New Investors - The Basics

New property investors need to be aware of certain things when they become landlords. the following topics are important to consider.


What do investors mean when they talk about "rate of return"?

Rate of return is a measure of profitability; it measures the annual income that an investment property will generate vs. the total cost of purchasing that property.

This is measured as a percentage figure.

For example:
If you purchased a property for $200,000 and rented it out for $200 p.w. you would be looking at an annual gross rate of return of 5.2% of your original purchase price.

Purchase cost - $200,000
Rental Income - $10,400 p.a. ($10,400 / 52 weeks = $200 p.w. rent)

$10,400 / $200,000 x 100 = 5.2%

Your annual gross income from the property is therefore 5.2% of what you have invested.


Things to keep in mind

You should always keep the following things in mind when determining your rate of return. These extra expenses should be subtracted from your gross rental income & they will effect the size of your return.

• Vacancy rate - your property could be vacant for a number of weeks if a tenant leaves and you need to find another one. Be conservative and allow 2-4 weeks for this.
• Maintenance - plumbing, electrics, roofs etc will all need repair from time to time. It's a good ideda to allow a certain amount of money for this each year.
• Management fees - it's a good idea to employ an agent to manage your property. Agents will arrange maintenance, find suitable tenants, reveiw rents and conduct inspections. There will be a fee for this service. Remember, you always get what you pay for.
• Insurance - insurance against damage, loss of rent and injury to tenants is a must. Talk to your solcitor and/or your chosen agent.
• Possible legal costs
• Annual council rates and land tax expenses

Special things to remember

• Have a good lease drawn up - your agent and/or your solicitor will ensure this is done properly.
• Make sure your lease protects you, your property and your income. It should also specify any extra "rules" you would like your tenant/s to abide by. Agents will advise you on this.
• Rent reveiws - these are rental increases over time. Increases in rent are necessary as inflation erodes the value of the dollar. You'll want to protect your income against this.
• Pick a property manager with experience and results. Your investment is too big to be mis-managed. Make sure you're comfortable with your chosen agent.
• If an agent is charging more than another there is usually a very good reason for it - they're worth it and have a very good track record.

Some of these tasks seem daunting and complicated. In reality a good property management agent will take all the stress out of being a landlord. The most important thing for you to do is consider all of your possible costs when buying a rental property. If you factor these expenses in from the start you won't have any surprises down the track.

Property is one of the most popular investment strategies in Australia and can help you create wealth. Immediate income whilst important isn't everything. Remember, as the years go by your investment property should increase in capital value. This capital value will be worth a great deal to you in the future, it will give you the option to borrow more or sell for an immediate cash return.

If you're looking to invest don't worry. Do your sums, get good advice and go for it!

For advice buying or selling - Halliwell First National Real Estate

http://www.halliwellfn.com.au/

Alan Halliwell - Director

So You Want to Try Selling at a Very High Price to See What Happens?

No Need to wait and see what happens, I can tell you what will happen right now!

YOU WON'T SELL!

That's right, you won't sell.

Why?

Because by over-pricing your home you help every other home on the market in the same category as yours sell. Period. (see buyers market explained)

Ok ok it sounds harsh but it has to.
The price you set on your property must be flexible enough to enter into bargaining but realistic enough to entice buyers to look. Over-pricing is the single biggest scare tactic you can unwittingly use against buyers. Buyers run a mile from over priced homes and trust me, they know what over-priced is. They study the market well before buying and recognise good value when they see it.

Good Value. There's a funny thing about good value. People are happy to pay for good value, most people don't try to negotiate below what is perceived as market "good value". Why? because they know the owner knows good value too and they don't wan't to push their luck.

Generally people are fair and decent & don't try you on. Remember, a good pricing strategy allows for negotiation anyway.


If you've been trying to sell and haven't maybe your pricing strategy needs to be looked at.

We at Halliwell First National are happy to help you with your pricing strategy. Come in a have a chat. You may hear things about your price that you don't want to but that's our job, It's also our job to be up front with you and talk to you about today's market and how we can help you sell.

For advice selling or buying - Halliwell First National Real Estate

http://www.halliwellfn.com.au/
(03) 6424 1496

Alan Halliwell - Director

Buyers Market Explained

Hello Again.

Devonport is in a "buyers" market. In fact most of the country is.
What exactly is a buyers market?

Basically a buyers market means that the market conditions favour the buyer. Sellers must be aware of this situation when setting an asking price for their home.

During a buyers markert the amount of homes on the market increases, this means that buyers have the luxury of picking and choosing between a wide selection of property.

Example:

Say a buyer is looking at 6 different homes. All of these homes are are very similar and would probably bring similar prices in any market at any time. Homes 1 to 5 are priced at around $250,000 but the owner of home 6 has decided to ask $280,000 hoping to get a higher price.

The buyer will go through a process of elimination until he/she singles one home out. Things like size, kitchen, bathroom, yard, location will come into play and so will price. In fact price is often the first thing buyers look at.

Why would our buyer even consider house no. 6 if the price is $30,000 higher than everybody else?
You may say that the buyer would make an offer... the fact is buyers get scared off by prices that are too high and as a result don't even bother simply because they have other options.

In these conditions buyers have the negotiating power and there is nothing we can do about it except be aware of it and price accordingly.

A skilled real estate agent should be bringing this point to the attention of their client.

A skilled real estate agent will also develop a pricing strategy that not only considers this situation but also allows space for negotiation.

It is a fine line but with the help of a skilled agent you should be able to determine a price that will work in today's market. If you're thinking of selling call for a chat today.

I'll leave you with a pearl of wisdom from Donald J. Trump:

"Over-priced homes are like old soldiers, they never die... they just fade away"

For advice selling or buying - Halliwell First National Real Estate

http://www.halliwellfn.com.au/

(03) 6424 1496

Alan Halliwell - Director

Sellers - First Impressions Are Everything

Make a good impression early

Sometimes I'll drive by a home for sale and think "I wouldn't even step foot inside that place" or "That looks like WAY too much work"

Whether these kind of thoughts are warranted or not is beside the point. The fact is that buyers will feel this way about some homes, especially if they don't make a good first impression.

Let me tell you, some homes sell for alot less simply because there were some maintenance jobs that needed doing. At the end of the day the maintenance work would have cost less than what got shaved off the asking price in the long run.

First impressions are so important when selling. You must have your home in A1 condition before going to market.

Buyers look for every reason possible not to buy "before" they sign a contract & look for every reason possible to confirm their purchase "after" they sign a contract.

With this simple rule in mind as a seller it is important to do everything possible to give buyers as few reasons as possible not to buy.

Basic Tips

• If the front of the house needs a paint get it done
• Front doors, gates & fences must be in order
• Keep the lawn mown and the garden in check
• The front of the house is it's "face" make sure it's smiling
• Angry dogs don't help, keep them out the back if possible
• Is your letter-box falling apart? If so get a new one
• Keep blinds open - sunlight sells
• Air fresheners, buyers love nice smells
• Keep pets locked up - puppies are cute, dirty paws aren't
• 3 rooms should always be clean and tidy - Bathroom - Kitchen - lounge. These 3 rooms are where life happes
• Fix any dodgy plumbing or electrics
• Wash down the walls with sugar soap
• Get a paint job if necessary

You need to make your home an empty canvas so the buyer can "paint" their own lives onto it. The buyer needs to be able to imagine living in your home. It will be easier for them to do that when the place is looking, smelling and feeling great.

For advice selling or buying - Halliwell First National real Estate

Director - Alan Halliwell

Haven't sold yet?

Are you getting frustrated?

Unfortunately many people, through no fault of their own don't receive the right advice in the first place. This can happen for various reasons but the end result is always the same, a home that hasn't sold with owners left feeling angry and frustrated.

It doesn't have to be this way.

It is extremely important for an agent to keep the people who have employed them (the home owner) informed on a regular basis. It is just as important for an agent to have an open discussion about current market conditions, promotion & strategies from day one.

Too often this is not done properly and unfortunately all parties concerned end up getting frustrated and become dis-heartened.

If you have been trying to sell but haven't been successful maybe it's time for a change.

I am more than happy to sit down with you and talk about what your options are with no obligtions to you whatsoever. At the end of the day isn't it better to have a second opinion if nothing else?

Call to make an appointment today.

For any advice about selling or buying - Halliwell First National Real Estate

www.halliwellfn.com.au
(03) 6424 1496

Alan Halliwell - Director

The Forgotten First Home "Sellers"

First Home "Sellers" - What this market means for you and all sellers

There has been lots of hype surounding first home buyers and what the current market conditions mean for them. Often we tend to forget the first home sellers and all sellers in general, what does all this mean for them?

This message really is for anyone thinking of selling or trying to sell.

Definition
Basically, first home sellers are the first home buyers of around 5 - 7 years ago. Since these people bought their first home they have had job promotions, had children, bought pets, have an extra car etc. Often they need more space and just generally feel that they want to "graduate" to the next level of home ownership. In order to do this they usually sell their current home.

A message to all the First Home Sellers
First home buyers are out there with massive Govt. assistance and they're just itching to buy, and they want to buy your home. Why? because it's probably going to fit into their budget. You probably bought your first home from a first home seller 6 or 7 years ago. This is a natural property cycle and can be seen as a "property ladder", everybody jumps to the next rung at some stage.

So what's all this got to do with anything?

Well, if you're thinking of selling this is a great time to do so because there are so many first home buyers out there looking to buy. So in effect the Govt. assistance for first home buyers is not only helping them, it's helping you first home sellers too. If you own a home that's in a low to mid level price bracket and you're thinking of selling now is a great time to do so, the buyers are out there.


What about second, third & fourth time home sellers?
This is great for you too. Just like the rungs of a ladder everybody wants to jump up a rung. So when first home buyers get into the market they actually "kick start" a domino effect where people sell in order to jump up to the next rung. Those who sold to the first home buyers will want to buy up a rung and so on... am I making sense? I hope so.

Simply put it is a great time for anyone who is thinking of sellng. If the first home buyers are active the market in general will be active.

Guess what, every first home buyer in Australia has been offered a $14,000 incentive to buy. You can't get more active than that.

For any advice selling or buying - Halliwell First National Real Estate

www.halliwellfn.com.au
(03) 6424 1496

Alan Halliwell - Director

First Home Buyers "Perfect Storm"

Without a doubt this is a great time to be buying your first home.

If you're buying your first home there are 3 main things working in your favour.

1. Govt. Grant
As we all know the Federal Government has doubled the first home buyers grant to a whopping $14,000. In addition to this, if first home buyers build a new home and live in it they will receive an amazing $21,000!

2. Interest Rates
Since mid 2008 interest rates have been on a steady decline. The main reason for this is that the Government and Reserve bank want to keep the economy moving. One way to acheive this is by reducing the "cost" to the individual of borrowing money in order to do things like buying a home. In a nutshell the Govt. & Reserve Bank is trying to make it easier for yo to buy a home.

3. Steady Property Prices
The majority of the country is experiencing a soft market where prices are not increasing. Property prices in some areas have reduced but Tasmania has managed to remain steady. The main point to remember here is that "property prices are not increasing". This means that it's still a great time to buy.


The Perfect Storm

This is the best opportunity first home buyers of any generation have ever had. The amount of Govt. support on offer coupled with the current market conditions really has created what I like to call the first home buyers perfect storm. If you're thinking of buying your first home the only thing left to do is act. You may never again have a better opportunity to buy than right now. Get out there and start looking for your home today.

P.S. If you're a seller, great. Look at all of these people out there who are facing the best opportunity in their lives to buy.

For any advice selling or buying - Halliwell First National Real Estate

www.halliwellfn.com.au
(03) 6424 1496

Alan Halliwell - Director

Advertising Works!

How important is advertising?


Advertising is one of the most important things we as real estate agents can do for our home sellers. It stands to reason that if people search for property it will be in the Newspaper and on the internet. Why wouldn’t we target these two methods of marketing?

Approx. 35% of our inquiry comes from the newspaper

Approx. 40% of our inquiry comes from the internet



Any agent denying you of the opportunity to advertise in the Newspaper is denying you of choice and exposure. Some agents in Tasmania feel that advertising doesn't work, quite frankly I just don't see how that is possible.

Isn't it better for your property to be exposed to as many buyers as possible?

Isn't it better for your agent of choice to have as much exposure to the public as possible?

"In the past some agents have suggested that advertising doesn't work.

I think the main point here is in the past.

All of these agents are now advertising in the newspaper.

It's quite facinating - these agents, who spent alot of time and energy dis-crediting advertising, are now using advertising themselves!

I wouldn't sign anything with an agent like that"

In the old days it was common for buyers to walk into an agency with a price range in their head and that’s all. The agent would then show them a list of suitable properties and take them for a drive around the homes. Today buyers research the properties they’re interested in by studying the real estate guide and by searching the web. They then make a short-list and know what they want to see by the time they come into the office.

It is an absoloute priority to be exposed to them before they walk in the office door!

It is important to choose an agent that not only advertises but one who has a constant presence in the newspaper. It's no longer adequate for an agent to have small ads or to only advertise now and then. I noticed a marked rise of inquiry from our ads in the paper when I decided to double their size.



It is also important to choose an agent who has a modern, easy to navigate website. It should be easy to find and it should only take a few easy clicks to find properties for sale. Our website is updated quarterly and kept to a state of the art level by the First National Group.

When choosing an agent to list your property for sale, always check these things:


1. Amount of advertising in the real estate guide, is it every week?

2. Size of each individual property ad in the real estate guide

3. Do a google search to check where the company name appears

4. Visit the company website to check how easy it is to navigate

This is where buyers are looking for property today. It is important to list with an agent who is not only utilizing these methods of marketing but excelling at it.

At First National Real Estate we make sure we do

For any advice on selling or buying - Halliwell First National Real Estate

www.halliwellfn.com.au
(03) 6424 1496

Alan Halliwell - Director

Open Homes - Do They Work?

Do open homes really work?

Yes! But not always in the way you thought

An open home is an excellent way to showcase your home to the market. It offers people the opportunity to get a true feel for the home and have a look around.

The best part about agents who conduct open homes is that no matter which home they are “opening” they are getting in touch with buyers. Every buyer at every open home is recorded. If a buyer didn’t like the home they looked at they are still in the market and may be interested in your home. A sale for you may come from a buyer found at a different open home.

Yes, this can and will happen to you if you hold an open home, isn’t it better to be exposed to more buyers rather than less?


Open Home Positives

Open homes help create awareness, allow interested parties to inspect the home and help agents collect important feedback about the property condition, price and popularity.

Feedback collected is very important and can help home owners understand what the market is saying about their property. Sticky beaks aren’t such a waste of time, often they have a lot to say and can be a wealth of valid feedback.

Buyers don’t just look at one home, they look at many homes. If your home is listed with an agent who conducts open homes your chances of being exposed to more buyers increases simply because buyers do visit open homes.


Open Home Facts

· An open home at your home may find a buyer and help you sell

· An open home at somebody else’s home may find a buyer and still help you sell

· An open home will help your agent collect important feedback both positive and negative

· Agencies that hold open homes expose themselves and your property to more buyers


Open homes are a tried and true marketing method used by agencies world wide.

At Halliwell First National open homes are recommended but not enforced. We give you the opportunity of having one, if you don't want one for whatever reason that's fine. It's your choice and giving you what you want is what we're all about.

Any agent who tells you that they don't do open homes isn't giving you choice. They are taking choices away from you. You should ask yourself why an agent would want to do this... is it really because they think open homes don't work?

For any advice about selling or buying - Halliwell First National Real Estate

http://www.halliwellfn.com.au/
(03) 6424 1496

Alan Halliwell - Director

A note for the first home buyer

Time spent in the market is always better than timing the market

This phrase simply relates to the time it takes property value to mature from the day you purchase it to that day you choose to liquidate (sell) it. There are 2 questions to ask.

1. How many people do you know who have sold a property for twice its price 12 months after buying it? I’m guessing not many. Ok, Ok, I’m sure there’s someone out there who has done it (Donald Trump maybe) but it’s not very common.

This is because property takes time to grow in value.

2. How many people do you know who know exactly when the stock & property markets are going to hit the very bottom and when they’re going to hit the very top? This time I know it’s no-one because no-one can. Plenty of people are very good at “forecasting” and “predicting” and this can really help narrow things down and I recommend that everyone does this in some way but no-one really knows exactly when things are going to happen.

Back to the opening statement “time spent in the market is always better than timing the market”.
This statement relies on the fact that the property market takes time to mature and that prices through all their ups and downs over 10, 15, 20 yr periods still generally increase.

There is no “get rich quick” scheme. When it comes to property the majority of us need to have a long-term approach. Some lucky people buy very low and sell very high and most of them are just that… lucky. And then there’s the Donald Trumps of the world who devote their lives to forecasting markets and took huge risks to get started too. For most of us that just isn’t practical.


So as you can see, if you choose property as a place to invest there is no real “bad” time to buy as long as you are prepared to wait and treat it as a long-term investment. Sure, if you buy when prices are at their peak you will have to wait longer to realize capital growth but your property will probably still increase in value if you hold onto it long enough. Most of us live in our homes for around 7 – 10 yrs.

For first home buyers this is a great time to be buying. The Govt. grant has been doubled to $14,000, the market is soft (prices aren't increasing) and interest rates are dropping. This is a first home buyers "perfect storm".

This is exactly the reason why buying as early as you can (as long as you can afford It and have considered your finances) is always a good thing to do. The longer you can hold property the better chance you have of selling it for a profit in the future.

A good idea would be to visit a financial planner who can help you make informed decisions about your individual financial situation in relation to buying property.

Time spent in the market is better than timing the market… when you’re ready go for it.


For any advice about selling or buying – Halliwell First National Real Estate

(03) 6424 1496
www.halliwellfn.com.au

Alan Halliwell
Director – Halliwell First National

The Property Clock

When is the best time to buy?


Real estate travels in a cycle with higher prices at the top of the cycle and lower prices at the bottom. This cycle can last from 5 to 20 years and can be thought of as a clock with 12 o’clock representing the top and 6 o’clock representing the bottom. The interesting part is that on average, every ten years since 1900 property prices have doubled regardless of the ups and downs of the cycle, so in theory every time the clock hits 12, property prices peak. That is why real estate has been one of the most popular investment strategies in Australia, because given time property should increase in value.

Ask yourself this... would any property on Earth sell for the same price it sold for in 1990 in today's market? Would any property sell for less today than what it did in 1990?

Highly highly unlikely.

This is the power of the proprty clock, even when the clock does strike 6 & the market bottoms out you can feel safe in the knowledge that prices probably aren't going to be as low as they were the last time the clock struck 6.

No-one can perfectly judge when the clock will strike 12 or 6 o’clock, it is a matter of watching the market and paying attention to economic trends. One can judge where the market roughly sits on the clock but no-one knows exactly when the clock will hit its peak and when it will hit its trough. If we knew that I wouldn't be writing this blog and you wouldn't be reading it... we'd probably be on the golf course laughing all the way to the bank!

At the moment we are nearing the bottom of the cycle where buyers may not be willing to pay as much for the same property that they may have paid 12 - 24 months ago. You could say that we are around 4 or 5 o’clock on the property clock. I would like to make one thing clear before going any further. This does not mean that property prices are plummeting. It simply means that certain things in our economic environment are affecting the market so in turn property prices and buyers ability to purchase can be affected. It is not the first time this has happened and certainly won’t be the last, hence the cycle of the market.

The most important thing to remember here is that buying at 6 o’clock on the property clock means you stand to wait for less time to realize an increase in the capital value of your home because the top of the market where property prices are highest is closer. If you are one of the many people who bought at 12 o’clock, don’t panic, the clock is always ticking. You will just have to wait a little longer for the clock to reach 12 again to see an increase in the capital value of your home.

So, the trick is to try and buy at 6 o’clock not 12 o’clock. Luckily, for today’s buyers the best time to enter the market is now because of where we’re at on the property clock. As I said, in my opinion I believe we are somewhere around 4 or 5 o’clock. Buying in the next 6 to 12 months will give you a greater opportunity to increase capital growth (the value of your home) faster simply because you will be buying property closer to the bottom of the market rather than at the top of the market.

Once again, for those who may have bought at 12 o’clock, and there’s plenty of us, don’t panic because that home you bought is still building equity. In fact, the equity in that home could even help you buy your first investment property.

So what's the verdict. Realising capital growth is a long-term process regardless of when you buy. If you buy when prices are lowest your "long-term" strategy is just shorter than that of someone who bought when prices were at their peak.

Become a student of the real estate market, the information is out there and easy to get. Enjoy the process and when you're ready and can afford it don't be afraid to buy, whatever the market is doing. The best time to buy is always now because the property clock is always ticking.

For any advice about selling or buying - Halliwell First National Real Estate
(03) 6424 1496
http://www.halliwellfn.com.au/

Alan Halliwell
Director – Halliwell First National

Selling in a tough "buyers" Market

What is a buyers market & how do you sell in one?

A buyers market does not always mean there are lots of buyers, but it does always favour buyers.

Currently Devonport is experiencing a buyers market. Generally speaking a buyers market happens when there is a large supply of property for sale and a lower demand for those properties. A lower demand doesn’t always mean less buyers, it can mean the same number of buyers with less money to spend.

The main point to remember here is that sellers aren’t necessarily asking any more for their homes, it’s just that the gap between what sellers want and what buyers are prepared to pay increases a little. If you can recognize this as a seller in this type of market you will stand more chance of selling and selling is what you want to achieve.

For those looking to sell in a buyers market it is very important to get the pricing right on the very first day. If the price is too high buyers will ignore the property and you will actually end up driving buyers toward everybody else’s homes for sale. You definitely don’t want that because you WILL end up staying on the market for far too long.

Here is a list of tips to consider when selling in a buyers market:

• Study the real estate guide and watch how often prices drop on properties before they sell.


• Try to find out sale prices and then compare them to what the original asking price was.


• Listen to agent’s who give you a snap-shot of the market. They deal with the market daily.


• Don't listen to agents who don't give any market analysis.


• Remember, if an agent gives you a price that sounds too good to be true, it probably is.


• Listen to the market. Often all the answers you need come from feedback sourced at open homes, inspections & from buyer opinion. A good agent should be keeping you up to date.


• Avoid allowing emotion to influence your price expectations. Sometimes it’s hard but you need to be honest with yourself.


• Remember that the first 3 weeks of marketing your home are the most important. That is when the most buyers will look at your home so it’s important to be realistically priced from the start.


• Understand that buyers on average look at 14 homes before buying. If you’re over priced they have 13 other homes they can buy instead of yours.


• Don’t over price. This only helps everyone else selling in your market sell their property.

Some of this advice may seem confronting, but I can assure you that as a real estate agent it is my duty to make you aware of the importance of pricing correctly in a buyers market. It truly is a painful process when sellers realize that they have priced too high 6-8 weeks into their marketing campaign. Imagine an agent trying to explain my points at that stage! I can guarantee you it’s best to let sellers know what market conditions they’re dealing with on day one rather than on day 51.

For any advice about selling or buying - Halliwell First National Real estate

(03) 6424 1496

www.halliwellfn.com.au

Alan Halliwell
Director – Halliwell First National