O'meara Property

So why does the relatively humble Australian residential property investor continue to end up at the top of the investment heap?

Investment income
With prices at the bottom end of the cycle, rental returns are at probably the maximum you’ll see for many years.

Cost of borrowings
With 5 year investor mortgage loans available at around 7% and with rate rises being telegraphed pretty clearly by the Reserve Bank, there is a clear cut path to locking in costs for the next market cycle.

Demand
Continuing population growth, increases in immigration, first home buyer subsidies, historically low mortgage rates, state government stamp duty packages and continuing stock shortages say it all really.

The simplest law of economics states that when demand exceeds supply prices will increase.

Add value and keep control
When I buy shares in BHP Billiton (fine company that it is) I have zero ability to change the way they do business. When I buy a unit or house I know exactly what I have to do to increase both its rental value and ultimately its resale value.

Location
There are libraries full of data about each and every post code in Australia. You have access to council, state and federal government data that may impact the value of your investment. You also know how much each post code averages in both rental yield and capital growth.

Although we seem to be heading towards economic recovery faster than everyone expected, some market commentators are still predicting rough weather in the next few years as many corporate and sovereign debt issues have yet to be resolved.

Either way just keep quietly investing  in quality residential property. You’ll be richer for the experience.

We’ve all heard how over the past year the first home owners grant has greatly increased activity in the lower end of the real estate market which has in turn led to increases through the middle range of the market as many people ‘trade up’. Premium property has so far seen little increase in activity and may present the ideal long term investment for those keen to take a chance.

Prices on top end properties are very competitive at the moment through the Port Stephens/Nelson Bay area and there is plenty of stock available which has led to pretty substantial price reductions over the past six months. Waterfront properties are slowly starting to move again showing, in my opinion the first signs of the top end recovery but properties in the $700,000 to $2,000,000 range have remained very slow, particularly units and a search on www.realestate.com.au shows over 150 properties available in that price range. In many cases these properties have seen reductions in their asking prices of 10% to 20% over the past year and will regain that ground plus much more once the market moves again.

For those that have the financial ability to buy now and hold these sort of properties over the next few years I’m convinced that there are going to be some pretty impressive capital gains to be had.

On behalf of all of our team at O’Meara Property I am happy to reveal our new www.omeara.com.au website. As a custom project developed by real estate specialists agentpoint the new site contains a myriad of features to help those looking to buy, rent or holiday in Port Stephens.

Just a few of the features include:

• Automatic notification of new sales & rental listings as well as property news items to subscribers via email and/or rss feeds;
• Integrated blog providing constant property information. It’s easy for us to do so it will be done regularly;
• Viewers can create a list of favourite properties making it easier to come back later and review them;
• Whilst looking at a property you can click the ’similar properties’ button and instantly come up with other listings that may be of interest;
• Instant, easy search for waterfront properties or properties with views;

I personally believe that this new site leaves all other Port Stephens property websites in the dark ages and will become chock a block full of information over the coming weeks. Our interactions with buyers, sellers, renters and holiday tenants has told us that you want genuine localised information from a real estate website, not just properties for sale and lease. This is what our new site is designed to deliver.

As it’s our intention to build and maintain the most comprehensive Port Stephen real estate website I welcome your comments and suggestions which can be made below.

Our dedicated holiday website www.nelsonbayaccommodation.com.au remains fully operational and once we’ve recovered from this website creation we’ll be working on an update there as well.

With the interest rates low and the property market showing signs of picking up it may be a good time to consider purchasing either another or your first investment property.  One important item to keep in mind when purchasing an investment property is to get a rental appraisal from a well experienced Property Manager (not a salesperson)!

If you are looking at an investment property the sales consultant would normally provide you with a set of rental figures, whether it is for permanent, holiday or commercial property.  This may be either verbally or in writing.  If there is a current tenant in the property it may be a copy of the existing tenancy agreement.  Sometimes the current market rent can be totally different.

If a salesperson has given you the figures they could be slightly inflated or the rent may have not been fixed to market rent at the commencement of the tenancy agreement.  It could also be due to the person providing the appraisal being inexperienced either in the field or the area.  Whatever the case, because these things happen it is a great idea to obtain an independent rental appraisal prior to exchange.  It is a normal occurrence to arrange a pest and building inspection, why not get an independent rental appraisal at the same time (from an experience property manager).

Verbal estimates of salespeople can be misleading.  This may be because salespeople vary considerably in their property management expertise and they also won’t have a general awareness of rental values at certain times. 

If there is a current lease on a permanent/commercial rental or forward bookings for a holiday property you should definitely look at the current rent that is being charged.  However, this may only give you a historical figure.  As such, it may not truly reflect the current market value.

The next item to consider when looking at prospective investment properties is how easy will the property be to lease?  What is the likelihood of actually getting quality tenants in the properties current condition and at that particular time to the year?  How easily a property will lease is affected by numerous factors. Some of these include the condition, age and location of the property, amount of similar rental properties in the area and the style of tenants in the area. 

The last item and one that is often not considered is to take into account tenant turnover.  A home suited to a family will often have fewer turnovers than an apartment in a large block.  This is due to the fact that if a family settles in a home they are more likely to stay for a number of years, rather than uproot the family and move on at the end of the fixed term.  Compare a home to an apartment and the style of tenant changes to a single person or a couple.  These type of tenancies are normally shorter and the tenants would more often move as either their situation may change or they find something newer or in a better position that they extend their budget to afford.

If you are looking at purchasing an investment property in the area please give me a call.  I have been a Property Manager in the area for over 12 years and can certainly give you an honest, obligation free appraisal in writing.  This appraisal will be based on my experience, recent rental figures and also the time of year.