O'meara Property

The recent decision in the Land and Environment Court regarding a holiday let property at Terrigal on the Central Coast has certainly caused many questions and concerns for Port Stephens property owners. The fact is though, there is really nothing to worry about.

The case in regards to the Terrigal property seemed to revolve around what constitutes a residential dwelling in the context of the Gosford Local Council Local Environmental Plan (LEP). Informed sources have advised me that Gosford Council has a vast array of planning policies and often one side of a street can have one zoning and usage and the other side a totally different one. The Land and Environment Court banned holiday renting in Residential 2a areas under the current LEP. Gosford Council has already adopted a new LEP which does specifically allow holiday rentals and is awaiting it to be gazetted. This will bypass the Land and Environment Court decision.

Port Stephens Council has adopted a new LEP in March this year and is awaiting it to be gazetted. The draft LEP is available on Council’s website and page 57 shows very clearly that short term accommodation is allowable without development consent under the soon to be introduced LEP. Under the existing LEP, short term accommodation is not referenced in any way to say it is either allowable or prohibited in any zoning. I would seriously doubt that Port Stephens Council would want to get into an argument on holiday rentals when a new LEP specifically allowing holiday rentals is just around the corner.

Some local sources have been running around claiming that the Land and Environment Court decision sets a precedent and holiday rentals are not allowed in Port Stephens because of it. Nothing could be further from the truth; the Court decision was specifically based on Gosford Council’s existing LEP and has no direct bearing on any other local government area.

We will disclose of course that we are neither town planners, nor qualified to provide legal advice. The above article is written after substantial research has been conducted but is a matter of opinion only.

If you take note of doomsayer news broadcasters, it is easy to think that life is pretty bad. Real estate, shares, the environment, the  GFC, obesity levels, super bugs – whichever way you look at it we are worse off than we used to be. But is this really true?

While it is true that there are a lot of things wrong with the planet and with the way we live there is nothing to support the hypothesis that our golden days are behind us. The Economist asked its experts to come up with its outlook for 2050. While superbugs are certainly identified as an issue, they point out in their document called Megachange, the World in 2050 that there is also a lot of good news. We live an average of 25 years longer than we used to (a hundred years ago life expectancy in the western world was 54). Average crop yields have doubled, infant mortality is much reduced, two thirds of nuclear weapons have been dismantled, famine is more rare than it used to be. While we still need to work on global poverty, in 2008 it was estimated that 129 billion people lived on $1.25 a day. But in 1981 this figure was 194 billion people.

Even the superbug risk has to be seen in perspective. In Europe in the early 1300’s, the Black Death Plague wiped out a large percentage of the population. At the time Venice was one of the great trading nations of the planet; the plague wiped out 65% of its population. So there is nothing new about superbugs!

Many people will remember that in the US after the year 2000 millennium bug forecast, many people rushed out and built special shelters stocked with baked beans and water. Why? Because media predicted planes falling out of the sky and other sorts of chaos indicating social collapse over a computer programming issue as we went into the new century.

Nothing ensures media sales like doomsaying and a few properly researched facts will never be allowed to get in the way of the sales that result from bad news. While it is true that Europe and the US need to sort themselves out and China’s growth is likely to slow, there is nothing to support hypotheses such as Australian real estate will fall 40% and the share market will never recover. History shows us hurdles, potholes and road blocks, but life has been consistently getting better for more people.

Adapted from Paul Clitheroe’s article in the May 2012 issue of Money.

The latest edition of our newsletter “The Bay News” is now available. Editions are currently being posted out and will also be letter box dropped over the coming two weeks. If you can’t wait, here’s a link to the online version!

The Bay News 2011_2

Selling a deceased estate is often a good example of what happens when there are multiple vendors of a property.  Where there was originally just one owner to consult about selling methods, advertising, expenses and so on, there are now often many opinions about the way the property should be marketed. This can cause problems if poorly handled.

Deceased estate sales usually create a lot of interest amongst buyers. Interest is just what is needed to create the competition necessary to achieve the highest price.

But this is where the easy part ends. Often the new owners don’t really know each other very well and sometimes their interests appear to conflict.  Who will decide on the method of selling? Who will decide on what kind of advertising? The acceptable price?  Whether the decision is made ‘in committee’ or one person is appointed to speak for all, complications are still likely to be the order of the day.  

It is probably not surprising that price usually creates the most dissension; after all differing levels of real estate knowledge are likely and some beneficiaries may not even live in the area. Naturally it makes a big difference if the method of marketing selected is one that proves to all parties that the best price was obtained.

Private treaty is often not suitable as a method of selling a deceased estate because the parties involved frequently can’t even agree on an asking price! And it doesn’t always work to put the property on at the highest price suggested. If the price is set too high, the property may take a long time to sell. The ‘deceased estate’ tag loses its power to attract interest if the property is seen by buyer after buyer whose offers are refused or who fail to make offers because of the price barrier. As time goes on, the property becomes stale, and many properties become less appealing, especially if the burden of cleaning and garden maintenance becomes yet another cause for dissension amongst the beneficiaries. In the long run, leaving the house on the market when no one is living there can reduce the market appeal and subsequent offers can be lower than early ones.

Auction is often the fairest and least conflict-ridden method of selling a deceased estate because instead of having to decide on the price tag, beneficiaries can wait to see what the competition generated will bring in the way of offers. It also avoids the risk of the property becoming stale if it lingers on the market at a too-high price.

Many inexperienced  residential property investors start talking about selling their investment property when the market slows down. After all, the market is bad, therefore it’s time to get out of the market – right?

Wrong!  Is the investor going to realise a good return on their investment by selling when the market is slow? Of course not!  Shrewd investors – whether they invest in the stock market, antiques, art or property – have a more fruitful strategy. When the market is low is the time to borrow more money and buy a second property. Selling now will be a poor return on their investment, but buying now means greater rewards when the market does improve. After all, experienced investors know that the market is cyclical They know that when the market is hot is the worst time to buy as buyers tend to outnumber sellers and they end up competing for stock that is snapped up at alarmingly  increasing prices.  In fact they may well profit from the faulty logic of the inexperienced property investor by buying the very investments being dropped onto the slow  market by the less experienced who think property is no longer the go.

When the market slows down, the smart investors speed up, so that they are expanding their property portfolios when the market is in their favour inorder to be sitting pretty when the next boom comes along.

There is a lot of misunderstanding in many sections of the community about the use of Public Auction as a mop-up marketing strategy. Many home owners think that Auction is a great ‘last resort’ selling strategy – the ultimate eraser of past marketing mistakes and righter of all poor decisions made in their earlier Private Treaty marketing.  While it is true that many vendors go to Auction after failing to sell by Private Treaty, it is not hard to work out the flaw in this argument.

Vendors often think they will try to market their property by Private Treaty at an  inflated price just to see what happens. When asked for an explanation, many say ‘Oh, if I don’t get my price I can always auction it.’ But what happens at Auction when months of marketing at an inflated price haven’t secured the dream price the vendor was looking for?  

Sadly, by the time the vendor has given up on Private Treaty, the property is likely to be over-exposed and it will attract bargain hunters, no matter what method of sale is used.  Valuable time has been lost, and unless the market is trending up, the sale price is likely to be lower than if it had sold more quickly.

Once a property has been on the market for a long time, buyer interest falls.  Auctioning at this point rarely creates the competition needed for a high price.  Buyers know the vendor is unrealistic and often stay away from the auction – a death knell to hot bidding. The best case scenario is that the auction will attract bargain hunters – another great way of keeping the price down.  

In reality, no method, used as a last resort, will deliver optimum results. Holding out for an inflated price, no matter which marketing method a vendor starts with, will usually end  badly – no matter how good the ‘last resort’ selling technique of choice is. There is no safety net fix-it strategy for selling over-exposed properties.

Whichever method a vendor chooses to sell their property, it is important they do proper research into the market in their location and set the reserve (auction) or the asking price (Private Treaty) so that the property sells within the first month or so of marketing. ‘Last resort’  options shouldn’t be in the vocabulary of a home seller who wants to get the highest price for their property and they certainly don’t replace realistic response to market conditions and a firm hold on the reality of price expectations.

Many home buyers get all excited when they find a property they like, make an offer and get it accepted all in a short time frame. They think all their Christmases have come at once. Or do they?

After the initial exultation, many buyers spend sleepless nights wondering if they have made the right choice. After all, it was a bit too easy wasn’t it? Maybe they have paid too much? Surely they must have missed something. Something must be wrong with the property.

Buyers’ remorse is not uncommon, and is based on self-doubt stemming from the stress involved in spending so much money on a transaction home owners undertake (usually) only a few times in a lifetime.

Buyers should always put in place the necessary checks (building and pest reports for example) but those who get their longed-for property purchase wrapped up quickly should think themselves lucky that they struck a motivated and realistic vendor when so many have an inflated sense of what their property is worth.

There are many variables that affect the sale price of a property. Not all homes that look the same sell for the same price. Even when they seem to be equal (size, condition, features), some homes just seem to sell for more. What is the difference?

A young recent arrival from France rented an apartment in Sydney. She complained that the property had no light and was dull all day and of course, never got any sun. She said she had made sure to choose a property that faced south so why was this happening? The look of consternation on her face when she realized that southern hemisphere rules regarding aspect are different from northern hemisphere ones was the best demonstration anyone could hope to see of the importance of that elusive variable that has a demonstrable impact on the sale price of homes – aspect.

Unfortunately, many people whose homes are not ideal in terms of aspect overlook this when setting the asking price of their homes. There aren’t many buyers who come from overseas bringing with them northern desirability criteria for aspect. Most buyers have northerly aspect on their wish list, and will only drop it from the list if the price is right.

The latest edition of our popular newsletter “The Bay News” is now available and can be downloaded via the link below.

http://www.omeara.com.au/wp-content/uploads/2010/07/webnewsletter.pdf

Printed editions will be posted to subscribers next week and should be letter box dropped over the coming week.

Reports this morning from ‘Australian Property Monitors’ predict a more than ten percent rise in rents in Sydney throughout 2010. In short, it appears that the Tomaree peninsula will see similar increases as stock levels fall and costs for investor to hold properties increase.

The interest rate rises of late 2009 and the predicted rises through 2010 means that investors will be very keen to maximise the rent they achieve throughout 2010. Falling stock levels of properties to rent, particularly family homes has increased competition considerably and will ultimately lead to increases in rent prices. We’ve included below a few tips for investors to maximise their returns this year.

• Ensure your property is attractive to great tenants – if the property needs repainting or recarpeting, do it;
• Adopt the attitude that saving money by not maintaining the property costs you much more in the long term;
• Speak with your accountant or tax adviser about whether there are tax advantages to renovating your property; the answer to this question will depend on your overall financial position and requires specialist advice;
• Have all expenses ie. council, insurance, repairs paid from your funds by your managing agent so that everything shows on your statements and nothing is forgotten at tax time;
• Ensure your property is professionally managed; do they conduct regular routine inspections and provide a written report with pictures? do they assess the rent regularly?;
• Take your agent’s advice on the rent to ask for a vacant property. If you don’t trust their advice they shouldn’t be managing the property for you and getting a tenant today at 5% under what you’d ‘like’ normally beats getting a tenant in a months time.

For professional property management advice please feel free to contact me on 02 4980 4400 or email jane@omeara.com.au