Australia’s Proposed Rent Freeze.  Will it get up?

Australia’s Proposed Rent Freeze. Will it get up?

Australia’s proposed rent freeze that is presently before the parliament has been closely watched closely by industry commentators along with most Real Estate agents like Suzana Wade, Principal, & Licensee of Locate Property in Brisbane. She believes that the rent freeze is a terrible idea that could have serious negative effects on both landlords and tenants because she is a real estate expert with years of experience in the field.

For a set period of time, a rent freeze would set a cap on how much landlords could raise the rent on their properties. While it might seem like a good idea to shield tenants from rising housing costs, in the long run, it might backfire. A rent freeze, in Suzana’s opinion, would result in several undesirable outcomes, including:

  • Rent freezes would make it less appealing for landlords to make improvements to and keep up the standard of maintenance on their properties. If landlords are unable to raise their rents, they might not have the money to make the required repairs and improvements, which would ultimately result in a decline in the caliber of rental properties.
  • Reduced availability of rental properties: Landlords may decide to sell their properties or put them to other uses, like short-term vacation rentals, if they are unable to raise rents to keep up with rising costs. This might result in a decline in the number of rental homes available, making it harder and more expensive for tenants to find suitable housing.
  • A rent freeze would also put landlords at risk, especially those who depend on rental income to cover their mortgage payments and other expenses. Landlords might be forced to sell their properties or run into financial trouble if they are unable to raise rents.

There has been a significant backlash against Australia’s proposed rent freeze as a result of these and other worries. Suzana and many others in the real estate sector think the proposal won’t likely pass. To make sure that any upcoming housing policies are just and advantageous for all parties involved, she nevertheless urges all landlords and tenants to stay informed and actively participate in the discussion.

For the REIQ’s own article on the matter please refer to that here – REIQ RENT FREEZE ARTICLE

Rent Vesting –  What is it?  How does it work?

Rent Vesting – What is it? How does it work?

Renting out a property that you own while paying rent to live somewhere else initially seems like a strange thing to do. But “rent vesting” is becoming more and more common, which is due to a mix of financial and lifestyle factors.

Why would you do that?

Gaining entry into the housing market is a key benefit of rent vesting. While 66% of Australian homes are owner-occupied, the percentage for people under the age of 35 is much lower at 50%.

Young adults are increasingly choosing to live with their parents, helping out with a little bit of board while also using a tenant to help pay off an investment property. It might make it possible to buy a house or invest in real estate more quickly than would otherwise be possible.

More and more “rent vestors” are renting homes in desirable suburbs where they can’t afford to buy while investing in a less desirable but potentially more profitable area. The variation in rental yields is what is causing this trend. In comparison to yields of over 6% offered in more affordable suburbs, rents in desirable neighborhoods typically run as low as 2%.

In the opposite circumstance, some people choose to rent inexpensively while purchasing a more expensive property, frequently in the hope that the investment property will experience a faster rate of capital growth.

Then there are those who want or need to move frequently but still want the security that owning a home can bring.

You’ll make it work if you want to. 

Despite how appealing the lifestyle advantages may be, rent vesting must also be financially viable. You must be able to afford your rent as well as any net costs associated with your investment property, at the very least.

Long-term, rent vesting also aims to put you in a better financial position than you would be in otherwise, so it’s important to understand the real estate market and form an opinion on price trends.

Additionally, there are a number of tax considerations to keep in mind, both good and bad:

  • If the expenses for your investment property (interest payments, council rates, insurance, agent fees, etc.) exceed the rental income, or if the property is negatively geared, you may be able to claim a tax deduction against your earned income.
  • Any excess of rental income over expenses is taxed at your marginal tax rate.
  • You must use your after-tax income to pay the rent on the home you currently reside in.
  • While a profit from the sale of a primary residence is tax-free, any profit from the sale of a rental property is subject to capital gains tax.

Please visit the ATO for further advice or seek advice from your licensed Accountant

Is it suitable for you?

Do you like the thought of enjoying the sea views from your rented home while a tenant settles the mortgage on your prime investment in a burgeoning neighborhood? It might be worth investigating. Just make sure you comprehend the idea completely. Although they might not offer advice on direct real estate investment, your financial advisor can serve as a sounding board to make sure you have everything covered.

For any rent vesting advice or to enquire about a one-on-one with Suzana Wade from Locate Property, contact us today.        

Two Ways to Structure an Investment Property

Two Ways to Structure an Investment Property

Option 1: Positive Cash Flow Property

Structuring An Investment Property | Locate Property

Most Real Estate investors ideally try and target this kind type of structure for their investment property. Especially with the interest rates being at an all-time low. A historic low in fact. The idea is to achieve more rent from the property than all of the expenses to hold and operate that investment.

The great thing about a Positive Cashflow Property is that rents can cover expenses, management fees, property taxes, and insurance premiums-leaving you with extra income out of pocket. IE. Positive Cashflow

A Real Estate Investor can have the following when they invest in this type of structure:  1) Tax Benefits 2) Long Term Capital Gains 3) Excess Rental Income 4) Potential Appreciation. WHen this strategy is done right, this will allow for more properties to be added into one’s portfolio in a shorter amount of time.

Option 2: Negative Cash Flow Property

This is the traditional Real Estate Structure or the one that you hear the most when agents or talk about buying Property. This is also referred to as Negative Gearing. These days, most Real Estate Investors do not have this structure when they first start out in Real Estate Investing, but rather prefer to target a positive cash flow property instead due to the low-interest rates.

A Negative Cash Flow Property is when your income does not meet your expenses. In other words, the rent doesn’t cover all the bills/costs.

Positive and Negative Gearing What are they and which one should you aim  for? — Wealth Efficiency

This structure can have additional tax benefits such as the depreciation of the Real Estate Property and is popular amongst investors that are making the most of capital gains. Sydney Properties for example are more likely to be Negative Geared vs a Brisbane Property etc.

The investors in this structure are generally Real Estate Developers who will spend significant amounts of money to improve the Real estate market value. For a negative cash flow investor, their goal is not necessarily to produce a positive cash flow property, but rather it is to obtain a Real estate asset that will appreciate in value.  This Real Estate Investor structure their Real Estate investing for appreciation and gains down the line instead.

In order to do this type of Real Estate Investment correctly, thus protecting your downside risk, you need to be smart about the Real Estate Market that you are investing in.  This strategy is very Real Estate Market dependent, not all Real Estate Markets perform well in these times.

The structure that you choose will depend on your personal set of circumstances in the Real Estate Market, your Real Estate Goals, Real Estate Investment Education, and Real Estate Investment Experience.

Please seek Independent property-specific advice from a trusted professional before investing in property. The Property Market isn’t always up and your personal position dictates your ability to invest now just now but to be held in the event circumstances change.

Here Are 5 Ways To Reduce Tax On Your Investment Property

Here Are 5 Ways To Reduce Tax On Your Investment Property

It’s tax time! That means we’re all heading for our calculators (or accountants) to try and find out what sort of reprieve we can receive from the tax man.

Owning an investment property can be a great way to build wealth. However, with the ever-increasing costs of living in Sydney, Melbourne & now Brisbane.   It is important that investors get every last cent back on June 30th, 2021, and here are Locate Properties’ top 5 ways to maximize the return on your investment.  

Here are 5 ways to reduce tax on your investment property. 

1) Track all of your expenses 

Make Sure To Track All Your Expenses | Here Are 5 Ways To Reduce Tax On Your Investment Property | Locate Property

The property game is no different from any other taxing business, in order to win you must be able to account for all of your expenses. By using a property management software such as remind me, which has property specific reports built-in, including capital works reporting and depreciation tracking,  you can be sure that you are claiming back every cent possible

2) Appoint a Property Specialised Accountant

Appointing a property-specific accountant is a huge help when it comes to property tax. With knowledge of property and its depreciation rules, they are able to ensure that you have all the right supporting documents for each property claim that you make.

3) Be clear in your reporting & track expenses including trips to the property

Reporting & tracking expenses | Here Are 5 Ways To Reduce Tax On Your Investment Property | Locate Property

One of the biggest issues with property investors is the failure to track property-related expenses. This may be a trip to the property, getting a plumber in for an emergency call, or even a fitting from Bunnings. By having these expenses tracked with property-specific reports you can ensure that every cent is claimed back as a deduction

4)  Claim Plant and Equipment Depreciation

Property improvements such as new air conditioning units, or new hot water systems can all be written off. You are able to claim plant & equipment depreciation on these items, ensuring that you have appointed a Property Specialist Accountant.

5) Pay off the principal mortgage as quickly as possible

The more of your capital you can get rid of, the less amount of tax you will need to pay each year.  The reason behind this is property depreciation.  The capital amount will be able to be written off each year with the property being in your portfolio for more than 12 months.  If you pay down the principal quickly, you will reduce your tax payable on property assets.

**Disclaimer:  This article contains property investment and property management information. While care has been taken to ensure the property content is accurate at the time of publication, property details can change frequently. Locate Property makes no representations or warranties as to the accuracy of the property data contained herein, which may include linked websites that are not property specific or property representatives such as developers or agents.

5 Ways to Improve Your Home To Get The Highest Possible Rental Return

5 Ways to Improve Your Home To Get The Highest Possible Rental Return

The key to maximizing rental value is all about the little things. Even a small improvement can lead to significant increases in rent prices and Rental Value. In this blog post, we will share 5 home improvements that you can make to increase Rental Price for your property!

Take a look at improving your landscaping

Improving Your Homes Landscaping | 5 Ways to Improve Your Home To Get The Highest Possible Rental Return | Locate Property

A beautiful home will have a higher Rental Value, meaning you can charge more rent. Ranging from simple solutions, such as trimming trees, creating a pond or planting flowers to more complex solutions, such as installing a pool, there are many ways you can improve your landscaping to add significant value without breaking the bank.

Keep your walls freshly painted

Some Rental Properties will require tenants to paint the interior themselves. If you’re not into letting your property go without a fresh coat of paint, or if you don’t want to risk having the walls repainted by someone else and costing yourself money in the long-run, it might be worth considering painting rooms before it’s time to search for a new tenant.

Renovate your bathrooms and bedrooms

Freshen up your Rental Property by renovating bathrooms and bedrooms. This can range from simple upgrades, such as a new tub or shower head to more complex updates like installing a water-saving toilet or replacing an old carpet with hardwood flooring.

Increase the number of living spaces or bathrooms

Adding a second bathroom or an extra bedroom can turn your Rental Property into an investment where you have the potential for even more tenants on the same lease. In addition to that, creating more bedrooms will allow you to accommodate larger families looking for Rental Properties with plenty of room!

Make the property pet friendly

Make the property pet friendly to attract more tenants | 5 Ways to Improve Your Home To Get The Highest Possible Rental Return | Locate Property

Pets are a Rental Property’s best friend. Pet-friendly homes can considerably increase the attractiveness of your home to potential tenants. By opening up your investment property to pets, you’re opening up your chances of a higher rental return!

Make sure that you treat your investment like its a business.

Make sure that you treat your investment like its a business.

When questioned on their motives, most investors sight financial freedom as one of the major goals behind their investment property acquisition, this article will ensure that you treat your investment like its a business.

However, looking at the ‘bigger picture’ is crucial in ensuring you don’t wind up investing more time/money than the property is worth.

It’s crucial to ensure that you treat the investment like its a business from day 1 of the investment journey

A Business Should Be An Attractive Buy

Why did you acquire the property in the very first place? It is no use putting your hard-earned money into a property that will be difficult to leave when the time comes.

  • What is it that makes people want to live here?
  • What is the demand for properties in the area?
  • How many days are they on market? Etc

Any of these questions could lead to red flags and, most likely, an investment decision that may come to bite you later on. Ensure you always use foresight and apply calculated analysis during your purchase.

A Business Should Have Growth Potential

There is no point in getting into a business if it just going to stand still turning over a minor profit. Every element of a business needs to be able to cover its expenses and your investment property is no different.

To be able to scale you need to be able to leverage other people’s resources, like rental income, tax benefits, and any other income that allows you to minimize the risk in your investment and grow.

A Business Should be Able to Run Independently of You

You have a job and not a great paying one at that if your financial investments can’t work without you.

You definitely need to have your financial investments running like clockwork without the need for you to manage every decision or it simply isn’t worth it and you won’t be able to scale.

You need to be able to work rest and play without worrying over your financial investments. So treat your investment like its business and then you will understand time is worth more than cash, you are wealthy.

For more articles on trending Real Estate topics click HERE or the REIQ is also a great resource