There’s no denying that when it comes to property investing and making money from renovating, first impressions count. Changing the first impression of a property is the second highest returning “add value” technique. Here’s why…

BY ANA STANKOVIC

In this day and age most potential buyers start their search for properties online. They look up the locations they’re interested in, enter their budgetary constraints and select certain property profile details that they require.

Only once they’ve got the search results of this initial selection do they start prioritising which of these properties interest them. Out of the ones that look interesting to them, they’ll go and drive by a number of them and have a look at them from the outside before narrowing it down even further to a select few that they’ll actually inspect.

If a potential purchaser has two properties which are in the same area, have similar profiles (number of bedrooms, bathrooms and parking spaces) and are similar in price, which do you think they’ll be more interested in:

-       the one with peeling paint, falling down fence, big bushy plant hiding half of the façade, green eaves, rusted garage door, etc., or

-       the one that’s neatly presented and looks light and modern.

The answer is simple. It’s human nature to judge a book by its cover, but it’s only because they’re trying to imagine themselves living there. It doesn’t matter how good your renovation is inside if you can’t get potential purchasers through the door to actually see it.

It’s a numbers game. The more people come inside and inspect the property, the more are likely to be interested and pursue purchasing it, creating competition and pushing the price higher. So it’s in your best interest to get as many people through the door as you can.

Winning Formulas for Success on average gets around $4 for every dollar that we spend on renovating that first impression of a property.

So how do you work out what immediately needs to change with your first impression? There’s a simple way that a colleague of mine suggested a few years ago and it works a treat.

Stand on the opposite side of the street from your property and turn around so that you’re facing away from it, turn around and face it for five seconds and away again.

Anything unappealing that caught your eye in that time should be neutralised or removed. If there was a bright color, falling down verandah, rot, big plant, etc. – anything at all that stood out in a negative light – it needs to be addressed.

Once you’ve done this, have a look at other homes in your area that are in the next price bracket from your property – what are they doing? You want to increase the value of your home so it pays to try and get your property to look more similar to higher priced ones in the same area.

Ana Stankovic is well known as one of Australia’s leading renovating-for-profit specialists and is regularly featured in prominent industry publications, expos and continually educates investors. To find out more or sign up for Ana’s free newsletter, visit www.RenovateAndProfit.com.

Story from the API Blog

Rising interest rates are discouraging first home buyers and keeping them in the rental market, which in turn is good for property investors, according to leading online mortgage broker e-choice.

Property investors, who themselves say they aren’t deterred by rising interest rates, can look forward to strong rental returns as larger numbers in the rental market keep rents from falling.

A survey released by e-choice recently found that 41 per cent of would-be investors would reconsider if rates rose by two percentage points compared with 53 per cent current or prospective owner occupiers.

Executive director of e-choice’s parent, Firstfolio, Mark Flack said the outlook was good for property investors as first time buyers were shying away from any prospective purchase.

“We believe more prospective first-home buyers will pull out of the market compared to property investors, and as such we see a great opportunity in the investment property market,” he said.

University of Western Sydney property lecturer Za Manaf said it was a `sellers’ market’, which made it hard for first home buyers to find an affordable property.

“It is becoming more expensive to take out mortgages because the interest rate is going up,” she said.

“Demand is higher than supply, which leads to market being more favourable to sellers.”

The survey also found that between 20 and 22 per cent of respondents listed government charges and securing financing as the two biggest concerns when considering buying property.

The lack of attractive property investment options came in third, with 15 per cent of respondents citing it as a challenge when buying.

The majority of respondents picked Melbourne, Perth and Adelaide suburbs as areas with the best residential property return prospects.

A little under half of respondents, 47 per cent, chose an existing house as the most attractive investment option, with 18 per cent preferring an existing apartment as opposed to a newly built dwelling.

The online brokerage site e-choice polled 1,000 Australians looking to buy property, 32 per cent of which were property investors.

Story by Curtis Cooper REA

The Westpac-Melbourne Institute’s Consumer Sentiment Index has indicated a 7.0% fall in consumer confidence during May.

The Index now sits at 108.0 points suggesting that consumers have become less confident in domestic economic conditions over the last month. This is likely to be the result of a volatile share market, economic instability in Europe and higher interest rates. Whilst this month’s result is the weakest since June 2009, the Index remains well above 100 points which is the point where optimists and pessimists are evenly balanced.

A subset of the Index, the `Time to Buy a Dwelling Index’ recorded a fall of 15.4% from 104.3 points last month to 88.2 points, indicating that a majority of people surveyed believe the optimal time to purchase a home may have passed following the strong capital gains in home values over the last year and interest rate hikes.

The Reserve Bank’s Head of Financial Stability, Luci Ellis said at the Australian Financial Review’s Residential Property Conference this month, that housing prices had continued to receive upward pressure in Australia.

“It would be helpful if more of that demand could be accommodated with extra homes for occupation, instead of by higher prices,’’ she said. “Every cycle starts with something real, something fundamental. Recent data suggest that we do not have a credit-fuelled speculative boom on our hands. It would not be desirable for the current situation to turn into one.’’

While the Rpdata.com Market Activity Index has shown slight easing during recent times, the above average pre-listing activity level suggests that the listing environment should remain buoyant amongst real estate professionals over the coming month. Both the number of new properties entering the market and the total number of properties available for sale remain well above 12 month average levels despite falling below the level from the same time last year.

Story by Curtis Cooper REA

Having an understanding of median sale prices can add an extra dimension to your property purchasing skills.

Take care not to confuse median sale prices and average sale prices, the two numbers can vary enormously.

Averaging adds up property prices in a list and divides by the number of properties. The median price is the figure in the middle of a range of numbers arranged from lowest to highest.

So, if you have  11 properties, the median price would be the price of the 6th property from lowest to highest. There will be five properties below it in value and five properties above it in value.

Median and average prices can be quite similar if the prices form an even range from high to low. However, if the list of  11 properties has  eight low priced and only  three  high priced properties, the median value will look low compared to the average value. Conversely, with three low priced and eight high price properties, the median value will be higher than the average value.

Median prices are usually quoted by suburb/area or by a time period.  Suburb figures are usually calculated on the previous 12 months. Areas with less than 10 sales during that time don’t give enough data to generate relevant figures.

Comparing different areas with similar median prices can help make better sense of what median prices are all about.

Capital city medians are a good guide for suburban house prices, however houses within five kilometres of the CBD will have a much higher value than the median price for that city.

While median prices can assist as broad indicators and allow comparisons between cities, looking at recent comparable property sales in specific areas will always give the clearest understanding of the market you are in.

The best understanding of property values will be a combination of both median pricing – a macro view – and individual property sales in your target area, giving a complementary micro view.

Story by Sally Howes Domain.com.au

Overall lending for property is on a slide and on the surface that looks like bad news for property investors. But a deeper look at the numbers suggests there is an upside.

Australian Bureau of Statistics figures show the number of home loans dropped by 3.4 per cent in March, following a 1.8 per cent fall in February. It’s the eighth fall in the past nine months.

Approvals for investment loans, however, are going the other way with a 3 per cent jump in March. Looking over the longer term, the trend becomes clearer with investment loans up by 24 per cent on this time last year and home loan approvals down by 30 per cent from six months ago.

When combined with a demographic analysis of an area, lending patterns can give us a very good indication of what is likely to happen to property prices in these markets.

For example in a suburb such as Glebe in Sydney’s inner west about 55 per cent of all property is owned by investors.

Investors target this kind of area because there is a strong tenant demand due to the closeness to the city, university, shops and cafes.

A significant jump in investment lending is a clear sign investors are active in the market. When this happens they compete for property in places such as Glebe and put significant upward pressure on prices.

About 45 per cent of people in Glebe own the property they live in so there will be a level of softening demand from buyers but it will be compensated for by the investors.

This differs greatly from an area such as Kellyville in Sydney’s north-west. Investors control only about 13 per cent of property in this area.

Although it is a great area to live and raise a family in, Kellyville does not have the kind of infrastructure that tenants are looking for. Therefore demand from investors is weak and will have minimal impact on property values.

However, about 85 per cent of property in Kellyville is owned by people who live in their property so the drop in owner-occupier loans is likely to have a significant impact on demand.
If interest rates continue to climb and demand continues to soften, the chances of property values falling are increased.

The property market is made up of various sub markets that can be pulling in different direction at the same time. As an investor, it is vital to understand which market you are getting yourself into and how to interpret the raw data that will affect the growth pattern of the property you wish to buy.
America’s favourite investor, Warren Buffett, once said: "I’d rather be vaguely right than precisely wrong."

Once you get your head around how to interpret raw data you will have a greater chance of being "vaguely right" and therefore a successful investor.

Mark Armstrong is a director of Property Planning Australia, www.propertyplanning.com.au

The man who predicted the global credit collapse of 2007 has warned that Australia’s housing bubble is ripe to burst at any time.

US investment banker Edward Chancellor has told the Australian newspaper our economy is yet to emerge from the global financial crisis.

Mr Chancellor, who works for GMO, estimates Australian house prices are more than 50 per cent above their fair value.

He says house prices would have to fall ‘quite considerably’ to revert to their average price in relation to average income.

He also warned first home buyers were among the most vulnerable, saying the ratio of their mortgage repayments to their income would rise to ‘very high levels’ as interest rates continues to rise.

A potential trigger for economic trouble and the collapse of the housing market would come if China’s demand for iron ore and liquefied natural gas slowed, he said.

Original Story taken from www.bigpond.com