The evils of Negative Gearing?

article_05082013Barely a day goes by in the media that there isn’t an article published discussing the challenges of the Australian housing market and how much prices have risen over recent years. The long held ‘Great Australian Dream’ of owning your own home is frequently trotted out to tug at the heart strings of TV viewers when trying to find a suitable scapegoat for sky high property prices. Throughout much of 2014, focus was being placed on foreign investors landing on our shores with suitcases full of money and pricing us locals out of the market. Currently the place for blame is on negative gearing. Whilst I’m happy to agree that negative gearing may have had some contribution to price rises, it’s important to take into account the huge amount for factors at play here. Although I’m no economist, it doesn’t take a genius to realise that the combination of negative gearing, foreign investment, historically low interest rates, ease of finance, ongoing agent under-quoting and the sense of urgency portrayed in the media all play a role. Not to mention the fact that almost 70% of Australians choose to live in capital cities and that there is only so much land available in these relatively tiny pockets of our enormous country. Geography and demographics certainly play a role.

Of course I’m biased…but while I do think that negative gearing has an important role to play in supporting investors and in turn the housing market in Australia, I agree with statements made regarding investors only investing in property simply for the tax advantages. To me, purely investing for the benefits of negative gearing is completely the wrong approach (although plenty do it). Following here are two videos worth a watch. The first is a clip from ‘The Project’ on Network 10 which aired last night and fired me up to write about this topic. Pay careful attention to the generalised statements and overall tone of the clip, it’s enough to make you go out and push the nearest property investor under a bus. The second clip by well known Australian property investing wunderkind Nathan Birch is intriguingly entitled Negative Gearing Sucks Balls. Nathan’s explanation about negative gearing and why people get caught out by it is spot on in my view. My thoughts? Negative gearing is a useful bonus for investors but certainly not a reason in itself to invest in property. Check out the clips below and make up your own mind!

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Renovation rescue – Day 13

After the painting in the lounge yesterday, today I felt a lot more confident that we could easily get through the kitchen and have it looking good by the end of the day. Once again it was ceilings first and then walls. One thing that I did today after the ceiling had dried was to replace the ceiling fan. Years of cooking grime had accumulated in the old one and it’s an easy update to give a more modern look. For around $20 you can get a new ceiling fan and replace it yourself as there is usually a plug mounted in the ceiling cavity so no electrician is required. 2 minutes…done! Whilst the first coat was drying back on went the over counter cupboard doors which had already had a fresh coat of paint and a set of the new door handles, easy. We also put back on the larger cupboard door in the lounge that had the ‘concealment device’ for the old hot water system as designed by the foreman. It came up really well and you’d never know what it is hiding (see the pictures below).

When the property first settled one of the very first things I did was to get in and measure up the windows for new window furnishings. Ordering blinds can take a long time but fortunately the venetian blind I had ordered arrive early this week (just in time). I ordered through www.blindswholesale.com.au who are based in Sydney and I found their prices to be some of the most reasonable for made to measure. The annoying thing with older places are that many of the windows, door handles etc are in imperial measurements so it’s difficult to get things that fit ‘off the rack’. It’s an expense to be aware of. Once the blind was up though I was really pleased and looking at the before and after pictures below you’ll see what a transformation the kitchen window has had compared to day one.

The afternoon was finished off with the second coats of paint and after that it was finally time to take all of the plastic covers off the kitchen cupboards, lift up the drop sheets and see what the finished product looked like. Unfortunately my current time frame is not going to allow for me to get the final feature of the kitchen finished until next weekend now (work beckons), from the pictures below I’m sure you’ll be able to see what this final feature will be (note the unpainted sections).

Overall the kitchen looks completely refreshed compared to the original and I’m thrilled. I’d even be game enough to cook a meal there now after mum gave the oven a good once over today. It’s amazing what 4 year old oven bake chips look like, think Amazonian shrunken heads but with more potato. There are a few 10 minute things left to complete in the kitchen such as sealant around the sink and some trim around the cupboards but it’s very close now.

Tomorrow I walk back in to the property after 2 flat out weeks and evaluate where we are at and importantly what’s left to do!

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What’s on the horizon for negative gearing?

symbol-upward-arrow-house_002So it’s federal budget night in Australia and there have been rumblings for some time now that the government might be looking to reform their negative gearing policy for property investors. The most frequent suggestion that I have heard is regarding the possibility of introducing grandfathering arrangements for current property investors whilst restricting any future negative gearing to newly constructed properties. Whilst this has the potential to save the government billions of dollars, there is still plenty of debate as to the flow-on effects that it might have. Whilst on one hand there are those stating that negative gearing has done nothing but escalate property prices for those wanting to purchase their own home (Check out the beer coasters here that encourage abolishing negative gearing), others view it as a key strategy in encouraging investment and maintaining a healthy supply of rental properties on the market. Time will tell after the budget announcement tonight and you can rest assured that whatever happens it won’t please everyone. Check out the links below to read some of the recent commentary on the potential impact on negative gearing in the 2014 budget. Stay tuned!

Negative gearing is on the chopping-block

Budget Night: What’s Going To Happen To Negative Gearing?

Exciting news!

In the interests of blatant self promotion I’ve attached the following image…more news to come soon!

IA

Invest For Success: Preparing Your Rental Property to Attract the Best Tenants

truemelbourne.com.au

tidy-kitchenForget second-hand furniture and dirty accommodation; today tenants have choice and know what they are looking for in a rental property. To attract the most prospective tenants to your rental property it needs to be attractive, stylish and practical.

The need to “invest for success” is never truer than with a rental property.  By investing wisely in the decor and fittings you will reduce vacancy times by attracting tenants quickly and retaining them for longer periods.

So, what should you do to your rental property?

Decor

Less is more. Avoid fussy decor that is difficult to keep clean or is too delicate to last the course. Choose light and neutral colour schemes to give the feel of increased space. Avoid light tones in carpets as these will quickly show dirt and marks.  (Tip: You can often source good quality second-hand carpet from online auctions and your local paper).  Whilst you…

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Why You Shouldn’t Listen to Donald Trump – The Barefoot Investor

When it comes to investing in property everyone seems to be an expert and is full of advice, both good and bad. You’ll hear disaster stories by the bucket load and I often suggest that a lot of this information comes from people who have not experienced property investing themselves. You’ll hear “I have a friend that had a terrible experience when…” etc, etc. So going on this philosophy you’d be inclined to think that advice from someone who has done it before would be a lot more useful. Often it is, but you still need to approach it with a critical eye and always ask yourself when receiving advice from someone, what’s in it for them? This, I’d also strongly recommend when attending one of the many property investment workshops or seminars that are frequently marketed to the masses. There are lots to choose from and whilst some are very informative and useful, there are also ones out there that are simply a sales pitch.

When browsing through the blog from Scott Pape at The Barefoot Investor I came across the article below highlighting that even when the advice is coming from one of the most successful real estate tycoons of all time you can still be taken for a ride. Click below and read on…

Why You Shouldn’t Listen to Donald Trump – The Barefoot Investor

Regional Property Prices

regionsAs you may have picked up I’m passionate about regional investment and it forms a large part of my portfolio. A lot of people are skeptical about regional investment and subsequently limit themselves to capital cities. Whilst capital cities have often shown better capital growth than some regional areas there are also some great reasons to consider investing outside of metropolitan areas, not the least of which is that it’s commonly a lot less expensive to get into the market. I have heard many people comment about how expensive it is to purchase in capital cities and that sometimes it’s next to impossible, however in the same breath you’ll hear them comment that regional cities don’t return the same capital growth, so what do they do? Nothing!

It’s important to do your homework and weigh up the pros and cons before you limit yourself to just one market which can potentially mean you end up doing nothing and waiting for the prices to drop (it might never happen!). Today I came across the data below which provides the median (not medium as written!) value of a large range of Victorian towns and cities. Information like this can be difficult to come across so it’s good when you can find it. Click on the image below to be taken to the active site. There you can also select and search by region.

REGIONAL

 

Hooked on Houses!

One thing that I’m always on the lookout for are great websites that delve into property in a variety of ways, be it investment, buying and selling, design, celebrity homes and the weird and wonderful. One website that I was recently alerted to by a friend is Hooked on Houses which is the brainchild of Julia from Ohio. It contains a great range of topics and information from renovation before and after, to houses featured in movies and TV. One of the posts that has really made me laugh relates to the interesting world of property listing photos.

mountain-lion-and-more-animals-in-study

From investigating Ways Dead Animals Can Kill a Real Estate Listing (above) to the more subtle Unusual Things Found in the Real Estate Listings (as seen below…yes there is a couch in there somewhere) it’s an eye-popping exploration behind the curtains of other people’s homes.

sofa-matches-wall-Christina

I’d also recommend having a look at the before and after page if you’re after some inspiration for your own projects! Thanks to Julia for her great website.

Lifestyles of the rich and famous

www.curbed.com2012_10_bremer_2-thumb

Now I’m sure that this website has been around for ages but I just stumbled across it a few weeks ago and have spent hours trawling through the archives. Whilst it’s not necessarily all about investing, a lot of the articles are great for anyone with an interest in property in the US. Note that you can select various areas in the states from the drop down menu at the top. I’ve spent a lot of time looking at LA…you can dream can’t you? If you click the picture above it will take you to an article featuring the mansion built on the site of Walt Disney’s last home which is on the market for around $90M.