Category Archives: Buying

getting to know your neighbourhood by walking the dog

Getting to know your new neighbourhood

Buying a new home often means moving to a new suburb, city or even country. It may be a new location you chose simply because you loved it, or it maybe it’s where you need to be for work or family. Whatever the reason for your change in location, it can be a little daunting finding ways to get to know the neighbourhood and have it start feeling like home.

Here are a few ideas for breaking the ice suggested by the Harcourts’ Facebook community, along with a few others we’ve come up with as well.

  • Ask the experts: A good place to start finding out what’s good in your new ‘hood is to ask the real estate agent you purchased from. In the course of buying you would have talked to them about the big things like nearby schools, or transport routes. But they’re experts in their local area so they’re also a great resource to ask about everything from finding the best coffee and great parks and playgrounds, to the best local shops and restaurants.
  • Walk the walk: Spend a weekend or two getting lost. Take to the streets on foot and just wander around. You’ll see much more than you would from the car so you’re much more likely to uncover the neighbourhoods hidden gems – and you’ll quickly get your bearings for where everything is. If you’re in a large city you don’t know then do the same on a larger scale in your car and you’ll quickly learn the best driving routes and how all the suburbs fit together.
  • Talk the talk: While you’re walking stop and have a chat or even just a passing “hello” to any of your neighbours you come across out and about or working in their garden. It’s a relaxed way to break the ice. Once you’ve found that café serving great coffee, make it your regular and get chatting to the staff, or strike up a conversation with the local shop owners.Once you start finding a few local favourites you’ll start to meet some of the same faces each visit.
  • Knock on the front door: The best way to meet people is the most direct. It can be a little intimidating but it is a great way to meet your neighbours, especially those closest who you’ll see most often. If you want an icebreaker take them a small gift like a cake, or invite them over for a drink. Or use the old classics like ask to borrow some milk for your first cuppa – and be sure to return it with interest.
  • Be seen: The opposite of heading next door to meet the neighbours is to just be visible and approachable in and around your property. If you’re mowing the lawns or gardening in the front garden just be aware of who’s outside as well and give them a wave and a hello.
  • Be cool after school: If you have school-aged children, get involved in school activities, sports and events. It’s a great way to help your kids settle in and you’ll quickly become part of the school community. The same is true for sports clubs.
  • Hook yourself up: Spend some time finding and reading local newsletters, newspapers, community Facebook groups, supermarket community noticeboards, and websites such as Neighbourly. They’re a great place to find out about local events, organisations in need of volunteers, or even on-going projects such as community gardens and working bees; all great places to meet people and start getting involved. Good luck getting to know your neighbourhood!

buying a holiday property

Five things to consider before buying a holiday property

While relaxing and enjoying good times at your favourite holiday location, you stroll past the local real estate agent’s window and browse the offerings.
Imagine, staying regularly or living in the same place where you have so many great memories. Imagine owning a property where time seems to stand still, and where enjoyment is the longest lasting impression.
For many people, buying an investment property in their favourite holiday destination presents a double dose of benefits – the chance to regularly enjoy the best of holidays and build wealth at the same time. Such a property can also represent the ideal retirement destination, or somewhere to treat family and friends with affordable holidays in the meantime.

While buying a holiday property seems a glittering prize, what are the key considerations before taking the plunge?

Make sure you really like the location

The first and highest priority is to know that you absolutely adore the location of your vacation property, and will be happy to adopt the area as your home-away-from home.
Gaining such an understanding is only possible by spending considerable time at the location, not just a weekend. It may require you staying for several weeks or longer to fully appreciate whether the location is going to stand the test of time.
If you love snow skiing, are the ski fields to a standard that will bring you enjoyment year after year? If you love fishing, will the location provide a happy fishing experience for you, year-in year-out?
As opposed to staying at a resort or timeshare, buying a holiday property is a long-term commitment, and you cannot just move to the next location if you become weary of the location or property.
Easy accessibility should also be considered. If the thought of catching two flights, or driving 1000 kilometres every time you want to take a holiday seems overwhelming, then you may wish to consider something closer to your first home.

Know all the costs

A vacation property is the same as any other property investment – you need to factor in all the costs involved, whether rates, electricity, maintenance, property management and all other overheads involved. A dream vacation property can quickly become a nightmare if your holding costs exceed your budget.
In many principalities, the government treat investing in holiday apartments differently than straight-up investment properties, so tax is also an important consideration when crunching the numbers.

Management of property

It is likely that you will only spend a few weeks a year at a holiday property, so what happens for the rest of the year in your absence?
A good property manager will not only ensure that ongoing maintenance issues are attended to quickly and effectively, but to maximise cash flow from rentals, will also work to ensure that the property is consistently occupied and cleaned while you are not there.
Engaging a property manager to undertake ongoing maintenance is so important, as the last thing you want to do on your holidays is to spend them repairing.

Due diligence on important indicators

If you can create more wealth at the same time as enjoying the benefits of a vacation property, then you have achieved two goals at once, but this will not happen by accident.
Before buying a vacation property, make sure it has the capacity to attract enough holidaymakers to make the investment viable. Ask local agents about the average rental yield in the area, average rents for similar properties and occupancy rates, which can often be lower and more volatile in holiday locations.
Most holiday destinations experience “high seasons” when rent prices can be increased to accommodate increased demand.
If this season clashes with your preferred holiday times, you may have to forgo earning higher rents for your own enjoyment, and this should be factored into your calculations.

Take security seriously

If it is likely that your vacation property will be left unattended for weeks or months on end, to protect your investment it is crucial to consider security.
Depending on the location and type of property, this could take the form of contracting a security firm to patrol the property regularly, or installing security and alarm systems. Perhaps it could mean undertaking certain renovations, such as installing bars on windows or more secure doors.

In the end, you need to be clear of your priority when buying a holiday property. Is your first priority to buy a holiday property, or to build wealth through the purchase of an investment property. Your priority will inform your purchase.
When it comes to buying in pristine tourism destinations, it is so easy for the heart to rule the head, so before you jump in, make sure you are clear about your priorities, think long term, and know that the numbers stack up.

Mortgagee sale

The four myths of mortgagee sale

The commonly held view goes something like this: All mortgagee sales go for a song because the bank just wants to get rid of the property as soon as possible to cover the debt.

Mortgagee sales can represent a great opportunity for the right buyer, in the right market, at the right time. However, the word “mortgagee” on a real estate advertisement doesn’t always equal “fire sale”.

The main point of difference with a mortgagee sale, is that the sale of the property is under the control of a financial institution rather than the owner.

What is a mortgagee sale?

When a homeowner stops making mortgage payments, the bank or lender has the power to take possession of that property, which involves a long legal process that can take six months or longer.

Such a circumstances can be the result of any number of factors, sometimes outside of the home owner’s control, for example, death in the family, sickness, unemployment or similar events. No matter the circumstances, losing the family home represents a devastating time for the mortgagor, and it is important to keep this in mind.

Before buying, it is vital to evaluate some of the well-circulated myths about mortgagee sales.

Myth #1: Mortgagee sales always represent a bargain

The price of the property will be determined more by market forces, rather than who is selling.

In a tighter market, with weaker buyer interest, some property specialists report mortgagee sales going for between 10 and 15% below market value.

In a stronger market, more buyer attention can push the price closer to the median. However, bidders at a mortgagee auction in a strong market often hold back because of their expectations of a lower price, so discounts can still be gained, particularly after the auction if the reserve is not met.

Myth #2: The bank wants to sell in a hurry

Many people think that because banks and financial institutions are not real estate agents, their only interest is to sell the property as quickly as possible.

This is true, however, there are laws governing the behaviour of lenders to ensure that the best interests of the mortgagor are maintained.

A rushed sale, without evidence of an appropriate and effective marketing campaign, will give grounds for the mortgagor to seek compensation if the result is a lower sale price than expected.

On many occasions, lenders will even avoid using the words “mortgagee sale” when marketing the property to avoid any perception of de-valuing the property in the marketplace.

Selling at a low price before auction can attract scrutiny of regulators, so it’s in the lender’s best interest to ensure all the boxes are ticked before and during the sale.

Myth #3: The level of debt determines the price

The common myth goes something like this: Because the bank only wants to recover their debt, that will be the key factor in the price. So if the mortgagor owned $150,000 on a $450,000 house, all the bank wants is $150,000.

However, although the mortgagors are no longer the owner of the house, they retain rights under law to ensure the house is sold for a reasonable price, and will receive the proceeds once the debt and costs are paid. It is in their best interests, to monitor how the sale proceeds.

Myth #4: The bank will accept any price, as long as it covers the loan

By law, a lender must undertake a lengthy process before the sale, which includes setting the price through an independent, certified valuation.

So, as always, it is the responsibility of the prospective buyer to do their homework into the recent prices of similar properties sold in the local market.

There are several risks involved with buying at a mortgagee sale, for example, there is no guaranteed vacant possession, and the new owner may be liable for any outstanding rates, body corporate fees or other payments.

Lenders are not required to supply building reports or disclose unapproved construction work.

So it’s important to take the time to do your own research and ask your Harcourts Sales Consultant about these risks. Check the sale and purchase agreement carefully before committing.

In the right market, a mortgagee sale can lead to bargains for buyers. However, to put it in context, a mortgage sale is about buying from a non-emotive, straight-forward vendor, offering a property that has gone through an informed, professional, independent pricing assessment.

Mortgage Application Form - low income investor

Buying Investment Property On A Low Income

There is no sugarcoating the fact that if you are a low-income earner, buying investment property will require a lot of discipline and sacrifice.

There are a number of challenges to overcome, but although income level is a factor when it comes to borrowing money for investment, there are a lot of other aspects at play, many within your control.

Investing in property remains one of the most effective ways for those on average or lower-than-average fixed incomes to build wealth, so there is every reason to research and dare to dream.

With discipline and planning, those earning a relatively low income can position themselves as a candidate to qualify for an investment loan by paying attention to their credit rating, saving for a deposit and searching for the right investment property.

Credit rating

In a nutshell, your credit rating is about how you demonstrate a healthy degree of financial discipline over a number of years.

Today, all major lenders have access to virtually everyone’s credit history, and although each apply slightly different criteria, most will consider the following factors:

  • Stability of employment history
  • Regularity of deposits into savings or transaction accounts
  • Level of existing liabilities or debts, including credit cards
  • Paying bills on time and in full.

The better you perform in these areas over an extended time, the more likely you are to qualify for a loan.

Saving for a deposit

It’s easy to say; harder to achieve, but saving 5-10% of the property value for your deposit will increase your level of suitability to the lender. The act of saving a deposit also proves to the lender that you have the discipline to service a loan.

To avoid paying lenders’ mortgage insurance (LMI), an investor typically needs 20% deposit, plus enough money to cover up-front costs of stamp duty, legal fees and other government charges.

If the prospect of saving a 20% deposit is inconceivable, you can consider other methods to avoid LMI (which usually costs between .5 and 1% of the loan amount), such as approaching a family of friend to be a guarantor to help you complete the deposit.

Guarantee loans allows another person, usually a family member, to use the equity in their own home as additional security for a portion of your loan amount, and are available from several banks and lenders.

Type of investment property

By finding the right type of property, an investor can also increase their chances of qualifying for a loan. Lenders are more likely to lend money on a property located in an area of predicted capital growth, good buyer sentiment and demand, showing higher than average rental yield, and of course, at a good price.

The good news is that the lender will also take estimated rental income that would be generated from the investment property into account when estimating your borrowing capacity. If the property has a relatively high yield, such as 3-5%, then this boosts your ability to service the loan.

If you’re investing in property to generate wealth, you should consult a range of professionals including an accountant, financial planner, a local mortgage broker and agents.

Low-income earners face a daunting task when it comes to entering the investment property arena, but every long journey began with taking the first step, and many of reached their goals.

Granny Flat or Home and Income

Buying Property With A Home and Income or Granny Flat

You may be one of many around the world who are considering buying a property with a home and income or granny flat.

If so, it could be for a host of purposes, and despite the name, it could be for a reason other than accommodating an elderly parent. You may have one or more “boomerang children” in tow – adult children who have returned temporarily to enjoy the multiple benefits of living at home. Or, you may be seeking additional income from renting your granny flat or need an office for your home business. Whatever your reason, the advantages of owning a property with a second living space on the same block of land are obvious and many.

With residential space in cities becoming rarer and properties owners looking for creative ways to maximise their income, granny flats are becoming the new black in real estate. Granny flats can either be attached or unattached to the main residence, but in all cases, smaller. They are often self-contained with kitchen, bathroom and living areas. In many countries – if the self contained unit is bigger than 60 square metres they cease to be a granny flat, and are then classified as another primary dwelling. Buyers need to be aware that when it comes to granny flats (or secondary dwellings as they are commonly called in the legal sense), there are different laws for each country and local councils applying to their building and renting. Different laws apply to the size of a block of land where a secondary dwelling can be built, the type of access, and in some cases, even the legality of collecting rent. So when buying a property with a granny flat, besides familiarising yourself with the appropriate laws at a local level, your first priority should be finding out if the dwelling is legal with all appropriate compliance paperwork in place. Should I buy a house with a granny flat? So what are the benefits and risks of buying a property with a granny flat?

The benefits of a Home and Income

Accommodating family members There is no doubt that part of the reason behind the exploding popularity of granny flats is the win-win solutions they provide for extended families. An elderly parent can live affordably onsite, while fulfilling the role of a handy babysitter. By paying mates-rates rent, an adult child can quickly save up for a deposit for their own house or an overseas odyssey. Extra rental income With new accommodation websites such as Airbnb or the possibilities of marketing an additional living space are now limitless. Granny flats can become handy earners.

Spreading your risk If you have only one investment property, an extended vacancy can be cruel, but with the addition of a granny flat, you immediately have another rental income. The likelihood of two vacancies at the same time is highly unlikely. More tax depreciation If the granny flat is new, and is being rented, then the owner has the opportunity to claim depreciation. Before making a decision based on depreciation, you should first talk with a professional who can advise you on depreciation schedules.

The risks involved with a Home and Income or Granny Flat

Increased property management costs An extra dwelling brings extra responsibilities and maintenance costs, particularly if there’s plumbing. It may be vacant The original purpose for your buying a property with a granny flat may change. The boomerang child may move out or you may no longer need a home office. If the granny flat is vacant for an extended period, maintenance will still be needed. Often, a vacant dwelling deteriorates more quickly than one that is occupied, and the last thing you need is a backyard eyesore. You may reduce your rental market or resale potential

When it comes to reselling, the presence of a granny flat will reduce the size of your pool of potential buyers, and therefore may lead to a lower price than otherwise possible in a tight market. Subdividing possibility on a bigger block, the granny flat could effectively stop you from subdividing into two titles.

Granny flats have outgrown their name. Multipurpose, adaptable, young and hip, these little dwellings can add a valuable punch to any property if handled wisely.