Sizing Up Your Property Investment

12 tips to get a great property valuation and appraisal by Ms. Ryan for Australia’s API Magazine.

Real estate investors periodically have their properties revalued in order to finance additional property investments. For example, just say your property’s value has gone up by $50,000. Most lenders will let you borrow around 80 per cent of that value ($40,000) which you can use as a deposit for another real estate investment purchase. In order to work out exactly how much they’ll lend you, lenders will often send a property valuer or appraiser around.

So we’ve asked a couple of industry experts for the insider’s word on property valuations also known as property appraisals. How can real estate investors get the highest figure possible?

Phillip Grahame from Herrron Todd White says, “The main things in a valuation [or appraisal] are the size and functionality of the dwelling and the size and location of the land.”

So obviously the chances of a favourable property appraisal or valuation mainly come down to your choice of property investment in the first place. And of course, it also depends on what the property market in general is doing at the time. However, according to our experts, there are a number of things you can do to make sure you pull off the best valuation or property appraisal on the day.

1 Presentation
Grahame says presentation is the most important thing to take care of when you have an upcoming valuation or property real estate appraisal. “(Make sure) the gardens are looking nice and the clutter throughout the hosue is cleaned up and all that sort of thing. Because first impressions, even with property valuers, do count,” he says. “If it’s freshly painted and really neat and tidy and presents well, as it would to a buyer, then we’re going to be more positive on that particular property.”

Mark Ruttner from First Valuation Group agrees, “The owner should provide a property in a state of repair similar to an open for inspection. There’s nothing worse than rolling up to value a house and all the clothes for the last two weeks are on the bedroom floor, the toilet seat is up, dishes from the last week are still sitting in the sink.” Ruttner suggests mowing the lawn and trimming the edges. He also says any external painting should be fully completed, as first impressions can be significantly dampened by incomplete paintwork.

2 Recent Sales Evidence
If you know the sales prices achieved at any recent property sales in your area, have that information available for the property valuer and property appraiser. Ruttner says “One of the best times to et a current valuation is when you have say two or three recent sales that are very similar to that of the property getting valued. Obviously such sales have a direct effect on the arrived value.”

The easiest way to keep tabs on sales in your area is to attend auctions nearby. Whether it’s an auction or a private sale, hold on to the sales brochure when you attend the open home so that your valuer and property appraiser will be able to track down the agent to confirm the selling price.

If you want to be really helpful, Ruttner says it’s great when a property owner puts together a written report detailing three or so comparable sales within about 500 m of the property over the past six months. Grahame agrees that recent sales information is very useful.

He explains, “In most cases we’ll probably be aware of (the sales data) but in some cases we won’t. So if the applicant knows of it, it pays to make the valuer aware of it.”

3 A Rates Notice
According to Ruttner, some valuers and property real estate appraisers like to see a copy of your municipal/council rates. They vary from one place to the next, but there will generally be a “site value” or “unimproved land value” figure reflecting the value of the land only. And sometimes, there will also be an “improved value” based on the land and building. “Those (values) are done on a statistical analysis. So it’s not accurate but it gives us a ball park,” Ruttner says. “It gives the valuer/appraiser a pretty good idea of where it’s sitting in the marketplace.”

4 Be Honest
Grahame says, “We’ve heard every story and trick in the book and we can see through that pretty quickly. I’ve always found in my experience the morehonest the people are, the more we look favourably on the property and the application. If someone’s telling fibs, immediately we see through that and get in a defensive mindset.” For example, Grahame says clients might claim that a neighborhouring property recently sold for $500,000 but the valuer or property appraisal might have evidence that it only sold for $450,000.

5 Make Your Improvements Prior
If you have improvements to make, make them before the valuer comes around. Grahame says there are plenty of people who fall into the category of “the gonnas”. “Next week we’re gonna fix up the bathroom; or next week we’re gonna put on that car port …. What people don’t’ understand is that we have to value it as we find it on that day. We can’t take into account any future improvements they may – or in a lot of cases they may not – do.”

6 Clear Instructions
Grahame says, “If you’ve got plans for future investments and quotes and costings, make sure if you’re going through a lender that the lender requests an ‘as if complete’ valuation. A lot of times (the valuer or property appraiser) goes there and it hasn’t been communicated that’s what’s required and we just value as is on the day.”

7 List of Recent Improvements
Ruttner says, “If improvements have been made to the property over recent times, provide a detailed and written list of works conducted and the cost of these. Even better would be project specs and a building contract, giving the valuer an idea of exactly what has been spent.” While this will often add weight to your application, “also bear in mind that cost does not equal value in all instances,” he cautions.

8 Don’t Overcapitalise
Grahame says, “Obviously improvements and renovations add value. But you’ve got to be careful about overcapitalising. So not spending more on a particular improvement than that particular area can cope with.” For example, “Putting on a large extension will obviously increase the value of the real estate property but it may not increase the value more than what it actually costs. That’s generally dependend on the quality of the area. So if people renovate and improve to put the property in a bracket higher than what most properties in that area sell for, then there’s a chance that they’re overcapitalising. If they’re in a really strong, well regarded area where people are looking to buy in high price brackets, then it’s harder to overcapitalise.”

9 Outdoor Living Areas
“Outdoor living areas are one thing which tend to add more value than cost. So if there’s a well presented and functional living space, that always reflects well on a valuation or appraisal of a real estate investment property,” Grahame says.

10 Kitchen and Bathroom
“Kitchen and bathroom facilities are an obvious one,” Grahame says. “If they’re well presented and don’t have a dated look about them, then that will obviously have a positive impact on the valuation [or property appraisal]”

11 Etiquette
“The inspection in a typical three-bedroom home would take a prudent valuer [or real estate appraiser] not much more than 10 minutes to inspect inside and out, so don’t feel that you have to speak to the valuer to make sure that they haven’t missed any part of the property,” Ruttner says. Some owners feel a need to follow the valuer or property appraiser around pointing out every feature of the dwelling, but Ruttner suggests “don’t try and sell the property to the valuer.”

While you may be pointing out features you feel add value to the property, it’s best to leave it up to the expert to decide which are the salient features. If you waste the valuer’s time or the property appraiser’s time with lots of chatter you may get in the way of them doing their job as thoroughly as possible.

If you want to make sure the valuer has all the information they need, Ruttner suggests that at the end of the visit, you can always ask whether there are any matters the valuer isn’t sure about.

12 Be Patient
“Lastly, don’t ask the valuer what they think it’s worth as they’re leaving,” Ruttner says. After visitng the property, the valuer or appraiser needs to go away and undertake at least two separate methods for determing the property’s value. Two of the most common methods for residential property are “direct comparison” and “summation.” Direct comparison involves analysis of recent sales of similar properties in the area. It may be a straight comparison or a comparison of the rate per square metre (which is the salesprice of each property divided by the land size). In this method the valuer or real estate appraiser takes into account factors which differentiate your property from those in the comparison sample, such as location, size, quality of the dwelling and views.

Using the summation approach, the valuer/property appraiser assesses the land value (sometimes based on a comparison of vacant land sales) and then includes the ‘added value’ of the improvements of the land (ie. buildings). The added value is based on market evidence and is sometimes analysed on a rate per square metre basis. The valuer probably won’t be comfortable giving you an answer until this analysis is complete.

In short
So for optimal results, keep your place neat and tidy, provide any information to the valuer which might support your case, and then leave them in peace to get on with their job.

23 Ways to Cut your Overhead in Real Estate Investing

Is your cash flow a bit tight? Here are some ways you can make things a bit easier. Written by Michaela Ryan for the API Magazine May 2007 issue.

Many beginner investors in real estate put a high proportion of their income towards their mortgages. Eventually rents rise and cash flow becomes a lot easier. But in the meantime, there could be a few years when you’re strapped for cash. So here are some suggestions for cuttng your living and property expenses, to free up some cash flow and make life a little easier for real estate investors.

1 | Stick to a real estate investment budget

Karen Novak, a certified financial planner with Westpac, says the first thing you need to do is work out where you’re spending your money. There are a lot of pro forma budgets available online or through financial advisers. You could use one of these or simply go through al your bills and work out what you’re spending each month. According to Novak, the problem areas for most people isn’t their bills, it’s their discretionary spending. Most real estate investors underestimate the amount they spend on items such as groceries, entertainment, takeaway and clothes. That’s why Novak recommends tracking your expenditure for a month and copmaring it to your initial estimates. Once you know how much you’re really spending you’ll be in a good position to establish a realistic weekly limit.

2 | Identify your weaknesses

All real estate investment professionals and beginners have weaknesses. As you track your spending, you’ll see where your greatest weaknesses are. For example, Novak says some people regularly go to the supermarket for one thing and end up coming home with six additional items. Another person’s weakness might be shouting rounds at the pub on their keycard once their cash runs out. Once you’re aware of your weakness, you’ll be able to change your behaviour.

3 | Negotiate with a property manager

Do you own a number of properties, managed by different property managers? If you offer several properties to one manager, you’re in a strong position to ask for a discount. These days there are a number of property management real estate companies that service an entire city rather than one suburb. Tenant enquiry tends to come largely from the internet these days, so it isn’t as important to have a local manager as it once was.

4 | Do real estate property repairs yourself

If you need to spend a handyman around to a property it can set you back $60 or more. If you employ a gardener to attend a property regularly, it can cost you several hundred dollars a year. Are you capable of doing these jobs yourself?

5 | Shop around for insurance on property

Do you know how competitive your insurance premium is? Not just landloards’ insurance. What about your health, car, and home and contents insurance? It sounds like tedious work shopping around for a better deal. But it’s just a matter of making a few calls that might save you hundreds of dollars each year. Alternatively you can ask an insurance broker to shop around for you. Or you could try an online service such as www.iselect.com.au to compare a wide range of health insurance premiums.

6 | Shop around for phone and internet services

While we’re on the topic of shopping around, there are huge savings to be made on your home phone, mobile and internet bills. When your contracts expire, it’s a good time to consider your options. Or if the cost of breaking an existing contract is small compared to the savings you’ll receive from a different service provider, it could be worth while making the switch even earlier. There are attractive deals in each of these areas individually. Or you could bundle the three services with one provider to attractive discounts. You just need to set aside a hour to go online and consider the packages that various companies offer.

7 | Reduce bank fees

Bank fess and charges can take a nasty bit out of your savings each month. If you shop around, you might be able to swap to a bank or building society with much lower fees. In some cases you can be stung withfees even though your account is closed.

8 | Use your own ATMs

For beginner real estate investors in Australia, do you know how much you pay every time you use the ATM of another bank? If you’re regularly incurring fees of two or three dollars, you might want to think about locating the nearest ATM or branch belonging to your bank, and doing your withdrawals so you don’t have to find an ATM so often. Check your bank’s terms and conditions to find out whether you’re charged a fee for getting cash out via EFTPOS. It might be that you can get your weekly pocket money when you do your grocery shopping.

9 | Reduce credit card costs

Beware of late payment fees and over-limit fees on your credit card, which can be up to $40 a pop. According to the ACA, if you don’t make a payment by the due date, some credit unions even charge $15 every seven days until a payment is received. By shopping around you might be able to change to a credit card which offers a much lower interest rate and perhaps no annual fee. The market is becoming much more competitive.

10 | Consolidate Debt

Novak says you can save money by consolidating the debt that you have. Novak suggest you could settle your other credit card debts using the new card, and then pay of the debt on the new card in a focused period to time so that there’s no debt remaining by the end of the honeymoon period. This strategy could get you out of the cycle of making costly ongoing interest payments – so long as you have the discipline to carry it out properly. Alternatively you can speak to your mortgage broker or banker about consolidating personal loans and credit car debts by refinancing your home loan on your residence property.

11 | Pay less interest

in some cases you will be able to reduce your monthly mortgage commitment if you refinance to a new lender or negotiate with your current lender to get a reduced rate. This is extremely great for first time real estate investors and investment professionals who can lower their monthly costs by a lot.

12 | Pay interest only

There are pros and cons if you pay interest only on your mortgages (as opposed to principal and interest on your real estate investment properties). For example, sometimes it can hold back you borrowing capacity (i.e. next time you apply for a loan the bank might not be willing to lend you as much money as it otherwise would.) However, paying interest only on loans is a common strategy for reducing the overheads of property investment.

Points 13 through 23 are coming soon! Stay tuned.

Stay the Course in Real Estate Investing

By Michaela Ryane for the Australian Property Investor magazine May 2007 issue. Not many of us are turned on by the idea of ‘getting rich slow’. But patience does pay off on the winding road that is property real estate investment.

Remember Veruca Salt, a.k.a. the girl who screeched: “I want an Oompa Loompa now!” in Charlie and the Chocolate Factory? Well, if we’re really honest, a lot of us have some Veruca in us – we crave for instant gratification.

Occasionally, property real estate investors get rich quick. But for most of us, it’s a case of sitting back for a while before the gains become obvious. In the meantime your inner Veruca might become impatient. She may even urge you to sell up. So how can you get out of the Veruca mindset and into the mindset of ‘staying the course’?

1. Consider historical data

If you’re influenced by short-term events, you’ll make yourself unnecessarily anxious. Historical data confirms that real estate property values and rents have always gone up in the past. Best selling property author Jan Somers has been investing in real estate since the seventies. She uses historical data to build her confidence. However, she cautions: “You shouldn’t rely on those statistics to decide when or where to invest.”

2. Take a long-term view

If you buy real estate property expecting strong short-term gains, there’s a reasonable chance you’ll be disappointed. With a long-term view there’s a much lower chance of disappointment. “Long term is more than four or five years,” Somers suggests. “I can’t tell you the number of people who in the late 1990s and early 2000s had held on to property for four or five or seven years and said, ‘look nothing’s happening and we’re going to bail out’. And they’ve bailed out and missed out (on significant gains).”

3. Remember why you’re doing it

Goal setting 101: if you set a goal, write down the reasons why you want to achieve the goal. If you didn’t do this when you started investing in real estate, do it now. This is your big picture – your motivation to stay the course. You can refer to it whenever you start to get impatient. You may be forced to make some sacrifices when you start investing in property and real estate investments, but if your big picture excites you, you’ll be more willing to do whatever it takes to achieve it.

4. Know your risk profile

If you’re prone to anxious worrying, look for ways to increase your ‘sleep-at-night’ factor. You can fix rates, hire property managers, get landlord’s insurance. Whatever it takes for you to stay the course.

Prestigious Real Estate Properties makes Real Estate Investment a Snap

Published in the Real Estate Business Edge newspaper Advertising Feature in February 2007. Generate cash flow while you watch property value increase.

Every would-be real estate investor is seeking the fiscal equivalent of the Holy Grail: a fully secured, no-risk deal with guaranteed and robust rates of return.

Unfortunately, the Holy Grail remains elusive. And experience home buyers and sellers realize it’s a rare investment that doesn’t entail at least a minor element of risk. But that’s the key to wise investment in real estate: you’ve got to tap into the highest possible returns while keeping risk as far out of the picture as possible.

At Prestigious Properties, President Thomas Beyer and the Chief Operating Officer Doug Thiessen have shown that the syndicated purchase of carefully selected rental properties can bring real estate investors reliable quarterly cash flow and significant equity appreciation, with moderate risk.

Beyer and Thiessen have developed a highly successful formula that has made money for hundreds of their associates, most of them “ordinary” real estate investors who have never regretted their decision to enter into a syndicated purchase agreement.

“Investors generally want three things: zero risk, regular income on a monthly basis and a 100-per-cent guaranteed chance to watch their equity grow at a substantial rate,” says Beyer, an MBA from the University of Alberta as well as a Gold member of the Alberta Real Estate Investment Network.

“While nobody in the real estate investment community is able to offer absolutely iron-clad guarantees, Prestigious Proeprties CAN enable you to share in the ownership of a revenue-producing apartment building that’s as close to bulletproof as it’s possible to be,” he adds.

Much of the beauty of the plan lies in its simplicity. Beyer urges you to become a landlord while leaving all the hassles to him and his team. His program works this way: real estate investors with a minimum of $25,000 come aboard as partners in a syndicate to purchase an under-managed, under-valued property in a well-regarded area of a promising city such as Edmonton, Powell River, B.C. or certain medium-sized towns in Saskatchewan, B.C. or Alberta.

Beyer likes to refer to his ideal target properties as Class C buildings situated in Class B urban neighbourhoods. These are choice if underrated districts, where property values seem destined to appreciate.

When a purchase syndicate is formed, such properties will be acquired, skilfully managed, appropriately renovated, and eventually re-financed after a lapse of time ranging from nine to 24 months. By that time, rents will have increased, with a commensurate rise in the value of the building in question.

Under the terms of a pre-arranged exit strategy, the syndicate will eventually sell the real estate asset for as much as 30 to 90 per cent more than the original purchase price.

“There will always be demand for residential tenants in dynamic provincial economies such as B.C.,, Alberta and Saskatchewan. Time and again, we have proven the rental market is a good growth area, whether the economy is strong or soft,” says Bayer.

Prestigious Properties expends enormous effort on due diligence, carefully and methodically identifying potential real estate asset able to combine positive cash flow with equity growth. Apartment or townhouse complexes full of renters tend to match this profile beautifully. Because, as Beyer points out, the more rental units in the building, the greater the cash flow – even after taking care of upfront expenses such as taxes, mortgage payments and rental management.

As an example, the president cites the company’s most recent investment opportuniy. It’s a 104-unit townhouse style complex in Wetaskiwin, not far southeast of Alberta’s capital city. Prestigious Properties is currently projecting combined cash flow (generally distributed on a quarterly basis) and equity growth of as much as 15 to 20 per cent a year on this complex. Beyer believes the value of this residential property could easily double within four to five years.

“And don’t forget, there are numerous tax advantages to our program, including flow-through of expenses via our LP. These real estate assets enjoy tax deferred status until such time as they are sold,” Beyer hastens to add.

In short, it’s the perfect way for a man or woman in the street to take advantage of Western Canada’s booming real estate market. Beyer believes mature real estate investors may be kidding themselves if they believe they can retire off a stock-market based investment, such as a mutual fund. They’d be wiser to put their money into a safe, inflation proof REAL estate investment that makes money as you sit back an watch its value appreciate.

Beyer has learned the real estate business from the ground up. An award winning Christian businessman with a glowing track record, he urges you to get smart and go with a winner.

That’s Prestigious Properties. It may not be the Holy Grail, but it’s as close as most investors in real estate are likely to come.

Check out the Prestigious Properties website: www.prestprop.com. Then contact the company at 403.678.3330 or email investor@prestprop.com.

For other joint venture Edmonton real estate property deals and investment opportunities, click here.

Should you sell or rent? The ongoing debate of selling property for capital gains versus keeping them for positive cashflow

Part 2 of this article published in the Australia Property Investor Magazine.

You don’t need to sell to access your gains in real estate

Lomas says people think they have to sell real estate to release the capital gains they’ve made. “But your unrealised gains are worth just as much- probably more, because you don’t have to pay CGT (capital gains tax),” she says. “The gains are there for you to leverage against. You don’t have to realise the gains to leverage into more real estate property or another kind of investment. If people are thinking of selling because they want to cash for seomthing, they would be better to get that cash by borrowing against their equity – although it depends on many variables.”

A comparison of two hypothetical scenarios shows how home equity is more powerful in creating wealth if good property is retained rather than traded. Take two real estate investors who buy similar investment properties for $300,000, one who plans to use the equity build-up to buy more properties, the other seeking to trade the property. For the purposes of the exercise, let’s assume values rise 10 per cent a year andignore buying costs (identical for both real estate investors).

After two years both investors in real estate buy again. Investor A ha $63,000 equity and uses that as leverage to buy a second property for $400,000. Investor B realises his $63,000 equity build-up by selling (and paying around $25,000 in fees and taxes) before buying a better property for $400,000.

After another two years, both real estate investors buy again using their respective strategies. Compare their situations after another two years (i.e. six years after each made the initial purchase):

Investor A owns three investment properties worth around $1.72 million, with total equity of $521,000. Investor A is well-positioned to buy more property.

Investor B has one property worth $605,000 with equity of $105,000. Along the way, Investor B paid out $60,000 in fees and taxes by selling and is about to lose more, because the strategy in real estate property investments calls for Investor B to sell and buy again.

Plan and be patient with real estate

Perth real estate agent Bernie Kroczek says building wealth through property investment requires a long-term goal, developing a real estate strategy and being disciplined enough to follow the plan without over-extending.

“Assuming that you’ve done your homework and purchased wisely within your financial capabilities, holding a real estate property over the long-term (minimum of 10 years) virtually guarantees success – without taking unnecessary risks or trying to pick the real estate market,” Kroczek says. “It’s really quite simple and doesn’t require tricks, elaborate schemes or superior knowledge – which many people pay thousands of dollars for, attending one seminar after another looking for the magic bullet.”

Bright tells all his real estate investor clients they should look at a five-year buy-and-hold as a minimum – but preferably they should never sell. “They should be happy to own the property real estate if the market shut tomorrow and never reopened,” he says. Balanda says he helps many wealthy people with lots of property assets prepare their wills; invariably they’re people who’ve bought and held shares and property. “Very few people create wealth through trading, but I see a lot who create wealth through buying and holding good assets,” he says.

Wakelin advises investors in property to hang on to their tax-free profits and use them to leverage into other assets. “Hold on to good quality assets in real estate and use the equity build-up ad your notional deposit to buy the next property. It’s incredibly simple. The real take home advantage message is that there’s no need to line anybody else’s pocket. Hang on to your profits.”

Wakelin says real estate investors should base property-buying decisions on the potential to double in value every seven to ten years. “You only need to build up $50,000 to $60,000 in equity. You can unlock a good proportion of that and use it to springboard into the next asset.”

Hegney buys with a long-term view and never sells (these days) because he want to avoid the capital gains tax. “I’ve bought and sold 10 or 12 properties and the wealth I’ve created out of that hasn’t been as high as buying and holding five good properties – because a lot of my growth has gone in fees and taxes. “By the time you sell, pay fees an dpay capital gains tax, the next real estate investment you buy has to work that much harder to make up for that.”

Lomas owns more than 30 properties and has only once sold a property. “You might get good growth in the first year or it might be the ninth or tenth year, but you need to hold for ten years to make it work for you. If you’re buying to trade, you probably won’t give it that much time.”

Of course, there are real estate expectations…

Mortgage broker Tricia Green of Home Loans Now is an experienced real estate investor who sometimes sells assets in property. She says it depends on her initial objective in buying a particular property. “Sometimes I buy with the intention of making improvements to achieve capital gains and then on-selling,” she says. “But if it’s negatively geared for tax benefits I wouldn’t want to sell. It depends on what you’re buying it for.”

Green bought a block of apartment units with friends who planned to renovate and sell the improved product. “Our objective is to hold the property investment for a year to reduce the capital gains tax impact – and as the units become vacant we’ll renovate them and sell.”

Green says people who retain properties and build their equity so they can borrow against it to buy more need to be aware of the commitments they are taking on. “That’s fine providing it’s not going to create hardship in meeting repayments,” she says. “You have to service the loans and if the repayments are much higher than the income, it might work against you.

“But I agree, why sell if you’re comfortable with the commitment, because the real estate capital gains will still be there for you to use. If you’re investing for your retirement, just keep them and build up a property portfolio.”

Wakelin says there’s a danger in the buy-and-hold strategy in real estate property investing for people who over-commit and become too gung-ho. “There have been lots of so-called gurus urging people to be highly speculative,” she says. “It’s better to buy a good tenantable property, be patient and let it do its work to allow the home equity to build.”

Hegney says many home buyers in the recent boom market in Perth have made the mistake of buying with short term vision. “People have bought assets in real estate that have been fantastic performers over one or three years, but they’re not long-term performers,” he says. “if the property real estate market goes into reverse, they’re the assets you’d want to get rid of. “I would say to people – all those properties you bought in the cheaper areas that aren’t long-term high growth areas, I would sell them now. They’ve had their run.”

Lomas says trying to trade away your way to wealth is a mistake but it’s also a mistake to hang on to property real estate that doesn’t perform.

“In those circumstances, you have to cut your losses and get out when you can,” she says. “I always say you should never sell but sometimes you need to. I discourage people from hanging onto something that’s a bad real estate investment which is soaking up money and preventing them form buying more property real estate. You might need to get rid of it to allow you to do something else.”

A client of McGeever’s provides a striking example. The real estate investor paid $120,000 for a small suburban unit in 1992 and found it was only worth $95,000 10 years later. He had to decide whether to persevere or cut his losses. He decided to sell and used the proceeds to buy a small retail property investment for $365,000, yielding 9.5 per cent.

McGeever says with rental increases and firming yields, that real estate property is now worth $645,000.

Terry Ryder is the creator of hotspotting.com.au and author of four real estate books.

Real Estate Questions Answered

Panel of experts in real estate investing answer questions from API Magazine readers in the March 2007 issue.

Using a trust structure

Question: My husband and I own an investment real estate property in Queensland and we rent a house in Sydney. We’re buying a second investment property using a company/trust structure. We’ve set up a hybrid trust for future real estate purchases. For our third property purchase, would it be legal for our company to purchase and we, as individuals, rent it at the current market rate? I’ve asked two accountants this question – one said there was nothing illegal about it but the other wouldn’t support such a move.

Answer: Most trust deeds allow the trust to rent a property to the beneficiaries of the trust. So, from a legal perspective, there’s certainly nothing to stop you from doing this. Further, there was an important legal precedent set in 1987 when the courts found in favour of the taxpayer in just such a case. For what it’s worth, this is known as the Janmor case. However, before you do this there are a couple of issues to consider:

- the home won’t be exempt from capital gains tax if you were to sell it in the future, whereas it would be if you owned the home in your own names;

- the home may attract land tax that it wouldn’t attract if the home was in your own names.

So, I would suggest that you consider whether this real estate property will be your home for a long, long time or just a short while before making your decisions. The real problem arrives if you wish to negatively gear your home using the hybrid trust features of having the loan in your own names while the trust owns the real estate home property. This is because the Tax Office has said that it will attack this. More information can be found about how the Tax Office would view y our negatively gearing your home through the trust in TR 2002/18. There are legal arguments that suggest that the Tax Office is wrong, but, of course no-one wants to be the one to test whether the Tax Office is wrong or right. As a general rule, you’re wise not to have your home in the trust and negatively gear this real estate investment.

Dale Gatherum-Goss.

Unit or House for Real Estate Investments?

Question: I’m unsure whether to purchase a unit or house. What are the positives and negatives of both? Apart from local property average prices what should I look for? And how long will the real estate buyers’ market last for?

Answer: When it comes to investment property real estate, the first thing you need to do is be clear about why you’re investing. Do you need enough rental income to replace your salary, or do you need to build equity through capital growth in real estate? Since I don’t know the particulars of your situation in investing, I’m going to assume for the purposes of this column that you’re like the majority of property investors, who need to focus on assets that will deliver strong capital growth. In this case, it doesn’t matter so much whether to buy a unit or a house. The most important thing is to identify properties that are in limited supply and have experienced consistently strong demand over a number of years, regardless of whether it is an apartment unit or home. More often than not, these are within short commuting distance of the CBDs of major capital cities, where a scarcity of available land drives up real estate property values. You should also focus on locations where there’s strong competition during negotiations, for example where there are several or more bidders vying for the same home real estate property during an auction. This is a good indication of strong demand and capital growth potential. If you’re looking at apartment units, stick to low rise developments with less than 20 properties. There are less likely to be multiple units in the same block on the real estate market at the same time, so the resale value will be higher.

In terms of research, look at recent sales results in ‘comparable’ properties, i.e. those in the area, with a similar land size, architectural style, and degree of renovation. This will help ensure you have a realistic purchase price in mind, and don’t overpay for the real estate property.

Generally speaking, the ‘right’ time to buy is when the right real estate opportunity presents itself – that is – when you find the real estate asset that’s most likely to help you achieve your objectives. However, there are indications that property investors will begin returning to the market in greater numbers during 2007. So if you find the right property, don’t procrastinate. You’ll face more competition from other real estate investors as the year goes on, which will drive up the asking price.

Mark Armstrong

Questioning a Property Valuation

Question: In September we completed building two residential properties with two different lenders. We asked for a revaluation on one and sold the other last December for $330,000. (We expected this sale price). For the other house the valuation came in at $285,000, well under the sale price of our other property next door! Both completed at the same time, similar size, same finishes etc. Our real estate agent organised sales comparisons for similar properties in the same estate, indicating $320,000 to $330,000 for two properties. Tell me what’s wrong with the facts? Can this low valuation be adjusted?

Answer: When a valuation is lower than your expectations the best approach is to supply some recent sales evidence which supports your case and simply ask the valuer to review the valuation in light of this evidence. Generally, a balanced and informed communication with the valuer will resolve any misunderstandings. If your real estate property next door hadn’t settled at the time of the valuation, there’s a chance the valuer may not have been aware of this evidence. In addition, some lenders insist that valuations be based on settled sales only – not on properties which are still under contract. Remember that valuers are totally independent and have no vested interest in your home property or the outcome of the valuation.

Phil Grahame

Real Estate Investing Books and Property Investment Resources

If you are looking to purchase a book on how to invest in real estate or property investments or guides to property management, renting, seeking financing or general personal financial help, please read below.

The following web site is a great resource for real estate investors across the United States and Canada to purchase the best investment books that will guide you through the process of building wealth through property investments.

The two books that are recommended by everyone before you get started in the property investing arena are written by world-renowned author Robert Kiyosaki who teaches you on how to get out of the 'rat race'. By reading these two books, you will gain knowledge on why you are investing in real estate and how to change your life so that you can maximise your time, wealth and prosperity.

Book #1 - Rich Dad Poor Dad by Robert Kiyosaki

Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money That the Poor and the Middle Class Do Not


For CD Version:



Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money That the Poor and the Middle Class Do Not
A #1 New York Times bestseller, Rich Dad, Poor Dad is a true story on the lessons about money that Robert Kiyosaki learned from his two 'dads.' One dad, a Ph.D. and superintendent of education, never had enough money at the end of the month and died broke. His other dad dropped out of school at age 13 and went on to become one of the wealthiest men in Hawaii.

Book #2 - Who Took My Money by Robert Kiyosaki

Rich Dad's Who Took My Money? : Why Slow Investors Lose and How Fast Money Wins


For CD Version:

Rich Dad S Who Took My Money? Why Slow Investors Lose And How Fast Money Wins! (Cd/spoken Word)


Rich Dad's Who Took My Money? : Why Slow Investors Lose and How Fast Money Wins
Kiyosaki starts this book by asking the reader to study one's paycheck. "Look at all the deductions that reduce your take-home pay-federal taxes, state taxes, FICA, 401k deductions, etc., etc.," observes Kiyosaki. "For every dollar you earn, you seemingly only take home 60 or 70 cents! What guarantee do you have ALL these monetary deductions, like your 401k or Social Security, are ever going to come back to help you when you decide to retire?"Using this platform as a jumping-off point, Kiyosaki shows how today's employees can finally start taking advantage of their OWN investments to put them on the fast track to become independently wealthy. In short, Kiyosaki explains "who took your money" -and what you can do to make sure you aren't short-changed!

Here are the categories listed:

1. Rich Dad Poor Dad by Robert Kiyosaki
2. Donald Trump - How to get rich through real estate
3. Real Estate Investing for Dummies
4. Flipping Property and How To's
5. Real Estate Financing and the Banks including Mortgages
6. Renting Real Estate and Property Management
7. Home Renovations and Reno for Dummies
8. Recreational and Resort Real Estate Investing including Timeshares
9. Canadian Real Estate Investing and books by Don Campbell
10. Life, Wealth, Prosperity, Retirement - General Financial Help Books

Team Spirit in Real Estate Renovations

Written by Matthew Liddy for the API Magazine – January 2007 edition. Full-time investors in real estate Paul and Cindy Henderson have teamed up with like-minded investors on two recent projects.

Paul and Cindy Henderson don’t need any help to complete profitable renovations in real estate. They’ve been focused on building their wealth through property real estate investments for about three years, and have spent more than two of those years as a full-time renovation team. However, two of their recent real estate renovation projets have seen them teaming up with other investors to complete two very different projects – a duplex renovation and a home makeover aimed at raising $42,000 for charity.

In the case of the duplex renovation, Perth locals Paul and Cindy joke that it’s been one of the easiest makeover real estate projects they’ve undertaken – since their business partners did all of the work. That might now sound fair – but the Hendersons did put up the omney, handle all the payments and complete the settlements on purchase and sale.

“Our real estate partners had the time but not the money,” says cindy. “We had the money but not the time,. So it was a great real estate project which worked out extremely well for both of us – we couldn’t have been happier with the outcome.” Paul and Cindy financed the renovation using a loan with an 80 per cent loan to value ratio (LVR), with the 20 per cent deposit plus stamp duty costs coming from a line of credit they already set up.

These real estate renovations for the home masters generally work on their own but admit this particular partnership worked out very well. “We liked the idea of walking away with almost $70,000, for turning up for half an hour at the start and half an hour at the end,” Paul laughts.

That, of course, is understating the Henderson’s involvement in the real estate project somewhat, as they kept a close eye on the most aspects of the deal. Through a local real estate agent, the Hendersons’ business partner identified a duplex at Bateman in perth as a potential real estate target for the renovate and sell strategy they had in mind.

“We looked at the statistics on what was selling down there and similar duplex pairs – in fact, ours was better we felt – were going for $300,000 each, back when we were being asked to pay $440,000 for the pair,” Cindy says. “So we could see where good dollars to be had, even though we did need to spend some money on the renovation.”

Paul says upmarket Bateman real estate is an attractive area for real estate investment, partly due to its easy access to both Fremantle and Perth, but also due to the strong reputation of a local school. “It’s zoned for what is in effect the high school with the best record in all of Australia for passing out the youngsters (in terms of) scholarships marks and so on,” he says.

Conditions Attached

The Hendersons discovered that the real estate vendors had had the same plans for the property home as they did – strata title the two units, renovate and sell. However, changed circumstances meant they were now looking to sell them as a pair. The real estate home owners already had conditional approval for separate titles and just had to complete some building works – such as raising the dividing wall up through the roof space – in order for it to go through.

The Hendersons and their real estate business partners were able to negotiate a contract whereby they paid the full asking price for the home units but the owners completed the process of moving the property homes onto two separate titles before the purchase. In addition, they arranged to have access to the duplex during the settlement period.

This saved them about $10,000 on the strata title costs and gave them the benefits of a long settlement period during which they could begin the renovation, saving thousands of dollars in holding costs for the real estate property homes.

“You do take a risk when you do that because if a deal falls through and you’ve spend money on renovations, you have to walk away, “cindy says. “It was a risk for us but we couldn’t really see anything going wrong. We knew that we’d get finance and that things would proceed on our side.” The risk paid off – the home vendors completed the division of titles during what turned out to be a smooth three month settlement.

Paul and Cindy say that while they were pretty much hands off during the settlement renovation process, the makeover did fit in with their general strategy, meaning it didn’t involve any structural changes to the homes.

“We’ve seen friends of ours get involved with that sort of thing and year laters they’re still trying to put the walls back up,” Paul explains. For the duplex, the real estate renovation included remodeling the bathroom, kitchen and laundry, rending the exterior, new plubming, new electrics, installing air-conditioning, and some landscaping.

Because Bateman is an upmarket real estate market area, the Hendersons and their business partners opted for a high-class finish targeting professionals. “We decided to put granite beach tops and things like that in, whereas if it was a lower socio-economic group, we wouldn’t do that,” Paul says.

Blowing the real estate budget

Going into the real estate purchase, the new partners drafted an agreement setting out the terms of the deal. Paul and Cindy say they opted not to get legal advice on the document but did run it past their property mentor.

They also drew up a more comprehensive budget than they would have if going it alone. “We did a budget, which got blown,” Cindy laughs. “We do up a general budget when we’re doing a reno anyway just to make sure you’re not going to pay too much for the rela estate property home but we probably did this one more detailed to ensure the profit was there before we finished the offer.”

Those budget over-runs, Cindy says, were the most disappointing aspect of the real estate project. “We ended up paying something like $8000 just to do up the front yard and that was the removing trees, clearing the land, putting grass down and a small retaining wall,” she says. “But thought was too much. We probably could have done better there.”

Paul adds, “One of the major errors that I feel we made was that we agreed to look after the finances and pay the bills and tradies and so on but because (our home real estate partners) were doing the work really without our intervention – they were simply ordering the trades and passing the bills our way. “With the benefits of hindsight, if we’d had a bit more involvement, there’s no way in this world we would ever agreed to spend $8000 on a front garden.”

Despite the expense, Cindy and Paul were ecstatic with the outcome of the real estate renovation project – both in terms of the final product and the financial reward. After a $60,000 spend on renovating the real estate home property, the units sold for $335,000 and $332,000. The Hendersons saved money by welling without an agent in real estate. Both units sold within a single weekend, thanks to Perth’s hot real estate market and some clever tactical thinking.

“We looked for some agents’ adverts ont eh internet and we found that there was an auction just down the road from our property real estate that was going on the Saturday after we were ready to sell,” Cindy says. “We waited the extra week and we put our open house in to overlap the time the auction was going to happen.

They then set up their signs so that anyone going to the real estate auction would know about their open house. “I think we got about 75 people through and about half of those were from the real estate auction, so that worked quite well for us,” Cindy says.

The decision to go upmarket real estate paid off, as both units sold to professional couples. Paul and Cindy split the $134,000 gross profit with their business partners 50:50.

Avoiding the Pitfalls of Real Estate Investment

In Part 5, Monique Wakelin talks about what to watch out for when deciding what proper real estate assets you should consider in the December issue of API Magazine for the article: ‘Take Control: How Home Equity puts you in the driver’s seat’.

It’s not unusual to hear tales of woe from both first-time and seasoned real estate investors who have fallen for the traps and failed to achieve the capital gains they expected. Some of the most common mistakes that could potentially cost thousands of dollars include:

Investing in speculative sectors of the residential property real estate market. These include off-the-plan developments that concentrate on “inducements” such as rental guarantees, offers of finance or tax breaks. The “inducements” often mask a propensity for low or no capital growth.

Faulty real estate asset selection. You can select a real estate investment property in the right suburb but in the wrong street. It may be that the surrounding buildings and aspect detract from its attractiveness and long-term growth potential. The wrong building style can also be a slow mover, even if it’s in the right area.

Failing to understand the importance of scarcity value. The higher the demand for the asset and the less supply, the greater your capital gain in real estate will be.

Buying a real estate investment property for tax benefits, stamp duty savings or rental guarantees. On a properly selected investment property, these factors are an added bonus rather than the primary reason for the purchase. Nobody ever becomes financially independent concentrating on saving tax.

Failure to check major body corporate expenditure. The fees charged on some apartment developments canbe astronomical. In the case of some CBD high-rises, body corporate fees can be between $3000 and $4000 a year. This is a major part of an investor’s outgoings and an unnecessary expense.

Paying too much. An overpriced real estate property will take a great deal longer to catch up with its true worth and to start producing capital gains than one that was bought at the right real estate market price to begin with. Always do your homework in regard to prior benchmarking in real estate value.

Failure to diversify locations and building styles within a property portfolio in real estate. Not all real estate sectors of the property market move in a uniform way – even in the high demand areas. Diversity in a real estate portfolio can help the investor ride out any short-term anomalies in one area or market sector.

Relying on historical statistics. Most of the property real estate data we see is already three months old. This puts the investor in the position of trying to make tomorrow’s decision with yesterday’s news. You can’t beat on-the-ground homework for the most accurate picture of where the market is and where the real estate markets are moving.

Lack of independent information. When seeking advice from anyone in an advisory capacity, always check their qualifications, length of time in business, affiliations, any vested interest, what they abse their recommendations on, what ongoing services they provide and ensure their fees are paid by you, the customer, and not by other interested parties. Always ensure they have unrestricted access to the real estate market.

The cost of waiting for the “ideal” circumstances. This could be a wait-and-see attitude to interest rate movements or whether the property real estate market is going to soften. There’s no right or wrong time to buy an investment real estate property. If investors apply the long-term principle then the cost of waiting can be very expensive indeed!

Monique Wakelin is the co-founder of Wakelin Property Advisory, www.wakelin.com.au, a Melbourne-based property consultancy. For more home purchasing and real estate investment tips and checklists, please visit this link.

What affects real estate values and property values in the eyes of a home purchaser

By Terry Ryder for API Magazine January 2007. The second part of this two part article.

Public Transport Nodes and Real Estate Values

Matusik has investigated house values several times in the past five years to determine the importance of being next to public transport nodes. The evidence suggests home buyers are paying 10 per cent more to be within 500 metres of railway stations and 19 per cent more to be near major busway stations.

Over the past five years, real estate values near a railway station have increased 12.6 per cent a year – compared to the Brisbane average of 10.3 per cent.

“Higher prices are being paid to live near the major busway stations of Woolloongabba, Greenslopes, and Holland Park. Five years ago houses close to these stations weren’t much more than the Brisbane average but the median house price near these transport hubs this year was 19 per cent higher than the Brisbane average,” Matusik says.

Real estate values for these properties rose almost 12 per cent in the 2006 financial year, compared to the Brisbane average rise of 3.5 per cent. Bright says Sydney homes need access to some mode of public transport to be desireable – either train, bus or ferry.

“The more the merrier – it’s mandatory to have at least one ofthose modes of transport available, preferably two,” Bright says. “If you don’t have train or bus or ferry, you’re making it hard.”

Lifestyle Precincts, shops, parks are important for real estate buyers

Brisbane house values within 500 metres of noted lifestyle precincts – suburban high street or café strips – have risen 13.5 per cent a year over the past five years, compared with the Brisbane average of 10.3 per cent.

The median house price in these precincts is $584,000 – compared with the Brisbane average of $354,000. House values and real estate properties rose 9.2 per cent in these precincts in the 2006 financial year, while prices rose only 2.5 per cent across Brisbane.

“Home buyers in these higher-priced inner-city locations were paying 61 per cent more than the average in 2002,” Matusik says. “This premium has lifted to 81 per cent when compared to today’s median price. When comparing the results against the inner-city median house price, we find that the premium paid to live near a high street was 10 per cent in 2002 and 16 per cent today.”

The research showed there was a premium paid to live close to major shopping centres as well. This wasn’t the case in 2002 but today Brisbane, Gold Coast and Sunshine Coast real estate home buyers will pay 18 per cent above the area’s average to be close to regional shopping centres.

There was a similar result for homes close to major public open spaces. There was no premium in 2002 but now home buyers pay a premium of 18 per cent. “Annual price growth has been similarly impressive, with the results being 15.1 per cent a year over the past five years,” Matusik says.

Bright says lifestyle precincts are becoming more and more important in Sydney, because Generation X and Y want it and baby boomers are moving towards them as they edge closer to retirement.

Noise a No-No and will decrease property real estate values significantly

Home and apartment buyers are finding themselves victims of noise rage. Archicentre, the building advisory service of the Royal Australian Institute of Architects, says pre-purchase inspections of real estate show this is a growing issue.

“Often it’s only when people move in that they find their new home is subject to noise which can lead to stress, poor relationships with neighbours and in some cases physical confrontations,” says Ron Tanton of Archicentre.

Noise problems arise from poor real estate building practices with inappropriate acoustic separation between apartments, the tendency for people to invest thousands in home entertainment systems, noise-producing polished floors in units and balconies built like clusters on high-rise condo buildings.

“Noise is an issue everyone needs to assess before signing on the dotted line for a real estate property,” Tanton says. He suggest home buyers speak to neighbours and see how they feel about living in the apartments – as they’ll soon tell you if they’re suffering sound rage.

Bright says he visits residents living in apartments above the one he’s examining for a client and asks them to walk about so he can assess noise transfer. It’s important for home buyers to check whether the walls have noise-dampening insulation and concrete floors which lessen noise transfer. Kelaher says noisy apartments will sell for 20 to 25 per cent less than quiet ones.

Water tanks worth watching ... most so in Australia

Water-wise features will attract a premium and may, in the future, be a major contributor to achieving a sale. As the drought and global warming become top-of-mind for many Australians, this factor will gain increasing importance in the real estate market.

A recent website poll by Matusik Property Insights examined whether rain tanks added value to a home. Two-thirds of respondents thought they did. Of the ‘yes’ voters, 30 per cent thought they added between 2 and 5 per cent to the property’s overall value, while 20 per cent thought a rainwater tank would add 5 per cent of more. Matusik notes, however, that a 2 per cent premium would add $6500 to the average Brisbane home – twice the current cost to install a typical water tank. As the consequence of drought and water restrictions become more apparent, the value of having a water tank in a real estate property grows. Archicentre says one of the outcomes of water shortages will be more cracks appearing in Australian homes and real estate. It predicts cracking in homes will rise 10 per cent.

Archicentre’s latest survey of 75,000 homes across Australia found South Australia suffered the worst cracking problems in the country, with almost half of homes affected. The next highest was Tasmania, with 45 per cent of real estate affected.

Archicentre’s manager in SA, Jim Jovanovic, says that as water restrictions are implemented throughout Australia, the moisture in the ground is ‘changing quite dramatically.’

“When the soils dry out, strain is put on the real estate property structure and cracks can appear overnight,” Jovanovic says, “In many cases, cracks up to 10 millimetres in brickwork could close up once the soil regained moisture content. More serious cracking might need some form of structural repair.”

Terry Ryder is author of four books and creator of hotspotting.com.au.

For more information about Australia pre-construction condominium residences.

Real Estate Help is at Hand and Home Renovations - On the Improve of Real Estate

Got a real estate renovation question? Who better to ask than Reno King Paul Eslick? Published in API January 2007 magazine in Australia.

Question: My home renovation involves pulling out a kitchen cabinet and a wall to create more open space at the back of our house. After much hunting around, I’ve found some terractotta tiles that look almost identical to the tiles already in place through the rest of the kitchen. However, these tiles are somewhat thinner than the originals. What’s the best way to lay tiles so I get a level end result?

Answer: I assume we’re talking about floor tiles here. Tiles that require padding for levelling purposes should be laid onto a finished correct height solid base which has been attached to the original floor with nails and glue. Tiles are then fastened as per the manufacturer’s recommendations. Reno Kings usually tile all their wet areas with 200mm x 200mm white tiles for a BBC room – bigger, brigher and cleaner!

Question: What’s the best approach to painting concrete path or driveway? Is any special preparation needed?

Answer: For unpainted surfaces, new concrete requires curing for at least 12 weeks before painting. All unpainted surfaces, new and old, need to be etched to give good adhesion. Mix one part spirit of salts to nine parts water and spread with a stiff broom until fizzing action has ceased. Repeat on smooth concrete surfaces, wash off and allow drying before painting.

For painted surfaces, scrape off all flaky paint and remove all contaminants like oil, grease etc. Sand smooth surfaces to rough for better adhesion. Paint a small section only and allow it to dry and then test compatibility with old paint, looking for signs like lifting. If poor adhesion is visible, remove old paint. If not, paint as per manufacturer’s instructions.

Painting concrete sounds harder than it actually is. The Reno Kings paint these surfaces often. It gives the house a left and dries in two hours. What a bonus instant equity!

Question: I’m currently renovating a Queenslander real estate property and will be sanding the paint off the old deck and recoating it to show off the natural timber. I’m unsure whether to use a decking oil or a lacquer. What would your recommend?

Answer: Maintaining a natural look of timber deck equates to a lot of challenges to both the timber and the coatings. Decking, either hardwood or treated pine laid horizontally, has weather and foot-abrasive traffic to contend with. For this reason, I’d prefer decking oils as they can penetrate better into the cellular structure of timber. Keeping the natural look will require the deck to be recoated every 12 months.

The Reno Kings love decks and so will your tenants! They add value and increase rents. Pay special attention to the condition of stairs and handrails. You don’t want your tenant having an accident.

Question: Do you have any tips on how to get tradespeople to turn up at the appointed hour?

Answer: It’s a sign of the times unfortunately. The tradespeople have too much work and not enough time to do it in and a small number of workers can tar the rest. Getting tradespeople for real estate renovations from the Yellow Pages without checking previous work ethics is fraught with danger. I suggest you only approach tradespeople reno real estate recommended by reliable sources. When you find a good tradesperson, pay the promptly and you’ll become a preferred client.

The Reno Kings are flexible. If one tradie is a no-show, we move into another area to kept the job going.

Question: I’d like to add a water feature to the front yard of my real estate investment property but don’t know where to start. Is this a project a DIYer can handle or does it call for a professional?

Answer: There are plenty of complete systems that can easily be assembled by anyone. Costs vary from $200 up to $800. My friend Tony at Bunnings says they’re big sellers and all stores regularly conduct free DIY installation classes.

The Reno Kings say be careful of money suckers on your real estate investment property. How much will the rent increase and the house revalue with a water feature? Not much. This sounds like an emotional project. Forget it!

Visit the Reno Kings at www.renos.com.au. Do you have a real estate renovation question? Email it to editor@apimagazine.com.au and we’ll answer it in a future issue of API. If you would like more Real Estate Renovation Tips and Checklists, please visit this link.
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Home Renovations | On the Improve of Real Estate

Australians are spending more on major real estate renovations than they have in two years, as resilient house prices, a strong labour market and high vacant land prices drive people to improve rather than move.

Home Renovators spent $891 million on major works in September 2006 quarter, up 5 per cent on three months earlier, according to the latest Renovations Monitor from the Housing Industry Association (HIA).

HIA chief economist Harley Dale said market conditions in real estate were making major renovations an appealing option. “This is especially the case at a time when land supply constraints, higher interest rates and unjustifiably high government-imposed costs are conspiring to make new real estate residential construction a less appealing option than it should be.”

The average cost of a major home renovation was $86,476 in September, up 3.1 per cent. However, Dale noted that the real estate renovations most susceptible to interest rates – ground floor and upper floor extensions – lost ground.

Published on Page 6 of the Australian Property Investor Magazine – February 2007.