The steps which occur when you buy property in Australia

Transcript
“Hello and welcome back to daily buying tips, I’m Dean Berman from Berman Buys.

Today we’re going to talk about the steps which occur when you buy property in Australia.

Many buyers start in the middle of the buying process.

My recommendation would be to start with your finance before you even start looking at properties.

Once you have a clear understanding of your numbers.

You can start to research various markets which may suite your needs.

These will obviously be dependent on whether you will be investing or living in the property.

When you actually have a few markets you are keen on.

You can finally start to look at properties.

Some key points are not to get too emotional about a specific property, if possible.

The more offers you make, the better in my opinion.

They will give you feedback and an understanding about the property you otherwise would not have had.

When you negotiate a property.

It would be wise to understand local market sales.

And what the property is actually worth.

If you can understand the current market value.

You are in a much better position to determine whether the offer you want to make is good or bad.

Once the negotiation has been successfully achieved.

You will usually sign the contract to exchange and pay a nominal deposit to get the property off the market for a period of time.

Usually 5-10 days, to complex further due diligence.

Your solicitor/conveyancer will usually review the contract during this period of time.

In a house you will get a pest and building inspection and in a strata complex a strata report.

Your mortgage broker/bank will usually organise an unconditional approval and ensure the valuation on the property is correct.

Assuming all these things go well.

You will pay the balance of 5% or 10% to exchange unconditionally on the property.

Then enter into the settlement period, which is usually upwards of 30 or 40 days.
When settlement occurs, your finance will come through depending on the LVR you were able to achieve with your lender.

And you will potentially pay some more deposit depending on this LVR.

Stamp duty or transfer duty will also be payable to the government.

Hopefully you’ve got a slightly better understanding of the steps invalided in buying a property in Australia.”

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Why multiple options are good when investing

Transcript
“Hello and welcome back to daily buying tips, I’m Dean Berman from Berman Buys.

Today we’re going to talk about, why multiple options are good when investing.

What I mean by multiple options are ways to add value to the property.

If you buy a unit, you will have a few ways to add value to the property.

Whereas if you buy a house you will have more ways.

Namely because you have the land and can change the structure of the house.

Or get an approval and potentially even change the land i.e. subdivision.

Or even add an extra house i.e. granny flat.

Whereas the unit is relatively fixed.

However, internally it can be certainly changed.

It’s these options that can add value to properties in any market in my opinion.

Renovating, developing, subdividing etc…

In the unit you may reconfigure the layout and add an extra bedroom and bathroom.

This can certainly add value.

In the house you may extend and build another level or even knock down rebuild.

It’s these extra options which make houses very enticing.

However, the price point isn’t always achievable in premier locations.

Making the unit an attractive option.

Whether house or unit, try understand the options you have with the property.”

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What is a vacancy rate

Transcript
“Hello and welcome back to daily buying tips, I’m Dean Berman from Berman Buys.

Today we’re going to talk about what is a vacancy rate.

Sometimes you may hear the media quote vacancy rates.

Only to pretend like you know what’s going on.

Oohh that sounds like a good rate!

Thinking to yourself this is to complicated to understand.

But in reality they are actually quit straight forward.

Simply, the vacancy rate is a percentage of properties.

Which are unrented for longer than 3 weeks against the total number of rental properties in the market.

For example.

There are 5 properties on the rental market for longer than 3 weeks.

There are 100 total properties in the rental market.

In this case the vacancy rate would be 5%.

i.e. 5 as a percentage of 100 properties in the market.

What’s also important to know is a market is generally considered in equilibrium.

When rates are at 3%.

When they are below 2% the market is considered to have too few rental properties available.

Under 1% is a critical shortage, which can put upward pressure on rents.

Based on supply and demand.

So now when you hear someone in the media say the area has a rate of 4.2%.

You know you should probably be wary of investing there.”

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Clothing pack and homelessness

Transcript
“Hello and welcome back to daily buying tips, I’m Dean Berman from Berman Buys.

Today we’re going to talk about this clothing pack and homelessness.

To most it’s just a clothing pack with some staple clothes in it.

Like jumper, track pants, socks, knickers etc….

To me it represents something really important.

It’s my commitment to try and raise awareness about homelessness in Australia.

From what I’ve learnt so far, there isn’t a simple solution to fix homelessness.

It’s such a big topic.

Over 116,000 people homeless during the census in 2016.

The issue with Homelessness, is there is no single cause.

Often associated with personal trouble, sometimes medical, substance abuse etc…

Sometimes it’s just not enough money to be able to afford housing.

Ages can vary from young teenagers to the elderly.

Statistics show the hardest hit groups are often the young and elderly.

Experts such as Professor Muir of UNSW talk about the need for “more low-income rental housing and affordable housing”.

There are various schemes such as NRAS (national rental affordability scheme), Commonwealth Rent Assistance, Housing Affordability Fund etc…

It’s great that there’s these schemes, but they don’t seem to be ending homelessness.

Merely trying their best to try and contain the issue the best they can.

Surely there must be a way to make a change.

Recent figures released by UNSW state 1 in 200 Australian’s are homeless on any given night.

For young people 19-24 the figures rises to 1 in 100.

So if you were in school in a grade of 100, in theory one of our peers would be homeless.

That’s crazy!

I think the biggest challenge, is it will require effort to make a change.

I often hear we aren’t building enough to support the growing population.

How can we suddenly build enough to help our disadvantaged?”

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How to work out if your property investment is positively geared

Transcript
“Hello and welcome back to daily buying tips, I’m Dean Berman from Berman Buys.

Today we’re going to talk about how to work out if your property investment is positively geared.

In short, the rent you receive covers all the expenses associated with the property.

Expenses include.

Mortgage principal and interest repayments.

Council rates, fixed water rates, strata rates (in a strata complex), land tax.

Property management fees.

Maintenance or renovations of the property.

Once you work out these expenses.

Work out how much rent you receive a year.

By multiplying the weekly rent by 52.

I haven’t included any vacancy for simplicity.

If your rent is greater than all your expenses your property is cash flow positive.

i.e. the property holds itself.

There are other benefits you can claim with the help of a registered accountant.

These usually include depreciation and interest on the investment loan.

I generally find more affordable properties tend to be more cash flow positive.

Or properties which have been added to.

Such as a granny flat, second dwelling or extra bedrooms in an extension.”

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