Choosing the right Industry Professionals
When a homeowner, spec builder or developer engages a real estate agent, that agent is the sellers representative in the market for that property and is legally responsible to the seller to gain the best possible sale outcome. Local real estate agents and display home consultants generally have access to a range of stock limited to within their local community or franchise area.
A buyer’s agent acts for the buyer to source a qualified selection of properties that fit the buyers needs and represent the buyer during the entire purchasing process including negotiating the best possible terms and conditions from the seller leading to settlement. Buyer’s agents work closely with developers and stock wholesalers to source property under commericial terms not offered to retail buyers.
They may include:
- Licensed investment property advisor
- Licensed finance broker
- Insurance provider
- Property leasing manager
- Quantity surveyor
- If you are investing via your self managed superannuation fund you will also need a financial planner for specialist SMSF advice
If you plan to conduct your own due diligence you will need to project manage the outsourced providers and coordinate their services in a manner so there are no gaps in the delivery chain. Those gaps will cost you time and money at the very least
Finding an Investment Property
In selecting an investment property it is critical that you follow a strict due diligence process to ensure an effective investment strategy. Condensed from our detailed checklist, investigations must include research into the following:
- Location - look at where people want to rent
- Value for money - buy at current market value or less
- Infrastructure - investigate current and planned infrastructure
- Rental return - minimum of a 4% yield, perferably higher
- Design and finishes - design and finishes must meet tenant demand
- Quality and integrity of developer - investigate past projects and delivery risk
- Correct legal structure - what suits you, your family and your tax position
- Finance - consider all the terms and conditions as a whole
Successful property investing requires that you understand all these factors and how they combine to make your property a valuable investment
Off the Plan vs Completed Property vs Custom Built Property
Property investment is generally across three sectors:
- Traditional house and land packages (custom or completed)
- Apartments (taller buildings with lifts)
- Townhouses (low rise buildings including a courtyard)
Additionally these may be:
- "Completed projects' - completed and available for immediate settlement
- "Custom Build" - an investment home that is built to order
- "Off the plan" - an apartment project where the completion of the project is in the future
- "NRAS" - The National Rental Affordability Scheme
Investors who enter into a contract to purchase a property before it is completed are buying “off the plan” and will select their property from the builder or developer’s floor plans.
Considerations for an off the plan purchase:
- A lower entry price into the property market compared to its future completed value with the expectation that the property will go up in value prior to settlement
- That the settlement is in the future and you have structured your portfolio mix in advance
- Low barrier to entry due to insurance instruments such as deposit bonds in lieu of a traditional deposits are often acceptable to secure the property
- Suitable for SMSF buyers
- The opportunity to create a larger portfolio in a smaller timeframe when combining strategies
- You will take on the future valuation risk of the property, if it goes down in value you will have to increase your equity contribution
Considerations for a completed property:
- Short time period to settlement 1 to 2 months
- Known valuation for immediate funding equals lower risk
- Known rental return or perhaps already has tenants in place
- you may start claiming your maximum tax deductions immediately after settlement
- Suitable for SMSF buyers
Considerations for a custom built property:
- Opportunity to customised the build in regard to fit and finishes and also your budget
- The purchase of just the land initially means that you will only pay stamp duty on that amount, not the cost including construction. This saving can be many thousands of dollars when compared to paying the stamp duty on the total cost of the completed property.
- You will need to service or capitalise the loan interest during construction. In our current very low interest rate environment this extra interest is almost always less than the stamp duty saving in many cases.
- At the time this document was written, it is not legal for the investor to finance progress payments to the builder under a complying 1-part contract for a SMSF/ The land developer and the builder must enter into a form of joint venture agreement known as a builder's deed where the lend seller are both paid on completion. We have pre-negotiated deeds with a select range of builders and developers to provide custom built homes for SMSF buyers.
In all cases when a property is brand new the depreciation is maximised on the internal fixtures and fittings and the building costs. Your quantity surveyor will prepare a report required by your account prior to preparing your tax returns. Many developers will provide these reports in advance so a more accurate forecast of the real cost after depreciation and tax can be assessed during the pre-finance phase.
If you are buying an older or established property your maintenance budget will be higher and your deductions will be less as compared to the same property new
Custom design homes & turn key investment packages are the cornerstone of Green Earth Homes business
It is rare for individual investors to personally hold all the skills required and also have the time to perform these tasks at a professional level. We take the effort and confusion out of building your future wealth via residential property investment. We provide a full range of services from research, due diligence, negotiation, and acquisition of the property through to the cash-flow analyses, tax considerations, funding and leasing plus the ongoing tenant management. We have an established and proven expertise in the management of a wide range of investment property transactions, this is what we do, all day, every day. This service has a particular appeal to private clients and professional investors who:
- Understand the value of our professional advice
- Who don't have the time or,
- Who don't have the expertise to negotiate the minefield of compliance and commerce in dealing with the multitude of service providers concurrently required to successfully and safely acquire investment properties.
The acquisition is just the start of your journey, not securing or finding new tenants is one of your biggest risks moving forward. Our relationship with you is ongoing as your property managers. Green Earth Homes will safely guide you to your goals of wealth creation through property investment. We will successfully manage the process with due regard to financial risk management and timely performance, which has proven cost and time benefits. We have developed our own finance structures for funding in conjunction with experienced Financial Planners and Mortgage Brokers; provision of these safe and reliable structures are available during the due diligence process as part of our service. Our processes simply requires the borrower to be available for a call with our fully licensed and qualified advisors after which we will produce an executive summary containing the relevant information for an initial recommendation as to your borrowing capacity followed by an investment location.
Why Green Earth Homes?
Green Earth Homes is focused on delivering the highest service to our clients throughout the entire property investment process. Research and experience form the basis of the recommendations made by Green Earth Homes in relation to rising growth markets and identification of valuable purchasing opportunities. We act for you.
We work closely with leading property developers in a variety of locations and have access to the finest selection of land within master planned communities, often before they are made available to the public. We also conduct ongoing due diligence on a diligence on all existing projects against our strict benchmarks.
Each approved location has undergone an extensive due diligence process considering such criteria as high growth areas, current market value and high rental return among others which collectively set the benchmarks for Green Earth Homes to recommend property to both our direct clients and the clients of our business partners.
At Green Earth Homes we understand that every person’s property investment objectives and experience differ. Many clients have just discovered wealth creation and others already enjoy the benefits of large portfolios built up over a number of years with us. Green Earth Homes, along with our financial specialists will analyse your current situation and combine this knowledge with our interpretation of the current market data to assist you in your investment strategies.
Green Earth Homes prides itself on having a wide range of quality properties at affordability levels to suit the individual requirements for each client to choose from. We’ve assisted a large number of people from different backgrounds realise their property investment potential and we’ll support you to do the same.
We do not receive a commission from the property vendor or the funder; we are a builder not a sales agent. All our advisory work is provided without obligation to qualified investors. To be qualified, we simply need to establish that you have a suitable financial capacity and desire to invest in property. This is an easy process we can work on together.
For more information please contact us on 07 5476 6468 or at email@example.com