The June CoreLogic Hedonic Home Value Index results show Australian property values continue to trend lower in June amidst tight credit conditions and less investment activity.

Lifestyle markets continue to show strong demand though, with capital flowing into holiday home markets and areas popular with retiring baby boomers, which is partly why the Central Coast has out performed the Sydney market.

Whilst other markets have declined over the last 12 months, the Central Coast continues to draw a crowd from first home buyers, investors and the prestige market. Offering a wide variety of property types and budgets, the Central Coast region has continued to perform and attract buyers from other markets.
Combined regional markets across the country have significantly outperformed the metro areas, showing a 7.3% return over the last 12 months.

Should you want more information on the type of properties we purchase for our clients, don’t hesitate to contact me – available 7 days a week.

With the banks tightening up on lending, uncertainty in the marketplace and possible interest rate rises, landlords who own investment properties now need to turn into – property entrepreneurs. New methods need to be implemented to help manufacture and force equity in an uncertain market.

Investing in property is gaining in popularity as millennials are able to see the returns that their former generation were able to achieve in the past decade. An abundance of information available to us now through the internet showcasing some of the best property investors in the world, is fuelling our obsession with property investment.

For example, the latest release of ATO data show the number of individuals with the one investment property stands at a record 1.468 million. This is an increase off around 58,000 each tax year. However less than one percent of investors, or 19,198 own six or more property, despite the recent property boom fuelling a buying frenzy.

Building a strategy on how to keep investing rather than stopping at one or two investment properties is paramount. This will ensure you always retain control over your portfolio and are able to keep moving forward on your property investment journey.

The following 10 tactics have been recommended by seasoned investors, developers, valuers and brokers to help boost returns on your investment.

Cosmetic Renovation

Cherie Barber, educator and celebrity renovator of Renovating for Profit, thinks it’s not just about saving money but also about making money too! “People look to renovating these days as a way to build their wealth,” she said.

Most people don’t have $50,000 or $100,000 or $200,000 sitting in the bank but the average person has $1000 or $2000 or $5000. This can cover a small cosmetic renovation of paint, new carpet, installing new window furnishings or call a floor sander in to polish the floor boards.

These renovation strategies can help retain tenants, increase rental income and help boost the overall value of the property.

Granny Flat

Nearly 100 granny flats are being completed each week in Sydney alone, a three-fold growth in five years, according to state government figures.

This could be largely due to the increase in potential rental return once the second dwelling is constructed. Rental returns can range between $200 and $500 per week depending on build quality and location. With a build cost of approximately $120,000, this makes a solid return on investment.

“With jobs and population growth rising, investors looking to build granny flats can be confident of solid rental returns for many years to come,” Matthew Burroughs from DB Homes said.

Refinance Loan

The big four banks, which account for more than 80 percent of the nation’s home loans, are expected to raise rates because of soaring funding costs, according to Citi. This will hurt investors pockets, and it is important to review all home loans at least every 12 months to avoid financial burden on repayments.

Lenders are now offering the best packages for investors with healthy deposits and stable PAYG income. Remember it is easier to negotiate a new rate with a new lender than it is to negotiate with your existing bank. He new lender is usually hungrier for the business, therefore most often offering the best incentive to make the switch.

Tax Depreciation

Depreciation is a decline in value tax deduction for the building structure and plant and equipment assets of any income producing property. This can be claimed by all residential investment property owners each financial year. Maximising depreciation deductions helps reduce an investor’s taxable income.

Every year, thousands of dollars go unclaimed by property investors who are none the wiser. All it usually takes is a qualified quantity surveyor to inspect your home and prepare a report for your accountant. The savings can be bigger than you think.

Keep Saving

A lot of people work very hard to save for their deposit on their first investment property, but once they have purchased one or two properties they sit back and stop saving. The problem is, is that two investment properties is not going to set you up for financial freedom.

If you want to retire on a passive income and not rely on your superannuation, then you need to continue to save towards a multiple property portfolio. Don’t just rely on capital growth to occur on your existing properties, because if they don’t grow then you can’t keep acquiring more assets.

Keep producing income from your job or your business if you are self-employed, and continue to put a significant portion of your savings into income generating assets.

The next residential boom for NSW lies in the Hunter Valley, mid north coast and the central coast, as employment in these areas accelerates, the NSW 2018-19 budget shows.

The value of residential building approvals in regional NSW is at a record high of over $4.5 billion over the last year. The Hunter Valley, central coast and Richmond Tweed account for 38.8% of demand.

In more concentrated regional areas such as Newcastle, residential approvals have also boomed and are up 57% over the past three years.

Employment growth in regional areas have risen 2.4 per cent a year rising from the long-term average of 1.5 per cent a year, in the past three years while they continue to absorb new migrants from Sydney seeking cheaper housing.

For more information, don’t hesitate to contact me – available 7 days a week.

If I cannot even afford to pay rent how am I supposed to think about saving for an investment property?
For most millennials – many are unable to recognise the importance of having a financial safety net. Whether it is in the form of shares, a considerable cushion in the bank to fall back on or as an investment property, millennials tend to fight to anticipate future financial struggles – getting lost with living in the moment.

The dream of being financially free lies in the hearts of most millennials. Sipping pina coladas on a tropical beach for the rest of their lives is the only thing that comes to mind. It’s not motivating these individuals that cause conflict, it is the inability to foresee how they are going to build their wealth that stops most millennials from setting financial goals in the first place.

So with future financial struggles not being anticipated and financial freedom so far out of sight, how are millennials expected to adopt a mindset that encompasses the importance of saving to create financial investments?

Like me, many individuals around their mid-20s earn a wage. Working a job they’re not interested in, 10 hours a day five days a week, just to get by. More than 50% of their pay will go into their rent and the rest goes into groceries, entertainment, transport or potentially even paying off their first car – anything left goes to keeping their partner at bay.

Realistically, they might have a couple of hundred dollars a week spare that they can save. All of a sudden, their new car needs four new tyres and that six month Europe trip they have been saving for, for the last year becomes a little more out of reach. (That’s where all my money goes)

So, how can we even begin to rationalise saving for our first investment property?

Post finishing high school, my parents encouraged me not to take time off – allowing me to get ahead of the pack and to go straight to university. Having chosen a business degree, I landed a retail job on the side – finding a passion in selling vintage clothing. Working my way up over the course of 3 years to be offered a partnering position as a vintage clothing wholesaler, I was still struggling to even buy groceries after paying my rent. Although the hours were almost illegally long and the pay was not financially viable, I used the opportunities of working on the front line of one of Sydney’s biggest vintage clothing wholesalers to start an online retail store.

The ability to recognise the opportunities available and the willingness to make sacrifices educated me to always anticipate future financial struggles.

When I was 12 years old, I would always say to my parents that I could not see myself living past the age of 22. Now, at 23 years old I still struggle to see myself at the age of 50. It is this mentality and the desire to solely live and spend in the moment that is hindering our generations from really building a mindset that focuses on the importance of saving to acquire financial investments.

A true story – Two individuals have worked on the same construction site for the past four years. Both share a very similar income and both are 25 years old. The first is a crane driver. He has just put down the deposit for his 3rd investment property. Combined, his properties are valued at $1.1 million and generate $1,350 in rental income p/w – he still lives at home with his parents. The second, a project manager, has just finished saving and has put down a deposit on his first home worth $1.2 million which he is going to move into as his principal place of residence. Which one is better off?

“The most important word in the world of money is cash flow. The second most important word is leverage.” – Rich Dad, Poor Dad (Robert T. Kiyosaki)
“The home you live in is not an asset it is a liability. An asset is something you invest in that generates income” – Zah Azmi, CEO – Luxland Investments

Do millennials share a mindset that property in Sydney is so expensive and out of sight that why bother even trying to save? Why not wait for our parents to pass and inherit as much as we can? Is that the only way we will own a property in Australia’s major capital cities? With the median house price in Sydney reaching $1.1million at the end of 2016, (Domain) it’s not hard to understand how this mentality originated.

CHANGE YOUR MINDSET!

Financial literacy is not taught in school. Therefore, the importance of acquiring the financial security or finding the right median to do so is often a struggle for millennials. They like fast cash and get caught up in the trends. By investing in property it’s not a way to get rich quick, it’s a way to get rich guaranteed. – Luxland Investments.

Forget Bitcoins! There will always be someone who challenges what you believe. They will say that the property market will eventually crash and you will lose on your initial investment. Humans will always need food, water and shelter.

“You can’t live under a bitcoin.” – Marc Fattore, General Manager – Luxland Investments

Trends will come and go, but no investment offers the guaranteed successes and financial security like real estate. It’s not timing the market, it’s time in the market.

Build a Specific, Measurable, Attainable, Relevant and Time-bound plan! (SMART) – you don’t want to be eating two-minute noodles for the next ten years.

Zah Azmi was just 25 when he bought his first investment property with a $70,000 deposit he saved up working in sports supplement stores, night clubs and gyms, where he worked up to 90 hours a week. He could have bought something earlier but he wanted to wait till he had a decent deposit for a higher valued property, while his peers were investing in cheaper investment grade stock. “I figured that if I played in a bigger space, which seemed bigger at the time, I would get a better return”, he says. That philosophy stays true till this day as he is about to embark on developing a 40 unit apartment block with two business partners in Newcastle.

From that first property – $340,000 house on the NSW Central Coast – the now 33 year old has built up a portfolio of eight properties which include residential, commercial and development sites.

Mr Azmi, who grew up on the Central Coast, moved to Sydney at the age of 21. “I made the move to Sydney to seek employment as I was fired from nearly every job I had on the Central Coast. I worked at nearly every restaurant and bar in the area and got fired from pretty much all of them. I was very strong minded and refused to play the game of politics with others who had the employee mindset. I was entrepreneurial very young and it worked against me at times.”

“I always knew I was going to end up in property. I’ve always had a passion for it. When I was saving for my first deposit, I would hang out at newsagents and bookshops reading property magazines and books. To save money, I would read everything at the stores instead of buying anything. I would spend hours researching and analysing how other successful property tycoons made their millions.

After submitting multiple applications with banks in 2008 post GFC, he found it hard to get a loan approved. This didn’t stop Mr Azmi from finding a solution, as he engaged a mortgage broker, a family friend, to help plead his case with the banks. Eventually he was approved and went on to purchase a four bedroom Central Coast house, which has today almost tripled in value, allowing him to leverage himself into more properties and other business ventures.

“I was lucky I grew up in an area that was up and coming. Usually we are told not to invest where we grew up, but it just so happened that the Central Coast benefited from the ripple effect from the Sydney boom,” he said. “I still wouldn’t live in any of my properties, as I love living in Sydney and the income they produce is too good to give up. I focus on properties on the Central Coast and Newcastle regions which range in affordable price points of between $400-600k.”

Mr Azmi admits half of his portfolio is through the help of joint venture partners, however he says he would rather take part in something large scale than to own and run smaller projects on his own. He says, “Building a team of people who are on the same path as you is key. It is important to realise that you cannot do everything on your own.”

He believes there is a lack of motivation among the millennial generation to invest in property. Because the median house price in Sydney has reached an all-time high of $1.2 million, many view home ownership as out of reach and near impossible.

“You’ve got to educate yourself on other property markets that are in more affordable areas. Pay for the advice if you have to, just start the planning process. Focus on solutions, rather than dwelling on our housing affordability issues,” he said.

He states that the older generation also had their hurdles and roadblocks when buying property. “In the past wages were lower, interest rates were higher and information was not as accessible,” he said. “Buying property will always be a struggle, and it’s just the cards we have been dealt in today’s marketplace.”

Even though Mr Azmi has worked hard and faced many adversities along his property investing journey, many have showed negativity and disapproval to his accumulation of wealth. “We live in a country with the greatest population of tall poppy syndrome. Many are jealous or disgruntled as they cannot get into the market themselves. They criticise and judge my every move, trying to tear me down whenever and wherever they can to make themselves feel better. I do this for myself and others who want to take positivity and motivation away from hearing my story. I want to help as many people as possible grow their own futures,” Mr Azmi said.

He also states that he has turned ordinary working class Australians into property entrepreneurs, teaching those involved that property investing is a business rather than a “set and forget” strategy. “Making money from day one as well as enjoying year on year growth is our goal. We are in the business of making money as quickly as possible through a smart property investing formula.,” he says.

Mr Azmi said that it is absolutely critical that the correct asset is selected. “We are reaching a point of a possible correction in the market, therefore we need to ensure that our investment can weather any storm lying ahead. If you have bought the wrong property in the last couple of years then you may be in for a rough ride. Buying the right asset from the beginning will help safe-guard you from any market turbulence potentially looming.”

He said that he always keeps sufficient buffers in place to ensure extra funding is available if needed. “It’s about having a plan in place for all types of scenarios to help minimise your risk,” he says. “Landlord insurance is also a must to ensure any potential long vacancy periods are covered.”

He currently runs his own property development and investment firm that helps others grow wealth through property entrepreneurship. He also has shares in many other businesses in various industries that provide him with great networking power to spread his message across many channels. He has come a long way since his working days on the Central Coast. Now Mr. Azmi does the hiring and firing!