Investment Property Refinance, Made easy!

The clever investor knows that assessing your investments regularly is key to identifying opportunities to build wealth. Knowing when to refinance an investment property could be vital to a successful strategy. So is now the time for you to refinance?

Talk to us and we’ll help you to decide! There are some very competitive interest rates available from a variety of lenders.

In this article, we cover some of the common questions we get from our property investor customers – and if you do decide you’re ready to refinance, you can rely on us to make it easy!

Why should I refinance my investment property?

There are two main reasons why you may want to refinance your investment property. These are to access your equity, or to change to a different loan.

If you’d like to expand your investment portfolio, refinancing to access your equity could be a good move. You could potentially use your equity as a deposit to buy another property, or to take advantage of some other kind of investment opportunity – talk to your financial planner to see what strategy is right for you.

Accessing your equity to renovate could also be a good move. It could help you add value to your investment property, fast-track its capital growth and perhaps improve the rental value to increase cash-flow.

What kinds of fees are involved?

The costs involved in refinancing an investment property exiting your existing loan and setting up another are usually tax-deductable. That includes the borrowing expenses and any exit fees or penalties. In the first five years of owning your investment property, you can usually claim borrowing expenses back incrementally, and if you refinance within that timeframe, you can claim the remaining tax deductions immediately. Talk to your tax accountant about the benefits appropriate to your situation. If you don’t have one, we’ll be happy to help you with a referral.

Should I use one lender or multiple lenders?

Professional investors often prefer to use multiple lenders to avoid cross-collateralisation. Cross-collateralisation is where you secure a loan against two or more properties instead of one – which can be inconvenient when the time comes to sell, and risky if property prices should fall. If you use one lender, your properties may be cross-collateralised by default. Having said that, some investors may prefer to use one lender. Overall, it depends on your individual financial situation, goals and the size of your investment portfolio, whether you may choose to go with one lender or several. Talk to us and we’ll help you decide which loan structure is right for you.

Should I refinance all my investments at the same time?

If you’re reviewing one mortgage, you might as well ask us to assess all of your investment loans to make sure they are up to scratch. You may decide you are happy with the deal you are receiving for some of the loans, and only proceed with refinancing others. Or you may decide it’s time to change the way all your loans are structured and if so, we’re here to help.

Talking to your financial planner or tax accountant is also a good idea, to make sure refinancing is the right strategy for you financially. If you’d like to chat or explore the kinds of investment loan options out there, please get in touch today. We’d love to help you find the right finance to fulfill your needs!

Speak to our highly experienced and qualified broker today!

8 Signs Of A Suburb Property Boom

Any smart investor will know that you make your money when you buy, not when you sell. In property, the investor’s secret to success is to buy into a city or suburb that is about to boom, meaning you get in before prices rise and enjoy the wealth that comes from the growth.

Unfortunately, it’s a lot easier said than done. If it was easy, everyone would be making a fortune from real estate. It can be very hard to tell when a suburb is about to boom, but there are a couple of key indicators that you should look out for.

  1. Lower vacancy rates

Low vacancy means that there is either a shortage of rental accommodation on the market or the number of tenants has increased. In general, the market is balanced when the vacancy rate sits at around 3%. When the rate is below 3%, there is a shortage of rental properties for the tenant pool available and above 3% means there is a surplus.

A falling vacancy rate usually causes increases in rent as investors will take advantage of the higher demand relative to the number of properties in that suburb or area. An easy way to find out is using SQM Research’s postcode checker here, you can see the historic vacancy rate figures, the longer term average and what it’s currently sitting at.

  1. Higher yields

Because renters are flexible and can move more freely than owner-occupiers, they will often be the first to move to popular suburbs. The increase in demand will push rents up which means yield growth.

In the below example the rental yield is 4.55%

Property purchase price = $400,000

Weekly rent = $350

(350 x 52) / 400,000 x 100 = 4.55%

If you want to determine a more accurate yield, or the net rental yield which is the same yield after costs are taken into consideration you can use this formula.

Net rental yield = (Annual rental income – Annual expenses) / (Total property costs) x 100

There are lots of tools to give you a broad suburb view on what the average rental yield is, including RealEstate.com.au which gives a fairly broad calculation – this uses the median advertised rental figure, calculated on property sales over the past 12 months so it isn’t going to be accurate to a specific property but can help you narrow down your suburb criteria. You can also look at this great tool at SuburbView to understand the average price broken down by property type, amount of bedrooms and average rental yield.

Fewer days on market

This one is pretty straight forward. If demand increases, supply decreases or both, buyers will be quick to purchase property because scarcity creates demand. When demand exceeds supply, the average days on market will therefore be lower because there are more prospective buyers per property.

A way of quickly checking this is again using RealEstate.com.au you can look at a metric they call Market Demand, which is calculated by the number of visits to realestate.com.au/buy per listing per month with the assumption being more people viewing the property means there is more demand, compared to when there are less people viewing the property there is therefore less demand.

You can view the Average Days on market using a suburb report from HomeSales.com.au as well, which at the top of the suburb profile shows how many days people own the property, in the case of Brisbane LGA (postcode 4000) units in Brisbane take an average of 77 days to sell meaning they can be on the market much longer than suburbs like Paddington (postcode 4064) which only has an average of 63 days on the market for units, and only 35 days for houses showing higher demand.

  1. Increasing number of auctions

Auctions historically work better when demand is strong. When there’s lots of demand, buyers will be more willing to outbid each other which results in higher prices for the vendor. Therefore, if there are more auctions than usual in a particular suburb, it could mean that market is getting hot.

It is worth remembering that auction clearance rates are generally more applicable in New South Wales, Victoria, ACT and South Australia as their purchase contracts are less flexible for buyers meaning more properties are sold at auction, compared to private treaty (a non auction sale). Whereas in Queensland, Western Australia and Tasmania buyers tend to prefer non-auctions as they can sign contracts subject to finance and other conditions.

A quick way of tracking Auction Results in your local area is using RealEstate.com.au and investigating your suburb to see if it sold at, or prior to auction and for what value.

  1. Less vendor discounting

Discounting refers to a situation where the final sale price is lower than the asking price of a property. At times when supply exceeds demand, buyers have more bargaining power because there are lots of options on the market for them to choose from, so vendors may have to accept a lower price. On the other hand, when supply is scarce, buyers need to compete on price so vendors are much less likely to drop the price of their property.

Similar to days on market, HomeSales.com.au shows the Average Vendor Discounting meaning how much the list price is reduced from the initial value to the final agreed value. As an example you might be able to get a better deal, or the vendors will be more willing to negotiate in Paddington (postcode 4064) with average vendor discounting of around 5% compared to Albany Creek (postcode 4035) which interestingly has vendor discount of -1.43% meaning they may market properties asking for offers over $400,000 and sell for $410,000 or showing there is higher demand in this type of market.

  1. Infrastructure growth

An increase in development plans and public transport in a particular location is a sign that the government is expecting a population boost. Check the council website and community news to keep track of any announcements about public amenity and infrastructure. Or some smaller websites you can check out include Brisbane Development, The Urban Developer or Build Sydney to keep up to date with recently submitted plans and works.
>New Train Stations
>Larger Bus Stations
>Wider High ways
>Hospitals  Opening or Expanding
>New Schools

  1. New developments/redevelopment

Let someone else do the research for you. If a suburb has new developments or redevelopments planned, it’s an indication that a developer believes the suburb is likely to boom soon. You can again refer to Brisbane Developer, or The Urban Developer to keep in touch with upcoming projects or if you wanted to get an idea of your local zoning or see if your neighbour was going to build a new development you can check out your local council website – in the case of Brisbane this is called PDOnline and it shows any development approvals, plans that have been submitted or developments that have been approved on specific streets.

  1. Less stock on the market

If you notice that there are less properties on the market in your suburb than usual, this could be because no one is willing to let go of their homes because the area is doing well with good capital growth and/or yields. There are a few ways to investigate this, but they mostly include looking at RealEstate.com.au and understanding the current listings and number of listings in an area, speaking with local agents or again researching specific suburbs here.

  1. But how do I know if a suburb is about to boom?

All of these factors will ultimately influence if a suburb is about to take off, or the opposite if it is about to go into a decline. To find these places you should work with a Zenith Property Consulting Representative that will be able to guide you to a solid investment.

Any smart investor will know that you make your money when you buy, not when you sell. In property, the investor’s secret to success is to buy into a city or suburb that is about to boom, meaning you get in before prices rise and enjoy the wealth that comes from the growth.

Unfortunately, it’s a lot easier said than done. If it was easy, everyone would be making a fortune from real estate. It can be very hard to tell when a suburb is about to boom, but there are a couple of key indicators that you should look out for.

  1. Lower vacancy rates

Low vacancy means that there is either a shortage of rental accommodation on the market or the number of tenants has increased. In general, the market is balanced when the vacancy rate sits at around 3%. When the rate is below 3%, there is a shortage of rental properties for the tenant pool available and above 3% means there is a surplus.

A falling vacancy rate usually causes increases in rent as investors will take advantage of the higher demand relative to the number of properties in that suburb or area. An easy way to find out is using SQM Research’s postcode checker here, you can see the historic vacancy rate figures, the longer term average and what it’s currently sitting at.

  1. Higher yields

Because renters are flexible and can move more freely than owner-occupiers, they will often be the first to move to popular suburbs. The increase in demand will push rents up which means yield growth.

In the below example the rental yield is 4.55%

Property purchase price = $400,000

Weekly rent = $350

(350 x 52) / 400,000 x 100 = 4.55%

If you want to determine a more accurate yield, or the net rental yield which is the same yield after costs are taken into consideration you can use this formula.

Net rental yield = (Annual rental income – Annual expenses) / (Total property costs) x 100

There are lots of tools to give you a broad suburb view on what the average rental yield is, including RealEstate.com.au which gives a fairly broad calculation – this uses the median advertised rental figure, calculated on property sales over the past 12 months so it isn’t going to be accurate to a specific property but can help you narrow down your suburb criteria. You can also look at this great tool at SuburbView to understand the average price broken down by property type, amount of bedrooms and average rental yield.

Fewer days on market

This one is pretty straight forward. If demand increases, supply decreases or both, buyers will be quick to purchase property because scarcity creates demand. When demand exceeds supply, the average days on market will therefore be lower because there are more prospective buyers per property.

A way of quickly checking this is again using RealEstate.com.au you can look at a metric they call Market Demand, which is calculated by the number of visits to realestate.com.au/buy per listing per month with the assumption being more people viewing the property means there is more demand, compared to when there are less people viewing the property there is therefore less demand.

You can view the Average Days on market using a suburb report from HomeSales.com.au as well, which at the top of the suburb profile shows how many days people own the property, in the case of Brisbane LGA (postcode 4000) units in Brisbane take an average of 77 days to sell meaning they can be on the market much longer than suburbs like Paddington (postcode 4064) which only has an average of 63 days on the market for units, and only 35 days for houses showing higher demand.

  1. Increasing number of auctions

Auctions historically work better when demand is strong. When there’s lots of demand, buyers will be more willing to outbid each other which results in higher prices for the vendor. Therefore, if there are more auctions than usual in a particular suburb, it could mean that market is getting hot.

It is worth remembering that auction clearance rates are generally more applicable in New South Wales, Victoria, ACT and South Australia as their purchase contracts are less flexible for buyers meaning more properties are sold at auction, compared to private treaty (a non auction sale). Whereas in Queensland, Western Australia and Tasmania buyers tend to prefer non-auctions as they can sign contracts subject to finance and other conditions.

A quick way of tracking Auction Results in your local area is using RealEstate.com.au and investigating your suburb to see if it sold at, or prior to auction and for what value.

  1. Less vendor discounting

Discounting refers to a situation where the final sale price is lower than the asking price of a property. At times when supply exceeds demand, buyers have more bargaining power because there are lots of options on the market for them to choose from, so vendors may have to accept a lower price. On the other hand, when supply is scarce, buyers need to compete on price so vendors are much less likely to drop the price of their property.

Similar to days on market, HomeSales.com.au shows the Average Vendor Discounting meaning how much the list price is reduced from the initial value to the final agreed value. As an example you might be able to get a better deal, or the vendors will be more willing to negotiate in Paddington (postcode 4064) with average vendor discounting of around 5% compared to Albany Creek (postcode 4035) which interestingly has vendor discount of -1.43% meaning they may market properties asking for offers over $400,000 and sell for $410,000 or showing there is higher demand in this type of market.

  1. Infrastructure growth

An increase in development plans and public transport in a particular location is a sign that the government is expecting a population boost. Check the council website and community news to keep track of any announcements about public amenity and infrastructure. Or some smaller websites you can check out include Brisbane Development, The Urban Developer or Build Sydney to keep up to date with recently submitted plans and works.
>New Train Stations
>Larger Bus Stations
>Wider High ways
>Hospitals  Opening or Expanding
>New Schools

  1. New developments/redevelopment

Let someone else do the research for you. If a suburb has new developments or redevelopments planned, it’s an indication that a developer believes the suburb is likely to boom soon. You can again refer to Brisbane Developer, or The Urban Developer to keep in touch with upcoming projects or if you wanted to get an idea of your local zoning or see if your neighbour was going to build a new development you can check out your local council website – in the case of Brisbane this is called PDOnline and it shows any development approvals, plans that have been submitted or developments that have been approved on specific streets.

  1. Less stock on the market

If you notice that there are less properties on the market in your suburb than usual, this could be because no one is willing to let go of their homes because the area is doing well with good capital growth and/or yields. There are a few ways to investigate this, but they mostly include looking at RealEstate.com.au and understanding the current listings and number of listings in an area, speaking with local agents or again researching specific suburbs here.

  1. But how do I know if a suburb is about to boom?

All of these factors will ultimately influence if a suburb is about to take off, or the opposite if it is about to go into a decline. To find these places you should work with a Zenith Property Consulting Representative that will be able to guide you to a solid investment.

Any smart investor will know that you make your money when you buy, not when you sell. In property, the investor’s secret to success is to buy into a city or suburb that is about to boom, meaning you get in before prices rise and enjoy the wealth that comes from the growth.

Unfortunately, it’s a lot easier said than done. If it was easy, everyone would be making a fortune from real estate. It can be very hard to tell when a suburb is about to boom, but there are a couple of key indicators that you should look out for.

  1. Lower vacancy rates

Low vacancy means that there is either a shortage of rental accommodation on the market or the number of tenants has increased. In general, the market is balanced when the vacancy rate sits at around 3%. When the rate is below 3%, there is a shortage of rental properties for the tenant pool available and above 3% means there is a surplus.

A falling vacancy rate usually causes increases in rent as investors will take advantage of the higher demand relative to the number of properties in that suburb or area. An easy way to find out is using SQM Research’s postcode checker here, you can see the historic vacancy rate figures, the longer term average and what it’s currently sitting at.

  1. Higher yields

Because renters are flexible and can move more freely than owner-occupiers, they will often be the first to move to popular suburbs. The increase in demand will push rents up which means yield growth.

In the below example the rental yield is 4.55%

Property purchase price = $400,000

Weekly rent = $350

(350 x 52) / 400,000 x 100 = 4.55%

If you want to determine a more accurate yield, or the net rental yield which is the same yield after costs are taken into consideration you can use this formula.

Net rental yield = (Annual rental income – Annual expenses) / (Total property costs) x 100

There are lots of tools to give you a broad suburb view on what the average rental yield is, including RealEstate.com.au which gives a fairly broad calculation – this uses the median advertised rental figure, calculated on property sales over the past 12 months so it isn’t going to be accurate to a specific property but can help you narrow down your suburb criteria. You can also look at this great tool at SuburbView to understand the average price broken down by property type, amount of bedrooms and average rental yield.

Fewer days on market

This one is pretty straight forward. If demand increases, supply decreases or both, buyers will be quick to purchase property because scarcity creates demand. When demand exceeds supply, the average days on market will therefore be lower because there are more prospective buyers per property.

A way of quickly checking this is again using RealEstate.com.au you can look at a metric they call Market Demand, which is calculated by the number of visits to realestate.com.au/buy per listing per month with the assumption being more people viewing the property means there is more demand, compared to when there are less people viewing the property there is therefore less demand.

You can view the Average Days on market using a suburb report from HomeSales.com.au as well, which at the top of the suburb profile shows how many days people own the property, in the case of Brisbane LGA (postcode 4000) units in Brisbane take an average of 77 days to sell meaning they can be on the market much longer than suburbs like Paddington (postcode 4064) which only has an average of 63 days on the market for units, and only 35 days for houses showing higher demand.

  1. Increasing number of auctions

Auctions historically work better when demand is strong. When there’s lots of demand, buyers will be more willing to outbid each other which results in higher prices for the vendor. Therefore, if there are more auctions than usual in a particular suburb, it could mean that market is getting hot.

It is worth remembering that auction clearance rates are generally more applicable in New South Wales, Victoria, ACT and South Australia as their purchase contracts are less flexible for buyers meaning more properties are sold at auction, compared to private treaty (a non auction sale). Whereas in Queensland, Western Australia and Tasmania buyers tend to prefer non-auctions as they can sign contracts subject to finance and other conditions.

A quick way of tracking Auction Results in your local area is using RealEstate.com.au and investigating your suburb to see if it sold at, or prior to auction and for what value.

  1. Less vendor discounting

Discounting refers to a situation where the final sale price is lower than the asking price of a property. At times when supply exceeds demand, buyers have more bargaining power because there are lots of options on the market for them to choose from, so vendors may have to accept a lower price. On the other hand, when supply is scarce, buyers need to compete on price so vendors are much less likely to drop the price of their property.

Similar to days on market, HomeSales.com.au shows the Average Vendor Discounting meaning how much the list price is reduced from the initial value to the final agreed value. As an example you might be able to get a better deal, or the vendors will be more willing to negotiate in Paddington (postcode 4064) with average vendor discounting of around 5% compared to Albany Creek (postcode 4035) which interestingly has vendor discount of -1.43% meaning they may market properties asking for offers over $400,000 and sell for $410,000 or showing there is higher demand in this type of market.

  1. Infrastructure growth

An increase in development plans and public transport in a particular location is a sign that the government is expecting a population boost. Check the council website and community news to keep track of any announcements about public amenity and infrastructure. Or some smaller websites you can check out include Brisbane Development, The Urban Developer or Build Sydney to keep up to date with recently submitted plans and works.
>New Train Stations
>Larger Bus Stations
>Wider High ways
>Hospitals  Opening or Expanding
>New Schools

  1. New developments/redevelopment

Let someone else do the research for you. If a suburb has new developments or redevelopments planned, it’s an indication that a developer believes the suburb is likely to boom soon. You can again refer to Brisbane Developer, or The Urban Developer to keep in touch with upcoming projects or if you wanted to get an idea of your local zoning or see if your neighbour was going to build a new development you can check out your local council website – in the case of Brisbane this is called PDOnline and it shows any development approvals, plans that have been submitted or developments that have been approved on specific streets.

  1. Less stock on the market

If you notice that there are less properties on the market in your suburb than usual, this could be because no one is willing to let go of their homes because the area is doing well with good capital growth and/or yields. There are a few ways to investigate this, but they mostly include looking at RealEstate.com.au and understanding the current listings and number of listings in an area, speaking with local agents or again researching specific suburbs here.

  1. But how do I know if a suburb is about to boom?

All of these factors will ultimately influence if a suburb is about to take off, or the opposite if it is about to go into a decline. To find these places you should work with a Zenith Property Consulting Representative that will be able to guide you to a solid investment.

Investors Getting Savvy With Tax Breaks

Property investors are using tax depreciation in higher numbers and more quickly than ever before, new data suggests. Tax depreciation specialist BMT has reported that 15 per cent more people ordered depreciation schedules in 2014/2015 compared to the previous financial year. BMT found that it took investors an average of 281 days to order a depreciation schedule after purchasing their property during 2013/2014.However, that figure dropped to an average of 245 days during May, a decrease of 12.8 per cent. BMT chief executive Brad Beer said the data suggests an increasing number of investors are becoming more sophisticated in understanding […]

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There Is Only One Place In Australasia To Be Buying Real Estate Right Now!

          The CEO of McGrath Estate Agents Believes the buying a property in South East Queensland is the best location for the next 3-5 years. And he also thinks Sydney’s housing boom has just about run its course. south East Queensland is his top pick of everywhere to buy in Australasia at the moment. Sydney has experienced 40% growth in the last few years and its almost topped out.  He said that he can’t think of anywhere better to invest than in the South East of Queensland, centered on Brisbane, in the next 3-5 years for […]

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Australia In Property Bubble: 1 in 3 Investors

        More than 30 per cent of investors believe the country is in the midst of a property bubble, despite a clear majority saying now is still a good time to buy, according to new research. The latest Smart Property Investment Investor Insight Survey reveals 32.3 per cent of investors think Australia is currently experiencing a property bubble. Just over 54 per cent said there was no property bubble and a further 13.5 per cent were unsure. Last month, ASIC chairman Greg Medcraft expressed concerns about the “historic highs” of the Sydney and Melbourne property markets and cautioned that the two cities have the characteristics of a bubble. Mr […]

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Banks Gets Tough On Investment In NSW

  Lenders are continuing to make moves to crack down on investor activity, with more restrictions coming into play from today. Smart Property Investment has previously reported that banks including Bankwest, CBA, ANZ and Westpac have introduced a raft of changes to their serviceability and borrowing requirements for investors as regulators try to reign in investor activity. All changes thus far have been nationwide, with SQM Research managing director Louis Christopher noting it was “interesting” that none of the banks appeared to be making geographically-targeted policy changes. However, ING Direct has today released new loan-to-value ratio (LVR) parameters, with dramatic drops flagged for […]

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Future Tax Policy’s Changes To Negative Gearing

Despite Prime Minister Tony Abbott recently ruling out changes to negative gearing, the debate about the tax policy’s future rages on. Asked directly last week if he would rule out changes to negative gearing, Mr Abbott said: “Yes” – a statement welcomed by the Property Council of Australia today. “As far as statements go, this was pretty definitive and it provides a level of certainty to the 36,000 nurses, 54,000 teachers and 62,000 clerical staff who negatively geared a property in the 2012 financial year,” said Ken Morrison, chief executive of the Property Council of Australia. “So for them, the Prime Minister’s […]

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