This should benefit both buyers and sellers. Buyers will find it slightly easier to attain finance and sellers will expect to realise a better price due to the buoyancy of the market. Use this positive upswing to list or start your property search right now as further interest rate cuts in 2012 cannot be depended upon.

A residential property cannot be advertised for sale until a Contract of Sale has been prepared. The contract must contain a copy of the title documents, drainage diagram and the Zoning Certificate (s 149) issued by the local council. Property exclusions must also be included and a statement of the buyer’s rights under the cooling-off period must be attached. The draft contract must be available for inspection at the agent’s office.

What are “149” Certificates?

Section 149 Planning Certificates are issued in accordance with the Environmental Planning & Assessment Act 1979. They contain information on how a property may be used and the restrictions on development. A person may request a 149 certificate to obtain information about his or her own property but generally a 149 certificate will be requested when a property is to be redeveloped or sold. When land is bought or sold the Conveyancing Act 1919, requires that a Section 149 Planning Certificate be attached to the Contract for Sale.

You will generally need a fresh 149 Certificate if you are selling your house if the purchase of that house was completed more than 6 months prior to the sale.

Preparation of these documents by your conveyancer or  solicitor will cost in the region of $200.00 and may be payable before or on settlement along with other legal fees.

Dan Pritchard

Licencee

Some  buyers will choose a well maintained house over a poorly maintained house particularly if they are the same price or similar. While the weather is mild it’s a good chance to catch up on painting and gardening jobs.

Curb appeal is a big plus to have in your favour in a competitive market so bog in now before Summer and get your property ready to sell.

Continuing on the theme of  purchasing investment properties here’s a list of most of the costs involved , most of them you probably know, there might be a couple you haven’t considered and would like to add to your calculations.

Continuing Costs

• Agent fees – charged on the gross income from your property by the managing agent.
• Council rates – these vary from property to property.
• Water rates – water usage can add up to be a significant cost these days.
• Maintenance – this will vary a lot and can be tax deductible, make a Excel sheet for these.
• Land tax- look into this, your investment may be liable each financial year: http://www.osr.nsw.gov.au/taxes/land/calculator/
• Interest – the most obvious cost, the cost of finance.
• Strata fees – If your property is a strata title, you should get  details of the costs and management scheme.
• Vacancy rate – this is the amount of time as a percentage your investment can be expected to be vacant in a year. Ask an agent for an current average.

Purchasing Costs

• Borrowing/Lending costs – charged by your mortgage provider, always consider these amounts.
• Stamp Duty – calculate the amount you are liable to pay: http://www.osr.nsw.gov.au/taxes/transfer_land/calculator/
• Insurance – also an ongoing cost, you will want to protect your asset the day of the settlement.
• Valuation you may need to have two valuations done, one on the new investment and on on any property you are using to secure finance for the new purchase, they may be included in your borrowing costs, check.
• Conveyancing fees – contact your legal representative and get a quote.

Collate all these and use them in your calculations for the viability of your real estate property investment project.

Dan Pritchard

Licencee

The property market can still provide positive returns on your investment, if you’re careful to choose the right properties. What you are looking for is a return above the cost of finance and the other outgoings such as agent fees, rates etc. It’s quite easy to calculate the interest payable on an interest only loan, so let’s do that first.

E.g 250k borrowed at 9% per annum interest is 250 000 x 0.09  =   $22 500.00 interest charged per annum.

Then if you add in all your other outgoings say $4 500.00 for example then your entire cost of owning the property per annum is now known,  $27 000.00.

Then divide the your outgoings by the mortgage you have taken then:

27 000 / 250 000 = 10.8

The true percentage cost of owning the example investment is say 11% per annum, now if the examples gross rent is more than $27 000.00 per annum or 11% you might consider buying it as long as you have considered all outgoings, factors and vacancy rates first. Costs or outgoings are an area to be investigated more thoroughly a little later. To have the cost as a percentage is important because you will want to start adding in vacancy rates and risk factors onto this figure as percentages also.

Real estate agents quite often put a properties yield in the listing and yields are helpful but can be deceiving, an agent will not generally cover all outgoings in their calculations for a yield, that’s up to you.

Remember you can add a percentage of capital gain onto your yield. If you know the area of your investment property is improving in value at an average 4% per annum for instance that can be included in your yield, that’s your call.

This is just a very basic introduction into property investment.

If you are interested in potentially purchasing a real estate investment in the Orange area drop me a line at sales@bestrealty.com.au and I will add you to our database for receiving investment property updates.

Dan Pritchard
Licencee
Best Realty
0407 895 689
bestrealty.com.au