STYLE YOUR HOME FOR MAXIMUM BUYER APPEAL AND PRICE

A survey published in LJ Habitat magazine indicated 98% of real estate agents think that styling your home for sale will get you a better price, and 92% believe styling results in a quicker sale and 88% believe it attracts more interested buyers.

And styling your home could produce a price of between 5% and 12% higher than you would have achieved.

STYLING ROOM BY ROOM

1. CREATING AN ENTRANCE; - it’s the usual story! – you only have once chance to make a first impression so paint the fence – or have one built, check the path for cracks, plant  flowers and install flower planter boxes – and don’t for get to paint the exterior of your home!
2. THE FRONT DOOR; - give it some personality, check the step and surrounds, put in planter boxes and a shoe box or rack. And of course – paint it and give it some new door furniture.
3. THE ENTRANCE HALL; - this must look inviting, light and spacious – try a rug and a hall stand and a mirror to give the impression of light and space.
4. THE KITCHEN;- must be uncluttered and if possible have new cupboards doors and door furniture, replace bench tops and install new light fittings – any money you spend on the kitchen will be worth it!
5. THE LIVING AND FAMILY AREAS;- declutter all living areas and take away personal items – give the rooms a focal point such as a painting or a print – use natural colours –install new light fittings and bright prints and have the floors professionally cleaned. Fresh flowers and soft music for each “open” and make sure everything is spotless.
6. THE BATHROOM;- This is where you will be gauge on well the home has been maintained – clean, clean and more cleaning – fresh thick towels, soft fragrances, flowers and mirrors ad to the “fresh look”  touch – your bathroom must look like a television advert.
7. THE BEDROOMS;- Use warm lighting and remember less is more so reduce the amount of furniture and take away personal “knick knacks”.
8. THE OUTSIDE AREA; - neat, trim laws are the best-selling points and a courtyard and “quiet refuges” help create the sense of calm.

10 valuation myths you probably think are true

If you think more rooms equals higher value or that a pool holds no value, read on as Your Investment Property gets to Propell National Valuers to debunk the most common property valuation misconceptions.

1. Swimming pools add no value

This is a generalisation which cannot be applied to all properties.  In some areas there may be evidence that buyers are prepared to pay more for a pool, however in other areas this may not be the case.

Prestige homes or suburbs catering to families may see the added value in pools, whereas inner city or coastal properties may not.

Consider the potential target market for your property. Pools can provide an opportunity for leisure with family and friends and encourage a healthy and active lifestyle - a feature that will attract a certain market. Just keep it well maintained and landscaped to maximise value.

2. Bank valuations are always conservative

A bank will engage an external valuer to provide an unbiased valuation on your property. Valuers must act independently and should not be influenced by the party seeking the valuation or concerned with the reasons why a valuation has been requested.

A valuation report can be challenged in court and must be backed by comparative market data, therefore a valuer must be able to justify their valuation figure by providing evidence of comparable sales in an area. In compiling a valuation report, valuers must adhere to a strict process heavily reliant on factual data and appropriate methodology.

3. Valuers don't spend enough time in a home to give a solid valuation

Before visiting a property a valuer will undertake extensive background research on your local market. Valuers have access to software and data which allows them to check recent sales data in your area and will have knowledge of comparable properties.

When the valuer arrives at your property they will have a very specific checklist of items they are looking for and may only require 20-30 minutes at your property to compile this information. The additional research the valuer has undertaken should be evident in the valuation report they provide to you.

4. More bedrooms = more value

Often property owners make the mistake of believing their property is worth more than another in their area because it has more bedrooms.

Thirty years ago this certainly was a consideration when home design was less sophisticated and family sizes on average were larger. In today's market, property owners often choose to convert a spare bedroom into a study or office, home theatre or storage room, and there's a trend to convert garages to bedrooms to accommodate older teens and adult children with personal space away from the main living area.

When comparing two properties, especially units, total floor area may be a better indication of value rather than the number of bedrooms in a dwelling. Valuers also consider location-based factors such as street appeal, street access and views when comparing properties.

5. The valuation doesn't reflect my home's presentation

Buyers have very personal preferences when it comes to interior design. It is very common for property owners to spend $20,000 painting the inside of their home in bright, bold colours expecting their home to increase in value by at least the same amount.

While the property owner may love their new colour scheme, buyers may not share their enthusiasm. For this reason valuers factor in design trends when valuing a property, and most will agree that neutral colours present best. Property owners are also urged to stay away from exotic furnishings for the purposes of adding value to their property, as this too is subjective.

6. Property prices never go backwards"

This view is often held by young investors who have only experienced strong market conditions.

Many parts of Australia were fortunate during the 2000's to experience an unprecedented boom in property prices that seemed like it might continue forever. While in the long run property markets tend to go forward due to scarcity of land and increasing population, they tend to be cyclical in nature and often go backwards in the interim as experienced in late 2008 into 2010.

Economic factors both domestically and internationally can have a rapid and damaging impact on local property markets. A severe economic downturn in China, for instance, could see a decrease in demand for Australia's resources. In some mining communities that would likely result in a decrease in property prices and rental yields.

7. "Commercial property is riskier than residential property"

This is a broad generalisation which should not be a guiding principal for investors. A well located retail showroom with a long lease and annualised rental increase could be a very sound investment. While the property may not see an increase in value during a downturn, the long term lease will help to ensure reasonable returns during this period.

Conversely, the marketers of a new residential unit development in an inner city area may claim to offer a risk free investment.  However a large amount of units may be in development in the area and could quickly lead to an oversupply.  Commercial and residential properties should be evaluated on their own merits.

8. "Market Value is the same as sale price"

Market value is an estimate of the price a property would likely attract in a rational and competitive market place. Sale price is the actual figure a property is sold for. As an example someone sells a property for $500,000 (sale price) when near identical properties have been valued between $490,000 and $510,000 (market value) in the same area.

The reason for a disparity between a valuation and sale price could result from human factors relating to the sale. A buyer may feel a personal connection with a property and happily pay above market value, or alternatively, a buyer may have personal circumstances which compel them to sell quickly and accept an offer below market value.

9. "Investors should only buy for capital growth"

While capital growth should always be considered in line with your wealth creation strategy, rental yields for a property should never be overlooked. Strong rental yields produce a greater cash flow, and therefore allow investors to pay off mortgages sooner and have access to cash flow for future investments.

In general, areas with higher capital growth are based in metropolitan areas, are more expensive than their regional counterparts and generate lower rental returns. A property in an area with strong rental yields can still deliver a good return on investment when property prices are stagnant or falling. The deciding factor of which one is of greater importance should be based upon your individual investment strategy and current requirements.

10. Buying interstate is a great way to diversify"

Buying properties interstate can mitigate the risk of some local factors, but investors should be aware that all properties are affected by the macro economy. Interest rates, inflation, taxes and large international events can all have significant impacts on property prices in any location.

 This was evident in the wake of the Global Financial Crisis when property prices across Australia were negatively impacted. It is also important to consider that markets can vary within states and investing in different cities or towns can provide diversification. For example the resources boom in Queensland has seen many mining towns outperform Brisbane's residential property market in recent years, so looking further afield in your own state could be worth considering.

Adani Carmichael -Australia's largest coal mine free to proceed

WHAT YOU NEED TO KNOW ABOUT INTEREST ONLY LOANS

An “Interest only loan” is a mortgage where the amount of the loan, known as the principal, is never reduced – the borrower only pays the interest on the amount borrowed.

This means if a person borrowed $500,000 as an interest only loan, the borrower only has to pay the monthly repayments to cover the interest on the amount borrowed.

For example, after five years, the borrower would have paid interest on the loan but the amount of the loan still outstanding would still  be $500,000 because none of the “principal" had been paid off so the loan wasn’t reduced from the original amount of $500,000.

An interest only loan is in direct contrast with the usual “Principal and Interest” loan where the monthly repayments pays both the interest and part of the principal.

This means that after 5 years, the amount of the loan outstanding would have been reduced so also reducing the amount of interest that has to be paid as the loan amount is reduced.

In the 1970’s, interest only loans were popular with both banks and borrowers because property values always seemed to go up so if borrowers did want to sell their property after 5 years, the amount borrowed would not have changed, but the property value would had gone up, so the borrower had made a capital gain without paying off any of the principal.

This all changed in the 1980’s when interest rates rose to 18% and property values went flat.

Today, it appears mainly property investors seem to obtain interest only loans and even then the length of the term can be restricted to no more than 5 years.

However, the investor segment of the property market is growing and interest only loans are growing by 20% a year.

For investors with an interest only loan there are a few inherent problems that may occur during the life of the loan and beyond;-

1. When the interest only period ends after 5 years, what does the barrow do then? Find another bank that can offer an interest only loan?
2. Stay with the current lender and pay higher repayments to cover the interest and principal repayments which may not be able to be serviced from the investment property's income?
3. Sell the property, but it may be the wrong time to sell and the property value could have reduced below the amount of the loan outstanding?
4. Unless the borrower has a fix interest only loan, the interest can go up during the period of the loan so causing financial stress if the income from the investment property doesn’t cover the amount of the repayments.

When considering an interest only loan, the borrower needs to consider what may happen during the life of the loan and in particularly when the interest only period expires.

THE FLOOD OF MONEY FROM CHINA

China's appetite for Australia’s real estate doesn't seem to be diminishing.

Chinese investors bought more real estate in Sydney and Melbourne combined – worth almost $US 3.5M than in London, Paris and New York – this is an Australian record.

The Foreign Investment Review Board approved $12 billion for Chinese real estate proposals in 2014.

It is not only investment in real estate that is growing from China.

By 2024, it is estimated the number of Chinese born Australians would grow from 447,000 to over a million.

NEGATIVE AND POSITIVE CASH FLOW FOR PROPERTY – NEGATIVE GEARING EXPLAINED

With the lowest mortgage interest rates for over 50 years, most investors in property are finding the rental income is greater than the outgoings for the investment so in such cases, the property is known as being “positively geared”.

Negative gearing, as described by Wikipedia, is a practice whereby an investor borrows money to acquire an income-producing investment property, expecting the gross income generated by the investment, at least in the short-term, to be less than the cost of owning and managing the investment, including depreciation and interest charged on the loan (but excluding capital repayments). The arrangement is a form of financial leverage. The investor may enter into this arrangement expecting the tax benefits (if any) and the capital gain on the investment, when the investment is ultimately disposed of, to exceed the accumulated losses of holding the investment.

To service a negatively geared property an investor has to cover the loss created by the shortfall in outgoings compared to the income from the property.

Because an investment property is considered a business, any losses made by the investor can be used to offset the investor’s tax liability from other investments or income.

The Income Tax Assessment Act 1936 - Sect 128b allows a tax payer to reduce their tax liability for their weekly PAYG tax deductions to allow for the loss made from owning a negatively geared property instead of waiting until the end of the tax year to obtain a tax refund.

Capital Gains is the main reason for buying a negatively geared property, so it is very important to buy a property that is negatively geared in an area or suburb where there is every likelihood of properties achieving the highest possible capital growth.

Of course, with a capital gain comes Capital Gains Tax which eats into any income gains made from the sale of a property.

Tax depreciation is an additional tax liability reduction strategy but it is best used for brand new properties which have the highest capital depreciation potential

Properties with the greatest chance of Capital Growth are usually found in suburbs in major cities close to the CBD – within 10 km - or beaches and are the most expensive compared to properties in the outer suburbs, but properties with the highest chance of a capital growth cost more than other properties.

Investing in a property must meet personal needs and the investor investment strategy, age, income, tax liabilities and ability to service a loan must all be considered.

For example, an investor may not consider investing in the Broken Hill property market as a good choice but in a 10 year period an investment property in the “Silver City” produced a rental return (yield) of over 8% and a 10% growth rate. But during these 10 years the property market in that City may have gone through a “catch-up” and that capital growth may not be achieved for the next 10 year period.

Of course, a property can be positively geared if an investor only borrowed 50% of the purchase price, but would be negatively geared for an investor who borrowed 80% of the purchase price because the loan repayments would be higher.

The real problem facing investors with negatively geared properties is the shortfall may grow if the property became un-tenanted or the weekly rent reduced – this has occurred in new suburbs that have been constructed around the fringes of Brisbane and the Gold Coast in the last 2 years.

Another problem facing a negatively geared investor, particularly in the current economic environment, is the possibility of losing employment which may result in the investor having to sell the investment property before achieving any chance of a capital gain.

For these reasons, a positively geared property may be the best investment strategy for most property investors. And if the investor can afford to buy a positively geared property in an area of sustainable capital growth, then the investor has the best of both worlds.

GETTING STARTED ON THE PROPERTY LADDER

It is not easy to get on the property ladder in some parts of Australia particularly in some of the affluent suburbs of Sydney and Melbourne.

First home buyers have to have a sufficient deposit to obtain a mortgage to finance home purchase and then the first home buyer’s income must meet the requirements of the mortgage lender to service the loan.

Add to this is the “once only” purchase costs of Stamp Duty, legal fees, building and pest reports, mortgage application fees and valuation fees and in some cases, mortgage guarantee insurance.

STATE GOVERNMENT FIRST HOME OWNERS GRANT

The Queensland Government provides a maximum non repayable grant of $15,000 to purchase a brand new home or a “substantially renovated home” which is a home that has never been sold or lived in since the renovations had been completed and the building work was subject to GST which has been paid. A typical home that has been substantially renovated could include a "Queenslander" timber house that has been raised to provide additional living accommodation underneath.

Applicants for the grant must be 18 years of age or older, must never have purchase a property before either as an individual or a “couple” to live in but applicants who have purchased an investment property and has never lived in it may be eligible. An applicant must be an Australian Citizen or a permanent resident or and least one of the “couple” is an Australian Citizen or a Permanent Resident. The maximum price of the property cannot exceed $749,999.

Successful applicants must move into the property within one year of completion and live there for six continuous months.

Unfortunately, the Grant is not available if part of all of the deposit for the property is being provided by a person who will reside in the property as a “tenant” so a parent cannot help children obtain a grant on the understanding they could move in with the children.

BUYING AN INVESTMENT PROPERTY AND GETTING A GRANT FOR YOUR OWN HOME

It is possible for a couple to buy an investment property and then purchase a property as a principle place of residence and obtain the First Home Owners Grant providing they have never lived in the investment property.

STAMP DUTY INCENTIVES FOR FIRST HOME BUYERS

The Queensland State Government provides tax and Stamp Duty concessions for First Home owner and details can be found at https://www.treasury.qld.gov.au/taxes-royalties-grants/index.php