Apart from holding multiple residential and commercial properties, including caravan parks and motels across multiple states, Property Alchemy’s Penelope Valentine also provides property management services for her fellow investors, particularly in the Northern Beaches, South Coast and eastern and western suburbs of New South Wales.

As an investor and a property professional, Ms Valentine works to understand the fluctuations that have been happening in most major property markets in the country, particularly in Sydney and Melbourne, which continuously see value declines following the end of the property boom.

However, despite the negative headlines in the media, she remains positive about the assets that she holds and manages in the capital cities.

According to Ms Valentine: “I think there’s so much hype in the media but the media needs hype to sell, right? Actually, we’re just going through a market cycle. I don’t know whether people remember, but these cycles happen.”

Right now, it’s business as usual, and the investors who are able to thrive in the current market are those who continue to make logical decisions, as usual.

“Properties may take a week longer to lease, but there’s things you can do to lease a property, and it’s not just all about dropping the rent. It’s price presentation and positioning, too. We can always find great tenants if we make sure to listen to what’s going on in the market react quickly.”

“You can’t just keep doing the same thing and expect a different result. You have to be proactive and you need to have a great database. You’ve got to do a bit more hustle—that’s what it’s about,” the investor and property manager highlighted.

Being able to hold and maintain assets for the long-term has become more critical to property investment success as the Australian property market continue to go through a softening phase.

As such, identifying the right property manager could spell the difference between thriving in the market and delaying a wealth-creation journey. Ms Valentine believes that every investor must understand the process of the property manager before ultimately getting them onboard.

“A lot of people just go to an agency and then get given a property manager. They don’t know if that property manager just started their career a couple months ago or if they’re on their way out or they’re aspiring to be a sales agent or if they’ve been trained properly,” she said.

Ms Valentine strongly encouraged investors to take the time to conduct a few interviews in order to get acquainted with their entire process and understand how it can fit into your broader investment strategy.

At the end of the day, it’s going to be a relationship between the investor and the property manager and as such, understanding is key to fruitful collaborations moving forward.

“Understand who’s going to be communicating with you and how do they operate, what do they do differently from other property managers,” she said.

Finally, Ms Valentine stressed the importance of tenure in order to avoid the hassle of having to ‘start from the bottom’. According to her, the average tenure of good property managers is 18 months.

According to her: “If you start building a relationship with a property manager and they know everything about one of your properties, then they leave and you get someone new coming in, you have to educate this person again on what’s happening with your property, what happened with the last tenant. It’s a lot of work for an investor. When you choose to give your investment property to an agency or property manager, understand how they operate.”

In today’s market, the resilience and discipline of property professionals are becoming more important for investors who want to continue to thrive in the business of creating wealth.

By making sure that they got the best managers, investors can continue riding the waves of the property market and ultimately maximise the wealth-creation potential of their portfolio, Ms Valentine highlighted.

 

Tune in to Penelope Valentine’s episode on The Smart Property Investment Show to know more about her secrets to thriving in the current property market of Australia.

Have you wondered what is depreciation and how a depreciation schedule can save you money?

Depreciation is a powerful tool to help investors maximise their cashflow, minimise the holding costs associated with investing and minimise their tax.

A lot has been written about various nuances within tax legislation and construction estimating.

So I wanted to take a moment to get back to the basics and things that everyone should know about a depreciation schedule, so here goes.

depreciation schedule

 

1. WHAT IS DEPRECIATION?
1. WHAT IS DEPRECIATION?

 

In essence depreciation is a reduction in value of an asset over time.

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Under
income tax law, you are allowed to claim certain deductions for expenditure incurred in gaining or producing assessable income, for example, in carrying on a business such as property investment.

Since the value of some assets decline over their effective life you may be able to claim a deduction for the depreciating cost of that asset.

Just like you claim wear and tear on a car purchased for income producing purposes, or for a computer used for business, you can also claim the depreciation of your investment property against your taxable income.

 

2. WHAT IS A DEPRECIATION SCHEDULE?
2. WHAT IS A DEPRECIATION SCHEDULE?

 

A depreciation schedule is simply a report that shows you the deductions you’re able to claim on your investment property each year, based on the decline in value of the structure and assets within (where they qualify).

Depreciation is not available to your principal place of residence; remember the property must be income producing.

 

3. WHAT IS A DEPRECIATION SCHEDULE FOR?
3. WHAT IS A DEPRECIATION SCHEDULE FOR?

 

Its only real job is to save you paying extra tax.

Money Back


The way it works is like any other tax deduction you might be familiar with.

Say you are a Doctor and you need to pay membership fees to your institute, that is normally a tax-deductible payment.

Any tax deductions you claim comes off your taxable income.

To put this another way, if you earn $100,000 a year and you have $10,000 worth of deductions in that year, the tax office now sees you as only earning $90,000 a year and that’s what you’re paying tax on.

 

4. WHAT SORT OF DEDUCTIONS CAN I GET?
4. WHAT SORT OF DEDUCTIONS CAN I GET?

 

Unfortunately, that question isn’t as easy to answer as it once was.

With the depreciation rules being changed in May 2017, it depends a lot on when you purchased, whether you ever occupied the property, whether it’s new or old and several other issues.

In general there are two types of allowances available:

  • Depreciation on Plant and Equipment, which refers to items within the building
  • Depreciation on Building, which refers to construction costs of the building itself.

Both these costs can be offset against your assessable income.

 

5. WHAT ARE THE NEW DEPRECIATION RULES?
5. WHAT ARE THE NEW DEPRECIATION RULES?

 

This could get messy, but I’ll try keep it short.

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Essentially if you purchase after the 9
th of May 2017 you can only claim plant and equipment items if you bought the property brand new, or installed those assets yourself, such as adding new carpet.

Plant and equipment items are generally the internal assets like blinds, kitchen appliances, air conditioning etc.

What hasn’t changed is the division 43 deductions, which consists of the structure of the building including timber, concrete, tiling, kitchen cupboards an the like.

You can still claim those deductions as per the old rules.

 

6. WHAT ABOUT QUALIFICATION DATES?
6. WHAT ABOUT QUALIFICATION DATES?

 

The property needs to have been constructed after the 16th of September 1987 to qualify for depreciation claims on the original building structure.

Tax Time Papers


If it’s built prior to that date, then only the renovations or improvements will attract deductions.

This might be things like extensions, kitchen and bathroom renovations, painting and the like.

There’s no simple rule that guarantees a report won’t be worthwhile based on the date of construction because of these renovations creating deductions.

However, if the property was built after the 16th of September 1987, the report is going to be worthwhile under normal circumstances.

 

7. Should I get a Depreciation Schedule and how much does it cost?
7. SHOULD I GET A DEPRECIATION SCHEDULE AND HOW MUCH DOES IT COST?

 

Depreciation schedule costs are around the $600-$800 mark and I wouldn’t consider going any cheaper, though cheaper options are available.

Call Information House


Any less than that range will necessarily involve corner cutting on the inspection or the time taken to fully maximise and tailor a schedule to the client.

As for whether you should get one, quantity surveyors should be analysing that for you.

Simply give one a call or share an online link to photos and some basic information like the age, history, purchase date and they will tell you whether the report is worthwhile.

Worthwhile normally means they’ll find at least double their fee worth of deductions within the first full year of claim.

Personally, if there’s no value to the client, we’ll never recommend having a schedule done.

I hope that helps to give an executive summary on what depreciation is and how it works.

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Speaking with Smart Property Investment, Ben Handler, CEO of the Buyer’s Agent Institute, said there were two aspects of buying a property investment that can stump unwary property investors.

The first was being sure to undertake due diligence, something that Mr Handler has identified a lot of people ignore from working as a buyer’s agent for eight years.

When buying for his own personal portfolio, Mr Handler added he always is careful to do his due diligence.

“There’s been times where unfortunately I’ve ordered a strata report and the health of the sinking fund and some critical elements around how the building is maintained or issues that have been in the building before and how they’ve been rectified has concerned me,” Mr Handler said.

“It just showed me it could be a risk buying into this building, so that has steered me away in apartments.”

The second aspect that he sees stumping property investors was forgetting real estate agents are not trying to help you buy a property, but are trying to sell a vendor’s property.

“When you’re communicating and corresponding with them, … you have to be mindful that they’re always representing their vendor,” Mr Handler said.

“So, what you’re hearing from them, how many contracts are out, has there been another offer and [how] you need to increase your offer; you’ve got to be very mindful and skeptical and just conscious around what they’re telling you.

“How you’re dealing with a real estate agent is really important, and I think just knowing when to … walk away from a property; … setting that boundary of that threshold of what you’re prepared to go to.”

The world of real estate has changed drastically since the turn of the century.

Back then, property investment as a wealth creation strategy was really only in its infancy. Today more and more Australians are interested in property. Real Estate Agent

Over that time the role of real estate agents has changed.

In the past, agents held much more power.

They have access to data such as past property sales and local values, as well as details of properties for sale.

Remember back then agents usually just advertised listings in newspapers and their shop windows.

Within a few short years, property listing portals became common place and that meant  the balance of power changed with buyers having easy access to data.

Also, the days of agents driving prospective buyers to properties soon came to be a relic of a bygone era.

So, with so much change in such a short period of time, what does the next decade herald for the real estate sector?

1. Agent value

While there is no doubt that the role of sales agents has changed dramatically that doesn’t mean that an agent’s intrinsic value in a transaction has disappeared. 

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You see, the main value that selling agents have always brought to the table is their ability to negotiate between the seller and the buyer.

Because they are not emotionally attached to the property like sellers are, they are able to suggest a price that both parties are happy with and bring a protracted negotiation to a conclusion.

Whereas, left to their own devices, private sellers generally struggle to accept that buyers don’t view their property as a castle like they do.

While agents will communicate with both buyers and sellers differently in the future, for example social media, videos and virtual tours, I believe  a good agent will continue to help both buyers and sellers achieve the results  they desire.

2. Cut-price commissions

Over the past decade or more, the era of cut-price sales commissions has entered the real estate industry.

We’ve seen agencies like Go Gecko and now Purple Bricks set up shop offering a reduced sales commission for a reduced level of service.

There will always be sellers who are motivated by price and this means these types of agencies will likely always be around.

But remember the old saying: prices what you pay – value is what you get!

House For Sale Buyer Agent Investor Buy


You see…the cheapest agent is the one who gets you the best price, not the one with the lowest commission and who likely works on a quantity over quality model.

Sellers loose out in a number of ways.

I’ve found these cut-price agents are less motivated to get their vendors the top price.

And many of these cut-price fees include a non-refundable levy that must be paid regardless of whether they sell the property or not.

That is contrary to the standard commission structure that is only paid when a successful sale has been completed.

At the end of the day, while cut-price agencies might grow in number because of technological advances, most vendors that use them will probably end up with a cut-price result.

3. Free data

One of the biggest changes in the property investment space in the past 20 years has been the rise and rise of data.

When I first started out, there was very little available to help investors research the various property markets.

Today, there is more “free” online data than you can poke a stick at, but much of it is inaccurate.

It’s too easy to stumble into the wrong information.

Take the online property “valuation” reports – these are generally inaccurate (as often on the upside as on they are on the downside) as they have no idea of the condition of the property in question.

4 Research


Similarly, sellers can be misled by those “find the best agent in your area” websites, which make their money, and therefore we can assume their recommendations, based on commissions paid to them by agents looking for listings.

While the volume of available free data has skyrocketed one thing that hasn’t changed much is the ability to analyse it correctly.

Most buyers lack the expertise to understand what the numbers in front of them are really saying and how best to interpret them.

To be blunt: they lack the perspective to know what’s important and what’s not.

This is most obvious when lists of “best performing” suburbs are released, which some people confuse with signposts of where they should invest next.

My strategy is about buying investment-grade properties that will  continually outperform the averages, that doesn’t  change to suit the short-term changes of the market.

I only invest in the type of property and location that has “ always worked” rather than looking for what “works now” – you know the next hotspot or get rich quick scheme.

My research and that of our team at Metropole involves analysing leading indicators- signs of what will happen in the future, rather than the type of content freely available on the internet which tend to be lagging indicators – a record of what’s already happened.

So what’s ahead…

It is no secret that we’re in an age of rapid technological change that is having a significant impact on the types of jobs that people do.

The continual evolution of the internet, social media and technology will clearly cause disruption in many industries, including the property industry.

  • Your FutureBuyers will have more power being have to search and research properties and loans  online.
  • More buyers will use buyers agents to protect their interests, just like vendors have selling agents on their side
  • Electronic conveyancing is now happening through the Pexa portal with close to 1,700,000 property transactions having now been completed through this E-conveyancing network.
  •  How we handle our money and online banking is going to evolve. The day of cheques being written for deposits will soon disappear and it is possible that Bitcoin will play a role in future property transactions

However I don’t see real estate agents jobs being replaced by artificial intelligence any time soon.

And I’m not even going to go down the route of making a joke about the level of real estate agents intelligence!

You see…when it comes to real estate I believe that the sector will evolve and change but that the buying and selling of property will always remain a skillset that requires the expertise and knowledge of experienced professionals.

WHAT CAN YOU DO TO STAY AHEAD?

As signs point to softer growth conditions for Australian property over the coming months, independent professional advice and careful consideration will be as important as ever in navigating Australia’s varied market conditions. 

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If you’re looking for independent advice, no one can help you quite like the independent property investment strategists at Metropole.

Remember the multi award winning team of property investment strategists at Metropole have no properties to sell, so their advice is unbiased.

Whether you are a beginner or a seasoned property investor, we would love to help you formulate an investment strategy or do a review of your existing portfolio, and help you take your property investment to the next level.

Please click here to organise a time for a chat. Or call us on 1300 20 30 30.

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Options for savvy investors to take advantage of the boom in the staycation sector

Politics and economies are constantly changing. Savvy investors watch these changes, and, where others see problems, they see opportunities. Take the hot topic of today (and the last two years, and likely the next two years): Brexit.

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Welcome to one of the happiest cities in the UK

Off-plan property investment is a great investment strategy for all lifestyle goals, provided you buy in the best places to invest in property UK. Our research tells us that Leeds is one of those places. It is regularly rated as one of the UK’s best lifestyle cities, with a relatively low cost of living and a growing local economy. As if this isn’t enough to make Leeds one of the UK’s happiest places to live, the city is home to some amazing leisure, shopping and cultural amenities for residents to enjoy.

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Damian Collins, president of the REIWA, said the overall regional median rose by 7.8 per cent to $345,000 and overall sales were up 1.2 per cent.

“It’s the first time this year we’ve seen overall sales activity and median house price improve simultaneously in regional WA,” Mr Collins said,

“The results of the September quarter are very promising and suggest a recovery is not too far away.

“Although regional WA continues to feel the effects of the market slowdown, the results of the September 2018 quarter suggest the worst is over, with a number of regional centres starting to find their feet.”

Median prices

Out of WA’s 11 regional centres, five did not record any declines, REIWA analysis showed.

The top performer, according to Mr Collins, was the Albany region, with its median price rising by 26.8 per cent to $430,000.

“It also experienced an improvement on an annual basis, with its median price now 17.5 per cent higher than last year’s September quarter median,” the REIWA president said.

“There was a shift in the composition of sales in Albany during the September 2018 quarter, with significantly more activity occurring above $350,000 than there previously has been, and fewer sales occurring below $350,000, which is where the bulk of activity has typically occurred in this region.”

Other improving regional centres for median price rises included Bussleton with a rise of 9.8 per cent, Bunbury with a rise of 1.9 per cent, Geraldton/Greenough with a rise of 1.8 per cent and Broome which held steady.

Sales activity

Sales activity in regional WA fared slightly better than price rises, with six out of 11 regional centres seeing a rise in sales.

The largest increase, Mr Collins said was in Broome, which experienced a 90 per cent rise of sales up to 38 over the quarter.

Following this was Port Hedland, up 51.7 per cent to 91 sales, and then Karratha, up 23 per cent to also 91 sales.

“The Pilbara region remains one to watch, with the announcement of three new mining projects in the region by BHP, Rio Tinto and FMG going a long way to restoring confidence in the area,” Mr Collins said.

“With 20,000 new local jobs expected to be created as a result of these projects, this should support population growth in the region, improve demand for housing in the area and aid recovery.”

Other improving regional centres for sales included Geraldtown/Greenough by 31.8 per cent, Kalgoorlie/Boulder by 26.8 per cent and Mandurah/Murray by 8.5 per cent and Albany, which held steady.

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21 questions to ask yourself before investing in UK property

Successful property investors all have one thing in common: they have a plan, and simply don’t make it up as they go along. They read investment blogs and digest all the property investment education they can get their hands on before investing.

A good friend of mine is a project manager and controls projects worth multiple millions. The services are in constant demand. When I asked my friend to explain the secret of his success, he simply said, “Advance planning”. He told me that with every project he works through a list of questions with the client. These include questions about objectives, budget, maintenance, plans for the future, and so on. Armed with this knowledge, he then plans a project to the nth degree – especially when it comes to allowing for the unexpected.

Property investment research and considering investment opportunities in the best places to invest in property UK should be approached similarly.

Here’s a list of 21 questions that you should ask yourself before planning a UK property investment.

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