Finance Tips

Here they come….the emails you’ve been waiting for. You open them. You see a pattern. These commercial property listings are all the same. You choke it up to the fact that you contacted the commercial real estate brokers at the same time and they’re sending you what’s available on the market. A few weeks go by, and the investment property sales lists dwindle and no agents are calling. What happened?

You’re every commercial broker’s business and no broker’s responsibility.

Rewind a few weeks. You’re a commercial real estate broker. You receive a phone call from an investor who’s looking for a good deal in your market. He wants you to send him a good investment property to buy, so keep your eyes open and start hunting. You want a commission right?

Well, sure. But here’s the catch. You get at least one phone call like that every day. You’re asked to find a good deal for this investor, maybe go hunting for him, and start sending him listings. He’s probably not a hot horse who’s going to buy a property off the first list you send him and he’s likely having the same conversation with other investment property brokers in your market.

He’s everyone’s business and no one’s responsibility.

You add him to your database. Maybe you put him in your email distribution list and figure that something might happen, but if not, you may get a call one day when he has a property he needs to lease or sell is commercial property.

After a few weeks, you stop sending him lists of investment properties for sale because you’ve also been asked by 15-20 other investors in the same period of time to do the same activity. Somehow, they think you’re out there working for them, too, because they’re getting the same listings as everyone else. What they don’t know is that no commercial broker’s out there hunting, they’re just entering a search and clicking the send button.

You’ve been selling investment properties long enough to know that most of these calls are a fool’s errand. The promise of a commission looms on the horizon, but you know you’re going to have to spend more in time and resources to maybe get that commission than you’ll likely earn, plus you have no commitment from any one investor that they’ll honor your commission if you bring them a commercial real estate investment opportunity. Pretty risky if you’re a broker. You decide you’re better served investing in those who have hired you to help them acquire and dispose of investment property.

Ultimately, as an investor, ask yourself, when you repeat the same behaviors as everyone else by calling a bunch of brokers to tell them what you want, should you expect an outcome that’s different than everyone else who’s doing the same?

The next time you’re on the phone with a commercial broker, try asking him how many calls he’s had from investors “looking for a good deal” in the last 30 days. Then ask him how many of those investors he’s spoken to after the initial conversation. Chances are you already know the answer.

To get different results than everyone else, change your approach. Ask your investment property brokers how many investors they’re representing. The ones who have clients are getting deals done, while the ones who aren’t….well, just check your email box for the latest commercial property listings.

By taking a different approach and employing an investment property broker to execute a search and acquisition on your behalf, you may be delighted that when you become someone’s responsibility, you’re everyone’s envy.

A current account mortgage is a type of flexible mortgage product that combines several financial products into one single account.

As with any other mortgage product, a current account mortgage will be secured against the borrower’s home. Current account mortgages are not usually secured against investment properties.

The main difference between a current account mortgage and a standard mortgage product is that the current account mortgage will act as both the borrower’s home loan and current account.

Current account mortgages are often referred to as a “line of credit”.

The borrower will normally be required to have their salary or wage paid directly into the current account mortgage and will be allowed to withdraw money from the line of credit as required – within a pre-determined upper limit.

In addition to combining the mortgage with a current account, it can also be combined with credit cards, personal loans, and cheque book facilities in order to streamline the borrower’s overall banking facilities into one product.

As well as helping to streamline the borrower’s banking facilities, a current account mortgage can offer flexible features that standard mortgage products do not, which can further assist the borrower with managing their personal finances.

Because a current account mortgage is a type of flexible mortgage it can offer features such as overpayments, underpayments, drawdown of overpayments previously made, additional borrowing facilities, no (or low) redemption penalties.

In addition to flexibility, a current account mortgage can help the borrower save interest and pay off their home sooner. This is due to a combination of factors such as earnings being paid directly into the mortgage, daily interest rate calculations, and no high interest loans (e.g. credit cards) to pay off simultaneously.

A current account mortgage can, therefore, provide a borrower with many features for organising their personal finances and paying off their mortgage as soon as possible.

However, despite the benefits, it is important for the borrower to remain disciplined because excessive withdrawals will increase the overall cost and term of the mortgage and negate the benefits offered.

Because of this, careful consideration should be given before applying for a current account mortgage. Professional advice may be sought from an independent mortgage adviser.

To begin investing in real estate properties you don’t need to have a huge start up capital. If you have a tight budget for investing it doesn’t mean that you can’t reap the financial benefits of fixing up homes for resale. Actually many of the cheaper homes you can buy and remodel inexpensively will get you the greatest return on your investment.

To successfully invest in real estate on a low budget you should start by finding a cosmetically challenged home with a strong structure that is in a mediocre neighborhood. Once you begin looking in the right areas you will see that it isn’t very difficult to find an investment property with a low asking price.

The selling price of a fixer-upper home can be negotiated considering all of the flaws. This makes is easier for you to invest small amounts of money to add the maximum amount of value to the property.

When it comes to real estate investment quality doesn’t always have to mean a lot of money. You might be surprised at how far a new paint job, fixtures, and flooring can go when it comes to the over all appearance and value of a home.

If you aren’t convinced that you can manage investing in real estate on the budget you have set up you can always turn to your own investment, your home. If you have already purchased a home then you can leverage this asset to gain the capital you need to feel secure investing in real estate.

A homeowner that has paid their monthly mortgage payment on time and has decent credit will be able to get money in their hands faster and easier then they ever imagined. Whether you have a considerable amount of equity in your home or recently purchased it, it is possible that the property increased in value creating a larger amount of equity for you to access.

To calculate the amount of equity you have built up in your property you take the current balance of your mortgage loan and subtract it from the home’s market value. You can generally get the amount of your equity in a secured form of credit such as a home equity line of credit or a home equity loan.

You can also refinance your property to receive a lowered interest rate and some spare investment cash on the side. You can then use the money given to you as the means of buying an investment property or at least using it as a down payment. Be sure to ask your lender about any rules regarding cash-out refinancing. The majority of cash-out refinancing mortgages come with a higher interest rate attached then other types of mortgage loans.

Homeowners can use their home’s equity value to receive a home equity loan as another option. A home equity loan is a type of second mortgage to the one you are currently paying off. Opting for this type of loan offers many benefits including the ability to repay the loan early without getting hit with a large penalty fee.

You may wish to contact Joe and Colleen Lane, Realtors

There has been a lot going on lately – shake down and confusion. During these times human emotion works like this – greed is the accelerator and fear is the break. Many people have been jumping from one pedal to other – or applying pressure to both at the same time – not good for the health of the vehicle.

Property Market:

Agents – can you trust them? – Some have been saying that it is still full tilt boogie and business is strong. I think this is an automatic default response. Some agree that the recent stock market melt down has slowed the property market a bit. Many people are just sitting on their hands and waiting for the dust to settle. The big question is will this market meltdown create the same rush to property that happened after the meltdowns in 87 and 2000.

Of course agents are predicting so but there are few indicators that may hinder that outcome – mainly interest rate fears and housing affordability. Yes property usually doubles in Australia every 9 years but there must be some constraints sometime around rental returns and the ability to purchase a house without a corresponding increase in incomes. At present it takes 7 times average annual income to buy an average Australian home – the highest ratio in the world. Can this keep increasing? Can rental returns keep going up to support the increasing costs of investment properties? Stay tuned for the next thrilling installment!

To put Oz house prices in perspective – the only country if a higher median house price than Australia which is $412,000 is the UK at $472,000. Compare it with other similar countries: Spain $369,000, France $293,000, US and Canada $324,000.

Share Market:

After the revolution I will have all day traders taken out and shot – but in the meantime I am sure many are having a gay old time with the volatility. The All Ords is in a classic support and resistance trading pattern between 5600 and 5750. Day traders love this pattern as they wait to see which way it will break and then rush in – either with calls or puts. I think the break out will be mild and in an upward direction. I think the worst is over but all the uncertainties will keep it in a slow recovery.

One interesting thing with recent market “corrections” is the ferocity. This is due to the prevalence of margin lending. This is also a reason why even the top end of the property market has been affected by the recent downturn. Many people are holding their portfolios on margin – using blue chip shares as collateral and borrowing against them. Fine in a stable market but when there are sharp falls brokers are forced to sell out people on margin calls and the market tumbles even more drastically.

This causes harder than usual sell offs and a hairy roller coaster ride. The banks have been hit the hardest and, although it takes some courage to enter the market again just on yield alone the major banks are giving a good return with the share price way down the dividend yield combined with the imputation credit can give a return of double figures. (pls remember I am not qualified to give financial advice so this is just an opinion).

New developments

I thought I would talk a bit about a few of the things that is happening around the shire. Some of the new developments that are happening are worth a mention.

Kiah

Kiah Apartments are on Cavanbah Street between Shirley Street and the railway line. They have just been open for inspection. Not exactly beach front but close. This was a long time in coming this development with the developer facing the usual amount of hurdles and obstacles. They are up market 3 bed 2 story units with a starting price around $1.8M. No bargains there.

The Butter Factory

Just north of Mitre 10 on the south side of Jonson Street is being made over into The Butter Factory. Ten very swish architect designed apartments and some retail will retain some of the old structure from the Norco Butter Factory days. Prices here start at $950K for 1 bedroom and up to $1.5 for 3 bed. Go online and look as they look good and that sounds reasonable.

Sea Drift

Just at the southern roundabout in town in Browning Street is another Eric Freeman development of units between $500K – $750K each. Apparently these have been selling well and are good value for money but I have not inspected. Stage 2 and 3 are yet to be released so probably a safe off the plan buy. This one and the previous two are marketed by Byron Bay First National.

Crosby Caravan Park

Opposite the Byron Golf Course on Broken Head Road the old Crosby Caravan Park (like most of the local caravan parks) are more than a face lift but a complete overhaul. This one is interesting in that they are offering 2 bed pre-fab units that start around $340,000. It is leasehold not freehold and body corporate is $100 a week – so you never own the land, just the building and a renewable 100 years lease. You can live in them or holiday let – or both.

Will be interesting to watch what happens with the Suffolk Park Caravan Park which is zoned “Community Use” as donated to council in a more relaxed time when nobody would ever of guessed it become such valuable real estate.

North Beach – Becton Site at the Byron Beach Resort

After all the years of strife I think that what finally is going to happen here will be good – and leave lots of natural habitat. I think it will be a win for the community as they seem like they are going to do a good job – sensitive aesthetic development, regenerate some bush and still be a good space for community events like the writers festival. Also it looks like good value – 1 bed apartments start at $380K, 2 bed beach house for $630K and bigger homes at 1.2 and 2M. Everybody is wondering how they are going to police the 3 month limit on owner occupier as it is licensed for holiday let – I know of a few people lining up to settle in for the long term.

Epicentre

Well the old landmark is finally flattened – thank god what an eyesore. But the end of an era now that the whaling and meat abattoir is no longer a Byron feature. 19 residential lots are planned. Prices are not yet decided but would have to $1.5M at least.

The only other piece of news is that it looks like we have had the wettest and coolest summer in over 20 years and that has had an impact on retail and holiday letting.

Buying property in Morocco is becoming increasingly popular with overseas investors as more people realise what Morocco can offer them. One such offer is high quality developments being constructed at bargain prices. Many of the properties are aimed at the luxury market and they have been fitted with exceptional features and facilities. This is all helping Morocco to become famous as the foremost destination for buying investment properties.

Morocco is steeped in history and is seen as a magical and mystical world that beckons travelers and tourists alike. Rabat, the Moroccan capital, is a modern day city that still holds its old world charm. The coastline is a favourite with tourists and destinations like Casablanca (made famous by the 1942 American romantic drama) and Marrakech are by all. Morocco is expected to become increasingly fashionable as a tourist destination, therefore investor forecasters are predicting that property prices will keep on in increasing in value.

Morocco has various hot spots that attract some of the world’s rich and famous, such as Saidia and Tangier. Currently the property market in Morocco is emerging as one of the top most developing markets with tremendous potential for investment, which is particularly good news considering today’s economic climate in the UK. The Moroccan government is taking an active role in improving the property market. They have implemented various initiatives, such as the King’s Vision 2010, to boost the country’s tourism and infrastructure, which in turn will improve the property market and economy in the country.

Once you’ve decided where you want to buy a property in morocco, the next step is to seek legal advice so you don’t make any expensive mistakes. Anyone wanting to turn their property investment into a buy-to-let property will need to pay tax on the income, although the first three years will be exempt of tax. If the property is sold within five years, a capital gains tax is levied based on the sale price less the purchase price. There is some good news regarding tax: because there is a UK-Morocco Tax Treaty in place between the two countries, this protects the investor from being liable for capital gains in both countries.

When it comes to choosing the type of property you want to buy, be prepared to take time, effort and commitment, especially if you want to find an unusual traditional style of property. Know your budget and stick with it, and take photos of each property you view so you can remember each one. Once you have found your property, you will need to place a verbal offer to the seller via the estate agent; bear in mind that negotiation is rarely an option when buying property in Morocco. The seller will then decide if the offer is to be agreed or if the price is to be raised. It is your choice to decide if you want to take the sale of the property forward or to walk away. If you want to proceed, the next step is to draw up a compromis de vente (“a pre-contract signed by the seller and buyer of a property that involves a two-way promise that amounts to a provisional sales agreement”) which is preformed by a notaire (ministry official). Once you have received the compromis de vente you have two weeks in which to change your mind. If you want to proceed there are several more steps to complete and then the property is yours to enjoy.

Buying property in Morocco is an exciting opportunity for investors; not only will you have a property in an exciting country, but you’ll have a property that could give you a really healthy return on your investment.