End of Financial Year

Winter is upon us. Not such a big deal for some parts of Australia, but in the southern states, it means rugging up, putting the heating on and getting used to dark, early evenings. It also, of course, means it’s coming up to the end of the financial year – and tax time!

There are a few things you can do in June in preparation for filing your tax return. The more you can do yourself, the less work for your tax accountant and so, the cheaper the bill for their services.

Many accountants have their own checklists to help you prepare your paperwork (or these days, electronic paperwork, files and spreadsheets). But even before you get this far it might be useful to think about the following things:

1. Do you need a depreciation report for your investment property? Perhaps you have bought a property over the last few weeks and have been putting off getting a report. Don’t put it off any longer, go straight to DestinyLive where you can order one directly. If you are already using DestinyLive you won’t have to provide any more information than is already in this system, which makes it really easy for you! You will then be able to claim any deductions in your 2015-16 return.
2. Have you been entering all of your income and expenses into DestinyLive? Your property manager will send you a yearly report of all of the rent payments and associated expenses so you can update your DestinyLive  system if you are a little behind. You will need copies of invoices and receipts for any repairs and maintenance rates bills you have had on the property(ies) too, to keep in case you are audited in the future.
3. Bank statements. These must also be kept if needed in an audit, and the information should be entered into DestinyLive. Doing so will dramatically reduce your accountant’s costs as there will be no need for your accountant to spend time extracting this information. Are these filed in date order to make it easier for the accountant? Are any missing? You can usually download an end of financial year statement when you are doing your online banking. This is useful for totalling interest received and interest paid over the past 12 months.
4. Of course, you also need your payment statement from your employer and evidence of any work-related expenses.
5. Is there anything that needs doing to your property that can be completed before the end of the financial year? June is a good time to do a property audit, perhaps together with your property manager, and go ahead with some repairs and maintenance, the costs of which could be claimed in this financial year.

If you are a Destiny client, it’s a great time to schedule a meeting with your Qualified Property Investment Adviser, to review your goals set earlier this year and to set new goals and targets for the year ahead.

Finally, whether you are a Destiny client or not, you can take advantage of the DestinyLive online property management and tracking tool. You can add details of your investment property (the first one is free) and the reporting offered by this exceptional tool will make tax time a breeze. All the information you need for your accountant regarding your investment properties will be easily downloadable from DestinyLive.

The Voice of Experience

At Destiny, we like to keep a close eye on what the media reports about property markets and the property industry. I don’t know how you feel, but to us it seems that, this year property has been in the headlines (not just the ‘Property’ sections) on an almost daily basis. In one recent Sydney Morning Herald article, it was reported that “the Australian Property Bubble” had been mentioned 3,093 times in the past 12 months. I’ll bet that “negative gearing” mentions are right up there too.

Another thing the astute reader of property media will notice is that many of the articles contradict each other: there is a bubble/there isn’t a bubble; Malcolm Turnbull won’t touch negative gearing legislation/maybe the PM is going to review the legislation after all. So who can you believe?

Remember why you are investing

It’s at times such as these we are experiencing in 2016, that property investors need to remain sensible. They need to remind themselves of their long-term property investment goals and why they set them. Most of us have set investment goals because we want to be financially secure and independent when we stop working. Don’t let media scare-mongering distract you from your original plans.

Focus on reality

Rather than worry about what might happen if there is a change to legislation that may or may not affect you adversely, focus on current realities:

• Interest rates have never been lower than they are today. It’s still a great time to invest in property, due to the affordability of credit which is creating better cash flows today.
• Property research and analysis has never been more accessible. The internet property portals, research tools and online communications, not to mention our own Essential Property Education course, have never been better. But you need to use these wisely – choose the best and most useful.
• Slow and steady wins the race. There is no ‘get-rich-quick’ approach to property investing (as many found out the hard way when they believed that buying investment property in mining towns was a fast and fail-safe strategy). Set realistic timeframes and achievable long-term return targets.
• There’s no substitute for experience. Learn from others who invest themselves. Not from those who profit from spruiking other people’s investment property.

 

Learn from the experts

Margaret Lomas and her company Destiny have been supporting, mentoring and educating property investors for over 22 years! That’s more than two decades of experience. Over this time, they have seen most things before. Talk of bubbles comes and goes, as do proposed changes to taxation and other legislation that affects property investors. If you want to know Margaret’s current views, book a place on her forthcoming seminar roadshow entitled, ‘The Changing Face of Property Investing’

Uncertainty in the Market

2016 has started as the year of uncertainty. So many times we hear financial commentators giving “uncertainty” as the reason why markets are down, or the dollar is down or other economic indicators are poor.

Usually it is the uncertainty that is affecting the stock market that we hear about, but perhaps it just seems this way because you can get a price for a share on a daily basis. We don’t really know the value of a property until it has been presented to the market and, a few weeks later buyers have made an offer. There just isn’t the same volatility in the property market to measure levels of uncertainty.

Government “conversations”

The current coalition government has been having “conversations” this year about increasing the rate of the GST, taxing our superannuation contributions and more recently making changes to negative gearing and the deductions property investors can claim against their other taxable income. There have even been whispers about changing the rules associated with capital gains tax (CGT).

The Labor opposition has now come out with a proposed policy to make changes to negative gearing, should they be elected back into power.

In short, there is a great deal of uncertainty about how we might be taxed and how we might be financially affected as we save and invest for our retirement years.

With the stock market officially in a bear market (and most of our superannuation funds that invest heavily in the stock market taking a hit as a result) and interest-bearing accounts paying all-time low interest on our cash investments, it’s little wonder that investors have been looking at property as a way to provide for themselves when they leave the work force. If politicians change the rules around property, many of you may feel at a total loss about what you should do to fund your retirement years.

Don’t panic

First of all, don’t panic. It may never happen! Many of you will remember numerous other occasions over the years when governments have “taken a look at” how property investors are taxed and the deductions they can claim. So far, no government has been foolish enough to take steps to make major changes due to the high risk that there would be a housing crisis as a result, as private landlords pull out of the market. Both sides of politics also preface their ideas about making changes with assurances that new legislation will be “grandfathered” which means that if you invested in property in good faith in the past, and in the 18 months or so leading up to any new rules, then the changes to how your existing investments are taxed will not be altered.

Talk to your adviser

If you are a Destiny client, don’t sit at home worrying about all the bad news and uncertainty in the media. Contact your qualified property investment adviser at Destiny and talk it through. They will discuss the facts not the hype. They will review your investments and put your mind at ease. If you are in a position to start investing it still might be a good time. Interest rates are still at all-time lows. If either side of politics is really determined to tamper with property investment rules, they first have to be re-elected and then have their legislation passed through both the lower and upper houses of parliament. Meanwhile, you will still need to fund your retirement and investing in property may well be the best way to do this.

 

 

New Year’s Property Resolutions

Happy New Year! How many of you made a New Year’s Resolution this year?

There are ancient origins to New Year’s resolutions. They are thought to date back 4,000 years, to when the Babylonians made promises to their gods at the start of the year. If they stuck to their promises their gods would look favourably on them. So perhaps the Babylonians were better at keeping their resolutions than we are today!

These days we laugh about not sticking to our New Year’s resolutions – after all, they are often made when we are full of festive cheer. But resolutions (promises to ourselves) are really just another form of goal-setting and setting goals to achieve our aims and ambitions has been proven to be very effective.

Property investing goals

To be a successful property investor, it is imperative that you set goals to ensure that you reach your main goal. For most of us, this is to ensure we have a comfortable income to maintain our desired lifestyle when we decide to stop working. In order to reach this ultimate long-term goal, it’s advisable to set short-term and medium-term goals.

Short-term goals could be around budgeting; making savings to free up money for a deposit or to increase equity in our existing property and so be able to afford the next property investment. Then medium-term goals could focus on when to buy that next property and then the next one, as you build your property portfolio.

Get educated first

If you have not started to invest, then your first resolution should be to get educated. There are so many trips and traps out there in the property investing marketplace that you need to make sure you get advice from reputable advisers. You can read objective blogs and articles, talk to other investors, watch property investment shows and videos and seek out courses that will teach you to understand the investment process. Many newbie investors make mistakes that can be avoided. Learn from other people’s mistakes – don’t make them yourself.

Some disreputable firms will advertise ‘education’ that is really just a sales pitch. If a seminar is free, then ask yourself why this presenter is giving his/her knowledge away for no charge. Doesn’t it have any value? Or are they being recompensed in another way? Perhaps they are promoting developments and investments and they are being paid by the developers?

Your first resolution should be to ask questions, test assumptions and find out answers by doing your own research and learning from independent sources.

Just do it!

In 2007, a study conducted by researchers from the University of Bristol in the UK, involving 3,000 people, showed that the vast majority (88%) of those who set New Year’s resolutions failed. However, when it came to goal-setting, results showed that men could achieve their goal 22% more often when they engaged in goal-setting, while women succeeded 10% more when they made their goals public and got support from their friends.

So, no more excuses, set property goals for 2016 and hopefully the property gods will look more favourably on you!

Contact Destiny for a free consultation.

 

 

Be contrarian at Christmas

Perhaps the most well-known and successful contrarian investor is Warren Buffett who famously said: “Be greedy when others are fearful”. Contrarianism is about going against the crowd, taking action when others aren’t, and this can work in property investing too.

A great opportunity for contrarian property investors is the run up to Christmas. The majority of investors will be winding down and pulling away from the market. They’ve had a tough year and will rest up and enjoy the festive season and start researching again in January. This leaves fabulous opportunities for those investors who take the contrarian view. It may seem as if you are the only property purchaser out there and you’ll be spoilt for choice.

Reasons for selling at this time of year

Smart investors realise that only vendors who are really keen to sell will have their properties on the market at this time. These vendors may accept a lower offer if it means selling up before the end of the year. They may need the cash from the sale or they may be home-owners who are moving for work and want to get settled in their new home before the start of the school year. Perhaps they are financially stressed, having bought a new property before selling and repayments on both loans are onerous. Whatever their reasons, if a property is on the market and being actively marketed in December, you can be pretty certain the owners are keen to sell.

Don’t make excuses, make plans

So don’t make excuses about not researching the December market. Instead, keep looking and making offers and negotiating hard. It is wise, however, to be particularly organised if you are seriously looking at property at this time of the year. Here are some things to consider if you are purchasing at this time of the year:

1. Make sure you have your finance in place and that all your documentation is in order for the bank when you need to take out the loan, having had your offer accepted.
2. Check with your solicitor that they will be around to look at the contracts for you and also, again come settlement time.
3. Don’t skip having thorough pest and building inspections just because it may be harder to find someone to carry these out at this time of the year.

Stay cool

However, you should still remain calm when investing at all times of the year. If you have set yourself a goal to invest before the end of the year and you aren’t finding anything in the areas you’ve confirmed as having the right growth drivers, then don’t rush into a second-rate property just because you’re approaching your deadline. There will be more opportunities next year – which is really only next month after all.

If you are not already a client of Destiny and you’d like to learn more about our award-winning services, visit www.destiny.com.au.

 

 

 

 

 

Rentvesting – what is it and is it for you?

‘Rentvestors’

It’s becoming quite popular to combine words to come up with a new one: “chillax” for example, is an amalgam of chill out and relax; “emoticon” – a blend of emotion and icon; “mocktail” is a new word for an un-alcoholic cocktail. Well this trend has crept into property investing too with the introduction of “rentvestors” to describe the growing number of renters who buy property as an investment rather than to live in.

Many a property investment guru no doubt claims that they invented this term, but the practice of rentvesting is something that Destiny’s Margaret Lomas has been talking about for a long while. It most likely started in Sydney and Melbourne when property was becoming unaffordable for first home buyers. Many young people were just not prepared to trade their inner city or beachside lifestyles for the security of a four bedroom, two bathroom house and land package with big back yard – 30 to 50kms from the CBD. This is the type of property Gen Y-ers might be able to afford, but many don’t want to live there.

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What exactly is rentvesting?

Rentvesting is the decision of people to start investing in property before they buy their principal place of residence. They buy an investment property which they keep tenanted from the outset, while they continue to rent their own home in a suburb or area where they could not afford to buy a property, yet where rental yields are relatively low. If they purchase well the rental income will cover most of the costs associated with holding a rental property.

Advantages of rentvesting

So let’s take a look at why so many people are choosing to rentvest:

• They can continue to live in areas which offer their preferred lifestyle: places with cafes, gyms, bars and nightclubs where they like to socialise
• It allows them to live closer to work, which may avoid a lengthy commute
• They will be nearer better public transport and may not need to run a car
• The rental income from tenants in their investment property will pay most of the mortgage and over time the property will increase in value
• There may be tax benefits, such as claiming depreciation, that will reduce their other taxable income. 

 

Disadvantages of rentvesting

There are a couple of drawbacks to the strategy of rentvesting. First, as you don’t already own property you won’t have equity in a PPOR for a deposit for your rental property, and you will need to use cash. This then ties up that cash so that is no longer available if you do decide later on to buy a home of your own. Second, you will pay capital gains tax (CGT) when you sell the rental property, whereas you don’t pay CGT when you come to sell your own home.

If you would like to buy property but don’t want to move from where you are currently enjoying living, then rentvesting could be for you. Contact Destiny to discuss it further with one of our Qualified Property Investment Advisers.

 

 

 

 

12 weeks till Christmas – still time to invest

In Australia in October many of us slip into wind-down-to-Christmas mode. The children go back to school for the final term, older ones have exams, younger ones have Christmas parties. There are footy finals, the spring racing carnival. Daylight savings in most states and the kids’ sports days and cricket matches to watch. When would you find the time to invest in property, really, so close to Christmas?

Well this blog is your reality check! There are three months left in 2015 and you can easily make your next or even your first property investment in this space of time.

To make it easier, lets’ break it down into steps.

Make sure your finances are ready to go

Talk to your mortgage broker and find out how much you are able to borrow. Perhaps you will need new valuations of current property holdings so that you have a true picture of your equity position. Then get all your paperwork in order – those recent payslips and any other income statements. If your finances are in order you are in a stronger position to act quickly when you find a suitable property.

Become educated

Most investors fail because they leap in without becoming educated.  Those who do seek out guidance usually do so from someone who is either selling property or who has a hidden agenda of some kind. Destiny has Essential Property Education courses happening regularly and, while you are making preparations to buy property, you have plenty of time to get along to one to make sure that you don’t join the ranks of those with poor or costly property investments.

Area research

Once you have the education,  you will know how to best use the information found in Margaret Lomas’s book, 20 Must Ask Questions for Every Property Investor. This will help you to ensure that the new research skills you have from the course are applied methodically and accurately.  You’ll be able to find  areas that are showing the right fundamentals such as infrastructure plans, population growth and a host of other ‘must haves’.

Property research

Your new skills will also ensure that when it comes to property choices you make the right ones from the outset.  Satisfying the present demographics and buying in the right part of town is simply one of those things that you need to learn how to do – it doesn’t come naturally and it is not always common sense! .

Call property managers

Once you are  confident that the area you have decided upon is right for you, then call property agents for some local knowledge. What type of properties are renters looking for? How much rent are they willing to pay? Are there any streets to avoid? Which are the popular schools in the area which families would like to be close to?

Negotiating

You will always make the first profit in an investment on the way in, and you can improve how you do this by using the negotiation skills you learn on the course.  No other course has such a  comprehensive negotiation skills components and these skills will stand you in good stead for every property you buy. With Christmas looming, make sure you let the agent selling any property you’re considering know that you are considering more than one property and you would like a prompt response to your written offer (say 48 hours). You don’t want to lose valuable time in negotiations – particularly if they come to nothing and you don’t end up buying the property.

Pest and building inspections

Don’t miss this vital step in your haste and make sure any contract you sign is pending satisfactory results to your building and pest inspections. Again, give the inspectors a timeframe in which to submit reports quickly.

Settlement and finding tenants

It might seem like the hard work is over once you’ve settled but it’s not! A property bought before Christmas will settle after and 2016 will be busy straight up getting tenants and managing all of those post settlement tasks.  Many tenants will look for a property in January because they will want to be settled in a new property before the start of the new school year. You can place your property with a property manager even before settlement so that they know it will be coming up and they can start to mention it to renters looking in the area.

Merry Christmas

Of course this whole process is a lot easier if you work with a property advisory service such as Destiny. You will have the support and experience of Qualified Property Investment Advisers (QPIA) and access to online tools such as DestinyLive that will help you evaluate potential properties and track investments when they are in place. If you aren’t a Destiny client, becoming one could be your best Christmas present ever.

What to demand from your property investment adviser

When people start considering property investing, they can be overwhelmed by the amount of information and advice that is available to them. It can be quite confronting deciding how to go about it. Just as when you start to learn any new skill, you may try to  nut it out all by yourself; by reading books, magazines, watching TV shows and YouTube videos. While there’s absolutely nothing wrong with this approach, it does take longer and a lot of your time.

An alternative is to fast-track your progress by seeking out a professional property investment adviser. This way:

• You can learn from other people’s mistakes so that you avoid making the same mistakes yourself
• You can learn from other people’s success – what proven strategies did they use?
• You can usually ensure that you are getting advice from someone with experience.

Many property investors who become Destiny clients start out on their own and then, after not doing that well, they find out how we can help!

You get what you pay for

Before we look at what an adviser should offer you, let’s first cover off the issue of what it will cost. First of all, you get what you pay for. If you look for free advice it will never be free. The advice may not cost you anything at the time but it will not be independent advice. It will most likely be a recommendation to invest in a development or property or ‘scheme’ and the ‘adviser’ will receive a kick-back from sending your business their way. People who work on these terms are not ‘advisers’, they are salespeople or marketeers.

At the other end of the scale, the most expensive is not always the best advice either. Ask yourself what you are actually getting for the price you are paying, and compare the services of other advisers and their charges.

Five non-negotiables

Here are what we consider five essentials that you should expect from your property adviser:

• Independent advice that is right for you: By law, financial advisers are not allowed to offer advice without getting to know their client first. Introductory discussions should cover your financial situation (your assets and your liabilities); your income and work history; your dependants and other financial commitments; your age and risk profile. This is to ensure that the advice you are given is relevant to your own situation. If ‘advisers’ offer recommendations to invest in property without finding out about YOU first, then run a mile.
• Education and transparency: Even if the adviser ends up doing a lot of the work for you — as is the case with some companies that offer buyers advocacy services as well as independent advice — you should ask to learn and understand the process and demand total transparency. What are they doing on your behalf? This way you can start to do more yourself when you know more about the process and become more experienced.
• Ongoing support: When you are starting out in property investing you will need support – some need more than others, but ongoing support should be a prerequisite with any property investment advisory service. You don’t want to just make one investment and then never hear from them again. You also want to know that you can contact your adviser regularly and at any time that suits you (not them).
• Accreditation: Is the company you are considering a member of PIPA? PIPA is the Property Investment Professionals of Australia, a non-profit organisation that “has been formed by industry practitioners with the objective of representing and raising the professional standards of all operators involved in property investment.” A good place to start looking for a property adviser is on the PIPA website. 
• Wealth of experience: Although we all have to start somewhere, would you rather have an adviser just starting out or be part of a winning team that has years of experience to share with you and thousands of happy clients who they have helped over this period? I know what my answer to this question would be.

Of course, we’d love to help you with your property investing. Destiny ticks all these boxes and more. Contact us now www.destiny.com.au.

Winners are grinners but self-praise is no praise

At Destiny this week we were delighted to learn that two of our branches had received Investors Choice Awards. Smart Property Investment, in conjunction with homesales.com.au invited property investors to nominate their favourite/most helpful property professionals in a range of categories. Andy Scott from Smart Property Investment said, “With over 7,000 votes the competition for these awards was intense”.

We are extremely proud that Jim Leone who runs Destiny’s Sydney branch was voted Winner of the NSW property adviser category and he was Highly Recommended in the Property Educator/Mentor category. Carolyn Walshe who runs Destiny Gold Coast was Highly Recommended in two categories: the Qld Property Investment Adviser and Mortgage Broker categories.

Well done to Jim and Carolyn and their respective teams.

Self-praise is no praise

What we are really proud of is the fact that it was satisfied Destiny clients who voted for us; not industry peers nor the media but investors who we have helped achieve their property goals and who were so pleased with Destiny’s services and products that they made their nominations.

There are some ‘advisers’ and educators in the Australian property investment marketplace who are quick to make claims about the wealth they have helped create for their clients in record time, and the ‘award-winning’ services they offer! When you read about achievements and awards which at face value give a person or a company credibility, scratch beneath the surface to find out where these accolades come from. It is misleading advertising to make claims that you cannot support, but this doesn’t stop some in the property investment industry from doing so.

Likewise with testimonials. How do you know that they are legitimate? Talk to other investors who are happy to recommend the professionals they have worked with. A reputable company will put you in touch with investors who will share their experiences with you.

Remember, self-praise is no praise, the praise you want to hear comes from satisfied clients, not a company’s marketing department!

Recognition of a range of Destiny services

Another thing we were proud of at Destiny when we received the Investors Choice awards was that Destiny was recognised for the range of services that it offers. Destiny is well-known for its property investment education, our Essential Property Education (EPE) course teaches and motivates investors to start or kick-start their property investing. But we also offer ongoing advice and mentoring as we support you to find the right property for your own individual circumstances. We help you research areas and properties and then we help you in your negotiations as you close the deal. Your Destiny adviser is with you every step of the way. And as Carolyn’s award attests, we have mortgage brokers who will find the best loan that suits your circumstances too ­­– make that “award-winning” mortgage brokers!

To find out more about Destiny visit www.destiny.com.au

Sound too good to be true? It probably is.

There has been news lately in the press about ASIC uncovering an unscrupulous Land Options scheme. I’m not going to go into all the details of how this worked but to cut a long story short, naïve investors handed over thousands of dollars on the promise of earning thousands more. They probably didn’t understand how the scheme worked themselves. They fell for the photos in the glossy brochures that depicted what the property they would be investing in would ultimately look like (ignoring the fact that what they were currently investing in was a piece of vacant land). It’s called “selling the sizzle, not the sausage”. As a property investor, it’s important that you protect yourself against such schemes and know how to spot a scam when you see one.

Rags to Riches

Another approach to dupe unwary investors is to sell the investor’s story. Instead of focusing on a secret property investment scheme that will provide phenomenal returns, they focus on the person. You know the sort of thing – ‘Aussie battler fights adversity to end up managing a portfolio of scores of property, providing thousands in passive income to retire at 30’! You have to be careful of this one because it’s true that you can build a property portfolio by investing in good, solid property that will provide you with a good passive income. But it’s usually not as easy as spruikers claim and the returns are generally more conservative.  In addition to this you need to invest in the right kind of property (not necessarily the over-priced developments they get a kick-back from selling to you) and that property type has to suit your own personal risk profile.  This means that it’s simply not possible for the properties being sold by spruikers to be appropriate for all people.

Who is to blame?

Some people say that you can’t blame investors for taking their financial security in hand and wanting to invest to provide for themselves in their retirement – and so they become easy targets. Others do blame them for their greed and naivety, and say they deserve what they get. You have to remember that spruikers and marketeers are very good at what they do. They are persuasive and know what buttons to push and can be persistent. Their skills can take advantage of even the most informed and intelligent investors.

The old adage, “if something sounds too good to be true it probably is” should not be forgotten, particularly when large sums of money are at stake.

Independent support is the key

At Destiny, over the 21 years that we’ve been helping property investors build profitable property portfolios, we’ve seen many “get-rich-quick” property investment schemes come and go. Very often victims of these schemes come to Destiny and tell us they wish they had come to us earlier as they would have avoided falling for these traps. We wish that more investors would see the value of investing in the right kind of independent support before they make their decisions.

Too-good-to-be-true checklist

If you’re considering an investment scheme or property expert’s advice, then this simple checklist will help to determine whether you should go ahead:

1. Is the company you are considering a member of PIPA – the Property Investment Professionals of Australia, a non-profit organisation that “has been formed by industry practitioners with the objective of representing and raising the professional standards of all operators involved in property investment.”
2. How long has the company (or person heading up the company) been in business? What is their track record in business?
3. Can they give you referrals so that you can talk to other investors who have been happy with their service and advice?
4. Are they pressuring you to make a quick decision before this “once-in-a-lifetime” opportunity passes? Or are they happy for you to take your time and do your due diligence to make sure you are comfortable with your choice to become one of their clients.
5. Is their advice to you truly independent, or do they have a property they are wanting to sell to you? Where they are selling property they are not independent and their advice cannot be guaranteed to be appropriate for you.

I think you’ll find that Destiny ticks all these boxes.