Property Valuation

Property valuation is sometimes misconstrued with an appraisal provided by a real estate agent. Typically a real estate agent’s appraisal will provide an indication of the property value based on opinion, recent property sales in the area etc; however the ability to use this information is largely limited to personal usage.  Your Buyers’ agent should also be capable of providing equivalent appraisals based on their market knowledge, and be able to sort through property listings, weeding out appraisals that are overly optimistic.

True property valuations are carried out by an independent and qualified professional valuer, who has completed tertiary level qualifications in order to be licensed/registered by courts, lenders or state bodies to carry out an expert valuation.  The property valuation provided by a professional valuer is considered a formal assessment with the outcomes able to be used as in legal proceedings by courts and widely used by lenders as a risk mitigation tool due to the qualifications and independence of qualified valuers.

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Income Protection Insurance – Property Investment

When investing in property, be it your own residence or an investment property, it’s important to be clear on your property investment strategy. Your Buyer Agent will undoubtedly walk through your investment strategy, but one area they should touch on is what financial safety net you have in place. Unforseen risks (such as falling ill) can quite quickly deplete your cash making it difficult to meet mortgage repayments, rent, renovations, household expenses, child’s education etc, so it is important not only to have a cash buffer but also the right investment strategy plan in place. Income protection can be part of this plan and whilst it isn’t suitable for everyone (some choose to self insure through strategies such as a positively geared portfolio), it will come down to your risk profile, financial capabilities and current employment arrangements. As with any insurance it is always in the policy fine print, so here are a few things to keep in mind when it comes to Income Protection insurance?
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Landlord Insurance Is It Essential?

Many first time property investors don’t realise there can be significant differences with having landlord insurance to that of home/building insurance. Landlord insurance is designed to cover owners from specific risks associated with tenanted investment properties that aren’t always included in the cover of a general home/building and contents or strata title insurance policy. Expanding on this, by way of example, a base building insurance policy would only cover you for external/structural property damage as well as public liability. It would not cover you for malicious damage by tenants, loss of rental income due to property damage (e.g. fire) or failure of tenants to pay rent.

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Property Manager Questions

In the last post we touched on real estate property management and property manager services, fees and other general tips. In this post I will touch on some questions to ask when searching for a potential property manager. Also don’t be shy in using your Buyers Advocate to give you some indication on what you should be asking potential property managers.

As with all property investment areas, research is essential so look into at least 2 to 3 companies before selecting the one you want to go with.

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Real Estate Property Management

If you are looking into real estate property management then it is likely that you have just purchased an investment property and want to find a property manager to look after it. It is also likely that you have consider whether you should undertake the investment property management yourself and reached the conclusion that the time, dedication and education required to do so could most likely be best invested elsewhere. I personally err on the side of using a property management company (Real Estate agencies will also normally have a service offering) as my personal time constraints should mean a dedicated property manager should be able to do a superior job with little cost outlay in the overall scheme of property investing.

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Tax Depreciation with an Investment Property

Depreciation is a complex area, however all property investors should have grasp on some of the subtleties surrounding it and how they can benefit from these. Depreciation is an accounting term and describes the general wear and tear of an asset, which occurs over the time that you own it (also called its ‘useful life’). Typically a building won’t appreciate in value, it is the underlying land value that does (there are some edge cases where this doesn’t always hold true).
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Positive Cash Flow with an Investment Property

We have previously covered off the property investment strategy of negative gearing, and in this post we will be looking at purchasing an investment property with positive cash flow. In essence the difference between the two strategies is that negative gearing requires the capital gain on the property over the medium/long term to exceed the shortfall in cash required to hold the property; whereas a positive cash flow strategy means once expenses, tax and deductions are accounted for you don’t require any addition funds to support the investment, in fact you should be earning money from the property.
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Inspecting a Property Before Purchase

Without doubt it is essential to engage a building and pest inspector (a.k.a. building surveyor) pre purchase but we will cover that in more detail in a later post. Before progressing though it is worth noting that most Buyer Agents will have a recommendation/preferred inspector to use (also harmless to ask if they use them for their own property purchases). Inspections are a crucial step in the process, therefore you want someone that comes highly recommended, minimising the chances of ending up with a lemon with hidden issues, that can leave you significantly out of pocket (e.g. white ants, foundation integrity etc).
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Free Property Investment Fundamentals Webinar

The BAG Team has come across a great opportunity for those in the market for an investment property to join a free Webinar, hosted by the REIQ Buyers Agent of the Year 2011, Liz Wilcox (Managing Director – Hot Property Specialists Buyers Agency) and Kevin Turner (4BC, Realestatetalk.com.au).

The details are as follows:

Date – 17th November 2011
Start Time – 6:00pm EST
Duration – approx. 30 minutes

For more information and to register please visit http://www.hotpropertyspecialists.com.au/event/event/detail/event/14009

Researching Infrastructure Development Plans for an Investment Property

You would have heard it a thousand times before but when it comes to an investment property one key piece of the puzzle (cliché) is location, location, location. When searching for the right investment property it is essential to ensure there is real demand for rental properties in the area and they have the potential to yield good rental returns. One great indicator for this type of demand is infrastructure and amenities in the area (current and planned) which this post aims to give you some research tips on seeking out.
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