarterly gain in house prices in four years.

It's good news for sellers, but not so great for buyers who have been scraping a deposit together and now must fight cashed-up investors for properties, plus a growing number of wealthy foreign buyers.

So in the interests of helping the underdogs, here are some ways that first-home buyers can compete in the real estate market.

Firstly, get pre-approval for a loan. If a seller has a choice between a pre-approved offer or one that is subject to finance, it's no contest.

It's also important to think about supply and demand.  If there is high demand for an area or property, you're going to have to pay more and battle others for it. In many cases taking that first step on the property ladder makes more sense in an area where there is abundant supply and lower demand. You can always trade up later once you have built some equity in your property.

Remember that most property investors think with their heads rather than their hearts and will seek simplicity in their purchase. That means first-home buyers may have a better chance at grabbing a bargain if they target properties that need a little renovation work to get them into good shape.

Search for opportunities before they get listed by building a network of real estate agent contacts.  Property experts suggest always making the first offer and asking the agent for the opportunity to make a counter offer.

Finally, take emotion out of your buying decisions, just like good investors do.  New properties will always be popping up.

(source: Perthnow)

bigstock-Chairs-On-Deck-Facing-Ocean-6971165Many people reading this column might be relaxing at a beachside getaway, a wine region in the south-west, a great fishing spot in the Kimberly or perhaps in a heritage town in the wheat belt.

Over summer many people will be enjoying Western Australia's delightful holiday spots, particularly along the coast. Places like Dunsborough, Denmark, Dongara, Lancelin, Cervantes, Albany and beyond. Over the years many people have bought holiday homes in these places.

Today, holiday homes are being purchased as far apart as Exmouth and Esperance. It all depends on people’s budget, allowable travel time and their strategy behind the purchase.

The ideal holiday home for most people is one that is always available for short stays, but this is a costly option for people who need to take out a mortgage on a second home. They are not the inexpensive country option they once were, particularly on the coast.

However, these days an increasing number of buyers are choosing to combine the purchase of a holiday home with long-term investment plans. This is possible because many favoured holiday locations have developed viable rental markets with local tenants leasing properties for extended periods, often beyond the summer holiday.

Some of these places might include Albany, Harvey, Busselton, Margaret River, Gin Gin, York  and Cervantes, for example.

Homes initially purchased as investments in these locations can later be used for holiday purposes.

In places where demand for rental accommodation is seasonal, such as fishing towns, windsurfing spots and agricultural areas, there is a greater likelihood of vacancies for rental properties outside the peak holiday or industry period. However, the rentals are normally much higher in properties leased for short periods and this can partly offset the loss of rental income when the place is vacant.

The benefit of this strategy is that the owner can then take advantage of the seasonal rental market by using the property off season.

Another option for holiday homebuyers is to purchase a unit in a resort development. Some resort operators will guarantee a rental income for a fixed period. In many cases the purchaser is acquiring a share of a managed investment scheme, which includes a stake in the total income and expenses incurred by the resort.

Either way, the most important consideration when buying a holiday home is, as far as possible, to set aside the emotional reactions and approach the purchase with a clear understanding of the real value of the property, its ongoing costs and the likely rental income.

If you are travelling around the state this holiday season and maybe thinking of a holiday home investment, why not drop into the nearest REIWA agency office and talk to the staff about opportunities?

(source: propertyobserver.com.au)

Renovating tips for first-home buyers

Wednesday, July 24th, 2013

dog as a painter with a brush and colorSOME simple precautions can make life easier and cheaper when doing up old properties.

If the great Australian dream is buying a house on the traditional quarter acre block, then the fantasy is renovating it. Reality TV shows such as The Block, House Rules and Selling Houses Australia don't do anything to dispel the illusion.

Simply follow their lead, knock down a few walls, pull up the carpet to reveal original floorboards and a slap on a new lick of paint to transform a house from dull and drab to sleek and sexy. Well, that's the dream. Reality is something different altogether.

While buying the worst house on the best street is an opportunity to add value to a home, it can also result in stress, tears and cost blowouts if you aren't careful.

INSPECTIONS

Before exchanging contracts, it's essential to conduct a pre-purchase inspection report.

Although they aren't mandatory, Philip Connor from Express Building Reports says it can save a lot of heartache and money.

A standard report will set you back around $500 and will tell you the present condition of the property, the structural integrity of the building and what potentially expensive problems you'll be inheriting.

As building inspectors no longer have to be licensed, Philip suggests the best way to find someone reputable is to look for a person with 15 years of practical experience and who is insured.

"My first question would be, are you insured?'' he says. ``If they make a mistake and they're not insured you can't sue them.''

APARTMENTS

A property inspection on a house reports on the entire property from fence to fence; it's a different story for apartments.

"With a unit you're inspecting only the unit and the immediate surrounding area,'' Philip says. "It can be problematic because you don't inspect lifts or other people's apartments.''

Philip recommends buying a house rather than an apartment, but if you can't afford to, choose a unit in a smaller block.

"You can get a better feel for the history of smaller buildings,'' he says. "Important issues that apply to units include noise and we don't inspect or comment on noise between units.

"The other is fire. If the unit block isn't certified for fire safety, you could be looking at $15,000-$20,000 to certify it.''

HOUSES

Philip says houses built between 1895-1920 can be affected by rising damp, and those built from 1920-1985 can have asbestos.

"One issue that affects all of these houses is drainage,'' he says.

"Rising damp, termites and wood decay fungi are all basically caused by poor drainage, so if you can solve the drainage problem you can often resolve all three issues with one stroke.

"It's inexpensive, just make sure that the water that comes off the roof is taken away from the base of the building using a stormwater system or conservation tank.

Then you'll need some patience.

"Once you resolve the drainage issue, you need to allow at least three to 12 months for the building to start to dry out,'' Philip says.

RISING DAMP

"Rising damp is like sex; every generation has to find it out for itself,'' Philip says.

"I've been around for so long I assumed everyone knew what rising damp was but that's not the case.''

Rising damp is when moisture seeps up from the ground through porous building materials, such as brick, and up through the walls of the home. It stains the walls, causes paint and wallpaper to peel, rots skirting boards and generates a musty smell.

While it's unpleasant, it's also treatable.

A damp-proof course, made from lead, slate or asphalt, is used to waterproof walls so moisture doesn't penetrate the bricks.

To ensure they do their job, Philip says the soil needs to be kept at least 500mm below the damp-proof course. ``Rising damp rises only to one metre above ground level, however if ground levels are built up it's going to go another metre,'' he says.

ASBESTOS

Philip says that inspections don't cover asbestos because it's virtually impossible to detect without ripping up the home.

"The company may say, `If we see fibro then we will flag that as most likely containing asbestos,' but here is the catch: there may be a painted surface that you don't flag as fibro, so you might miss it,'' he says. ``There are some fibro materials that do not contain asbestos, but as a general rule, you should always suspect fibro as having it.''

WHEN TO BE CAUTIOUS

Philip says it's important to take a realistic look at the numbers before you buy.

"If you're buying a dump in a bad location, watch out. If it's in a great location, it changes the ballpark rules substantially,'' he says.

Paul Myors, energy efficiency specialist from Ausgrid, says renovations over $50,000 require a BASIX certificate, which measures a home's energy efficiency.

Approximately 60 per cent of a home's energy consumption comes from heating, cooling and hot water systems so a major renovation makes it easier to install insulation, reverse cycle air conditioning and a gas hot water system to reduce bills.

John Rose from TKD Architects believes it pays to be aware of local council requirements before buying, otherwise your dream of turning that single level semi into a split level home could be shattered.

"There are always development control plan differences between councils and that can be the character of an area, heritage or environment,'' he says.

"You have to know the local council code requirements, but having said that, in recent years a number of changes have happened to council codes to bring them into line. It's much easier these days to understand how a building can be placed on a site.''

John has seen an increase in clients asking architects to attend site inspections.

"Most people feel that getting a builder's advice is the most important thing but in reality you need to understand if and how you can make it into the home you want. Inner Sydney is full of cottages 40-80 years old that need a substantial amount of work done,'' he says.

"You need to make a judgment call on what good advice is worth to you. Most people are paying for one or two hours of an architect's time, which is between $150-$500.''

John suggests discovering what you can do to a property without approval before purchasing.

Top 10 costly repairs

David Hallett from Archicentre, archicentre.com.au, lists his top 10 renovation money pits.

Re-stumping:An inspection of the sub-soar area is the only way to tell whether the foundations are solid.

Roofs: A dodgy roof, which includes leaks, scracked roof tiles or poor guttering, can cost tens of thousands of dollars to repair.

Wiring: Blackened power points are an syndicator that the home's wiring is problematic.

Pests: If access hatches to the sub-floor or sceiling are blocked, chances are they could be trying to prevent access which would reveal pest infestations.

Plumbing: Rusted pipes in old homes may shave poor water flow. Check water pressure by having a few taps running to test pressure and see if the water is discoloured.

Painting: If paint has been used to mask a sproblem, you could be up for the cost of repair and repainting.

Plastering: Plastering can be as simple as sminor cracks or major work if restumping a home. Framing: affected by termites will also need replastering.

Rising damp: Damp walls encourage mould and weaken a building's frame.

Guttering and downpipes: Guttering that sis badly fitted, rusted or neglected can cause issues during heavy rains.

Stormwater drains: Underground pipework, including stormwater drains and sewer pipes can be expensive to repair.

(source: Perthnow)