Property buyers rely on a number of different tools to assess the value of a property. This article will explore Automatic Valuation Reports (correctly known as Automated Valuation Model (AVM) Reports), and how they relate to the actual market value of properties throughout Brisbane.
An automatic valuation report is an algorithm-based computer-generated report, which provides an estimate of the market value of real estate at a specific point in time. The specified value of a property that this report produces uses a combination of mathematical and statistical modeling, along with databases of existing properties and transactions, and then calculates real estate values.
Automatic valuation reports are widely employed in the real estate sector. Some are provided directly to the public on free platforms such as onthehouse.com.au and propertyvalue.com.au. Others are available on subscription only such as CoreLogic. Additionally, mortgage providers, such as banks and other financial institutions, regularly use AVMs for residential portfolio valuations.
Because of their rapid rise in popularity and the availability of Automatic Valuation Reports to consumers, the debate has become apparent about their merits and their accuracy.
But do they accurately reflect the true market value of properties, and can consumers rely on AVMs to come to a determination on what to offer when purchasing residential property in Brisbane?
There are pros and cons associated with Automatic Valuation Reports that are important to outline.
AVMs are systematic and fast which means an estimate can be provided instantly once an address is entered. In our busy world, this can be a huge advantage for many people looking for quick information.
AVMs are cheap and therefore they save cost, especially when they need to be generated in large quantities.
AVMs are computer-generated, thus eliminating human error and removing bias and subjectivity from the equation.
AVMs rely on high-quality data and often that data is low in volume or not representative.
AVMs do not and can not factor in the actual condition of a property. Instead, they just assume an “average” state and that all properties are of the same state. Clearly, this is not true when we can buy fully renovated homes as well as unrenovated original homes when selecting real estate.
AVMs are less accurate in areas where the composition of housing varies substantially. They are more effective when the property stock is very generic in the same location.
In new estates where there is little or no known data upon which the AVM can rely, the lack of historical records can result in grossly inaccurate results.
AVMs can only work when the data provided is correct and up-to-date. Therefore AVMs are unreliable in a fast-changing real estate market.
So whilst there are some pros, the cons still outweigh the benefits of relying on AVMs – especially in a fast-moving market. In fact a 2017 conference paper “Automated Valuation Models (AVMs): a brave new world?” concluded that statistically-based valuations may be widely off-the-mark and need to be augmented by professional judgment.” READ HERE
Therefore whilst their use is growing, AVMs have not and should not override human valuation estimates. Instead, a thorough assessment of a property’s value requires not only experience where judgment is called on but also local knowledge of the specific market conditions where individual properties may be dissimilar in a variety of ways.
Our team consistently finds that AVMs underestimate the actual market value of properties in Brisbane – especially in a fast-moving market where growth is strong month-to-month. Instead, a comprehensive analysis of comparable sales, with consideration given to land size, zoning, property impacts, property size, and the property condition is much more accurate.
Despite the fact that AVMs are becoming more mainstream and easier to access, there will always be a need for local knowledge and expertise, as well as a physical inspection and on-site evaluation of the property in question.
In this blog we explain why you should use a Buyers Agent at auction, and how can they help give you an advantage.
The number of properties being sold by auction in Brisbane is starting to increase. We have traditionally been a market dominated by private treaty sales, however with more recent market trends, we are quickly becoming a city where auctions are more prevalent. This article will explain how a Buyer’s Agent can help when you need to participate in an auction to secure your perfect home or investment. So, why use a Buyers Agent at auction?
When a property is listed for sale by auction, the main goal of the sales agent and the auctioneer as a team on the day is to draw out the maximum possible purchase price for the vendor. The auctioneer does this by asking for minimum bid increments from the bidders and creating a sense of urgency, whilst the sales agent does this by talking to bidders, often standing side by side with them, encouraging bidders to put forward a bid in an attempt to increase the current bid amount. If an auction stalls, tough negotiations can pursue, and inexperienced negotiators often falter under this type of pressure. The environment at an auction is often one of high pressure, which can create anxiety and stress in any bidder who is not familiar and confident with the auction bidding process.
Why use a Buyers Agent at auction? Engaging a confident, experienced and professional Buyer’s Agent to bid on your behalf and to represent you on auction day, takes the pressure away from you as the buyer. Instead of getting caught up in the high-pressure tactics, as a buyer, you can relax a little knowing that your emotions will not get in the way of the important decisions that you need to make.
We often see tell-tale signs that inexperienced bidders give away, especially when they are approaching the top of their budget. Body language, facial expressions and delays in bidding can all indicate signs to a professional bidder that others are at or approaching, their maximum bid limit. Here are some of the reasons why engaging a Buyer’s Agent to represent you makes sense.
1. Why use a Buyers Agent at auction? – Eliminate the Emotion
When you buy at auction, there is no cooling-off period, so you need to ensure you are making informed decisions that are not fueled by emotion. Spending a “little bit more” might put you in a financially stretched position, or feeling emotionally attached may cause you to bid more than you actually need to.
Professional Buyer’s Agents will remain calm, non-emotive and focused on getting the best possible result for you. Acting under your prior written instructions, there is no need for emotions to sway your decision on the day. Instead, the decisions are made before auction day, when you are feeling calmer and level-headed.
2. Why use a Buyers Agent at auction? – Be better prepared
Understanding the market and what you may need to pay to secure a property is important when setting auction bidding limits. An area specialist Buyer’s Agent, who is in the market daily, is an expert at researching and understanding property prices. A professional can provide informed pricing guidance, therefore enabling you to be more prepared on auction day, or even suggest an alternative strategy such as placing an offer prior to the auction, when there may be an opportunity to do so and it is warranted.
Additionally, when bidding at auction it is important to understand the paperwork that is involved, both prior to bidding and immediately following an auction win. A licensed Buyer’s Agent can guide you through this process to ensure you are informed and confident.
3. Why use a Buyers Agent at auction? – Be objective during the auction
Buyer’s Agents do not feel intimidated at an auction like many other buyers who are less familiar with the auction bidding process. They will bring all of the tricks of the trade to intimidate other less experienced bidders, which will work to the advantage of their Clients. Having a qualified bidder to represent you instills confidence and in the event that an auction enters negotiations prior to selling, you know that you also have an expert negotiator on your side who will have emotional detachment in this daunting process.
There are many advantages of how a Buyer’s Agent can add value when engaged to bid at an auction on your behalf. If you are buying in Brisbane, and you need an expert auction bidder and negotiator on your side, reach out to the team at Streamline Property Buyers. We would love to help!
Brisbane is a city built along the banks of the Brisbane River. It is known as the “River City” for a reason. But being a River City, it is also a city that is exposed to flood risk, and this is what this article is going to focus on to ensure you can assess the flood impacts in Brisbane before you buy a home or an investment property.
Brisbane has experienced many significant flood events over the past two centuries. Back in February 1893, the first big river flooding event occurred where water levels were recorded at 8.35 meters above the low tide level in the Brisbane CBD, the second highest flood event ever recorded at the City gauge. This event was termed the Great Flood and that month was then referred to as Black February. The flooding was caused by a huge rain event associated with a tropical cyclone. This caused the Brisbane River banks to burst and the water flooded into the surrounding areas. This flood resulted in 11 deaths and about 190 people were hospitalised.
Fast forward to January 1974 and our city experienced the largest flood to affect Brisbane in the twentieth century. Once again, this was caused by a cyclone where 642 millimeters of rain fell within the space of 36 hours and the river system simply could not cope.
At that time the water levels peaked at 6.6 meters at the City gauge, but because development was a lot more advanced than it was back in 1893, 8,500 homes were completely inundated with floodwaters on this occasion. Brisbane was an inland sea during this flood event and 14 people lost their lives as a result, mostly in the inner city suburbs.
Off the back of these flood events, the Wivenhoe Dam was constructed to provide flood mitigation control for the City. This is located about 80km by road from the Brisbane CBD. Residents in Brisbane became more optimistic that Brisbane would never flood again and development was fast tracked throughout the city. No one thought that a river flooding event would impact our lives, or our homes again.
Then in 2011, the flood that was never meant to happen happened. After days of rain, the Wivenhoe Dam was over its capacity and the flood gates had to be opened to release some of the water. Brisbane was in for a shock.
On 11 January 2011, the Brisbane River broke its banks and by 13 January 2011, the river was raging. This time 20,000 residential homes were affected by flood waters across 94 suburbs throughout the city. It was the flood that was never meant to happen, but it highlighted the fact that our River City may never be immune from future flood events.
Understanding how to assess the flood risk associated with a property is therefore important when you are looking to buy a property in Brisbane. So here are some steps you can follow that will help you to assess this risk.
Downloading a FloodWise Report to assess the flood impacts in Brisbane
The Brisbane City Council provides predictions for the potential for flood risk for most properties around the City. A FloodWise Property Report can be completed HERE. You will be required to enter the property address, click Search and then select the way you would like to view the report before downloading.
This search will provide one of four types of reports, depending on the site.
The first type of Report is issued when there is NO known FLOOD Impact across a site. You will see this note on Page 1 of the FloodWise Report if this applies to your property search:
Obviously, this is the best possible outcome as it means the property is not going to be impacted at all by any type of flooding event.
The second type of report provides a warning that the property has Flood and Planning Development Flags, but there will be no visible graphs. The alert on Page 1 of the FloodWise Report will look like this:
This usually means that the property is impacted by overland flow flooding. Brisbane City Council does not have publicly available information on the overland flow modeling. Whilst we can get an understanding of the overland flow pathways, we don’t have details and the onus is on a buyer to engage a hydraulics engineer to complete an assessment to ascertain what that impact actually is. For development, this becomes much more important compared with just buying a residential site.
The third type of report that might be produced happens when there is a known flood impact on a site, but the information is not complete enough to determine what the minimum habitable floor level must be for flood immunity. There will be a graph on the first page of the report that will look something like this:
This usually happens when a block of land is too large for the council to have complete clarity of what the flood impact is likely to be at every point on the site and therefore the minimum habitable floor level is not noted on the report. In this instance, the onus is again on the property buyer to confirm what the minimum habitable floor levels might need to be to achieve flood immunity across the site.
The fourth and final type of report is produced when there is a known flood impact on the site AND there is sufficient information in council’s database to also determine what the minimum habitable floor level must be for a dwelling property to achieve flood immunity on that site. The graph on this report looks something like this:
You can see in this example, there is a dotted line that shows the minimum habitable floor level. This is the most comprehensive report out of all of the possible options.
Now let’s look at how to interpret the rest of the information in these reports.
The Green line on the right-hand side of the graph represents the contours on the property, or the ground levels of the site, based on the Australian Height Datum in meters m(AHD). A level of 0.0 AHD is considered sea level.
The highest and lowest point on the site are noted on this report through the lowest and highest points on the Green line. Obviously, suburbs closer to the bay in Brisbane will be closer to zero, whereas more elevated suburbs will be much higher.
On the left-hand side of the report, you will see some bars on the chart. These bars represent the annual probability of a flood event occurring for that particular property. These bars also show the magnitude of the associated risk for any flood event. This is measured using the Annual Expedient Probability (AEP), in other words, the chances that a property will flood in any year.
Usually, the higher the probability (ie: the higher the AEP expressed as a percentage), the lower the flood level will be. The same holds true in that the lower the AEP, the higher the flood level will be.
Some reports, but not all, will also include a flood level as recorded during the Floods of January 2011. And finally, some reports, but not all, will include a Defined Flood Level (DFL) as well which is a measure used for Brisbane river flooding whereby the flood level of 3.7M AHD at the Brisbane City Gauge and a river flow of 6,800m3/s is the flow. This gets a bit complex, but for those who understand hydraulics, it may be useful.
If the bars on the left-hand side of the chart are higher than the points in the Green line on the right-hand side of the chart, then you can expect that during a flood event, water is likely to cover part or all of that land. You can then calculate the DIFFERENCE between those two levels to get an indication of the likely flood LEVEL for that property at its highest and lowest point.
When it comes to new approvals for dwellings, or renovations on properties, council are focused on the 1% AEP levels. For any non-habitable spaces within a home (eg: garages & laundries) council requires those floor levels to be 300mm ABOVE the 1% AEP level for a site.
For any Habitable spaces (eg bedrooms, living rooms dining rooms) these need to be at least 500mm ABOVE the 1% AEP level for a site.
For any existing dwellings that may not already achieve flood immunity, a calculation between the ground levels and the ACTUAL floor level can often determine what level of flood inundation could be expected in the event of a significant flood event on that site.
If a property ALSO falls within a Creek/Waterway Flooding overlay Category 1, 2 or 3 OR in a mapped overland flow path, you may also need to account for an undercroft area in the event you are looking to complete any future renovation works. This can get quite complex, and we recommend if this applies to seek help from professionals such as architects, certifiers, and town planners.
On Page 2 of the Property FloodWise Report a Technical summary will be provided. This information is predominately for builders and architects who are completing renovation or building works on a property. Basically, if you understand how to read the graphs on page 1, you will not need to understand this more detailed technical information.
Checking the FloodWise Report for a property is an important part of the due diligence process that should be completed prior to a property purchase so that you understand the flood impacts in Brisbane and how they may impact on a specific property. Understanding how to interpret the reports is also essential. Finally, applying the information from the report to the specific property, and understanding what it means in relation to the existing property on a site is invaluable. This ensures any future compliance requirements in relation to renovations or improvement works are understood upfront.
One of the areas in relation to property investing that is least understood is around the property investment strategy and cashflow versus Capital Growth.
In our role, we speak to so many property investors who do not understand what type of property is best suited for them based on their goals, risk appetite and their personal circumstances. Property investing should NEVER be a one-size-fits-all approach, and yet so many investors select a strategy that may have unintended consequences for them in the future. The purpose of this article is to highlight the difference between a high capital growth and a high yield strategy when selecting an investment property here in Brisbane.
As a member and participant on a number of property investment facebook groups and online chat forums, I see many individuals seeking advice in relation to what is the best suburb in Brisbane to invest in for a specified budget. It always amuses me when others jump in with their suggestions and recommendations, based purely on price. This approach comes with so much risk, because there has been no thought given to the requirements for growth and yield for that individual.
How to determine the right investment strategy for you
To get an understanding of what investment approach might be best for you there are a number of considerations that you need to make:
What are your investment goals? That is, are you looking for more income now, or are you looking to create a future nest egg for yourself and your family?
What is your current taxable income? Remember any income that you generate through investments owned in your own name now will be taxed at your marginal tax bracket so this needs to be considered before you buy.
What is your exit strategy? Consideration must be given to whether you intend to hold the asset into retirement and live off the income it generates, or if you intend to sell at some stage in the future. The tax implications associated with this must also be considered up front.
At what stage in life are you now? The duration of the investment period that you have to work with can influence the type of property that you might target based on your specific needs at that time in life.
What is your risk appetite? We all have our own comfort levels and these need to be considered so that you can sleep at night!
Let’s take a look at a high yield asset first
Brisbane is a higher-yielding city than the likes of Sydney and Melbourne, so many investors are attracted to our city because of this benefit. Properties that return a higher yield are usually positively geared and are often cashflow positive properties as well.
A positively geared property means the property is producing income from a tax perspective. A positive cash flow property is one that puts money in the bank each week, once you account for all holdings costs, interest on the loan, and any repayments that you may be making towards the principal of the loan.
Properties are more likely to be cashflow positive on interest only lending – especially in the current environment where interest rates are at record lows. Fewer properties remain in a cashflow positive position once they convert to principal and interest loan repayments.
An investor can control the gearing and the cashflow position for an investment property through the finance structure that they implement for the purchase. For example, paying a higher deposit through cash would mean that the interest charges are lower due to a lower loan-to-value ratio and therefore the property is more likely to be positively geared, or even cashflow positive.
Investors MUST keep in mind that high-yielding assets have lower growth when assessing assets over the longer term. There is an inverse relationship between growth and yield. As one goes up, the other goes down and vice versa.
We can select an “example” high yielding suburb in Brisbane and determine the long-term performance of an asset based on historical data. Whilst there is no guarantee that the past is a reflection of the future, we do know that the past is going to tell a story that investors need to consider.
Let’s assume that the property value is $500K. The example property has a gross weekly rent of $600 which provides a strong 6.12% yield.
These are the additional assumptions:
Annual Vacancy rate of 2%
Borrowing at 80% Loan-to-Value Ratio (ie: $400K loan on the $500K purchase)
Paying for the remaining 20% property value and purchase costs via cash
The Interest Rate of 3% pa remains unchanged over the investment period
Principal and Interest Lending
Rental expenses = 27.37% of Rental Income (this covers property management fees, rates, insurance, maintenance etc)
Inflation on rental expenses set at 2%
Being a high yielding location, the capital growth rate is set at 3.5%. This is representative of historical growth rates in suburbs within Greater Brisbane that achieve higher yields like this example. For this reason, the Rental Price growth is also set at 3.5% pa (in line with capital growth).
The two most important things to note in relation to the cashflow in this scenario are as follows:
The pre-tax cashflow position is +$10,035 in the first year.
By year 31 the annual pre-tax cashflow position is +$70,350
In relation to the FUTURE VALUE, based on the compounding growth rate of 3.5%, this property will look like this:
By year 31 the value will be $1,453,000
This is an INCREASE of $953,000 from the time of purchase.
Now let’s look at a high growth Asset as a comparison
Consider now that the location selected is a high growth location which is in most cases going to generate a LOWER yield. In this example, we will again assume that EVERYTHING remains the same as in the higher yielding example, however, we will switch the growth rate the yield around. Therefore, the growth rate is assumed to be 6.12% pa and the yield is assumed to be 3.5% (based on a weekly rent of $343 per week on a $500K purchase). We can also assume that the rental price growth will be similar to the capital growth because the more scarce locations will achieve higher rental returns over time due to limited supply and higher demand. This ensures that a rental yield of 3.5% is maintained over time based on the property value. All other variables in the modeling will be exactly the same.
The cashflows in this scenario are as follows:
The pre-tax cashflow position is -$9,870 in the first year.
By year 31 the annual pre-tax cashflow position is +$134,161.
In relation to the FUTURE VALUE, based on the compounding growth rate of 6.12%, this property will look like this:
By year 31 the value will be $3,153,000
This is an INCREASE of $2,653,000 from the time of purchase.
Of course, this example is provided purely to illustrate the difference that a small change in the compounding growth rate can make over many years. TIME IN the market makes a huge difference when investing for capital gains for the future.
The reality is that generally the higher growth assets are located in the more scarce locations and therefore they are already priced higher. So it would not be realistic to expect that you can shop with the same budget and expect to choose between either high yield or high growth.
The difficulty for investors comes, when they have higher investment budgets, and they are presented with a CHOICE.
Should I buy One Higher Growth Asset or Two Higher Yielding Assets?
We also often get inquiry where people may have a budget of more than $1M to spend in Brisbane, but they ask if it is “better” to buy two properties instead of one with this budget. Again, the answer always depends on the unique circumstances of the individual.
If we look at the higher yielding asset and we consider buying two of these at $500K each, the numbers look like this:
Total Pre-Tax Cashflow for first year = +$20,070
By year 31 the annual pre-tax cashflow position is +$140,700
Total combined asset value = $2,906,000
Total INCREASE in value from time of purchase = $1,906,000
BUT … if you are a high-income earner, on the highest marginal tax bracket, then you would be paying tax of $4,770 in the first year for EACH property, which REDUCES your cash position from +$20,070 to +$10,530.
By year 31, assuming you were still paying tax at the highest marginal tax bracket, then your annual pre-tax income of +$140,700 would be reduced to $74,570 AFTER tax.
Over the life of the 30-year loan on each property, you would have paid a total of $481,670 in TAX which works out to be $963,340 across the two properties of TAX PAYMENTS in this scenario!!!!!
The after-tax cashflow position over the 30 years would be a total of $143,145 for each property, which provides after-tax cashflow of $286,290 across the two properties over the 30 year period.
Therefore, the TOTAL return would be:
Total after-tax cashflow across 30 years = $286,290
Total Growth over 30 years = $1,906,000
TOTAL RETURN over 30 years = $2,192,290.
Now let’s look at the alternative – buying a single high growth asset with the total budget of $1M and therefore targeting a higher growth asset.
If we look at the higher capital growth asset and we consider buying just one of these at a purchase price of $1M, the numbers look like this:
Total Pre-Tax Cashflow for first year = -$23,415
By year 31 the annual pre-tax cashflow position is +$134,161
Total asset value = $6,305,000
TOTAL INCREASE in value from time of purchase = $5,305,000
AGAIN … every investor must consider the tax implications of their investment decisions. Using the same examples, if you are a high-income earner, on the highest marginal tax bracket, then you would NOT be paying tax, in fact you would get a TAX REFUND of $3,155 in the first year. This is because at this time the property is NEGATIVELY GEARED which means you will be paying a portion from your own funds to hold the asset because the costs associated with holding the property exceed the income from rent that is being achieved.
By year 31, assuming you were still paying tax at the highest marginal tax bracket, then your annual pre-tax income of +$134,161 would be reduced to $71,105 AFTER tax. This is only $3,465 less than in the high yield example!
Over the life of the 30-year loan on the single property, you would have paid a total of $602,705 in TAX which works out to be $360,635 LESS TAX compared to the scenario of buying the two properties with the higher yielding returns.
The after-tax cashflow position over the 30 years in this high growth scenario would be -$120,353, mainly because the income from rent has not fully covered all costs as well as principal repayments for this property over the life of the loan.
Therefore, the TOTAL return would be:
Total after-tax cashflow across 30 years = -$120,353
Total Growth over 30 years = $5,305,000
TOTAL RETURN over 30 years = $5,184,647.
When we compare the two scenarios, the difference in the TOTAL RETURN, puts the single high growth property ahead by a HUGE $2,992,357!!!
So, which Strategy is better?
The answer to this question is still – It DEPENDS!
Of course, looking at the overall returns, targeting the high growth asset results in significantly higher levels of wealth after 30 years. There is no doubt about that from the numbers above.
But, some would argue that having all your eggs in one basket presents as higher risk. If the property is vacant, for example, you have no income at all. But if you buy the RIGHT asset then the risk of vacancy is minimized.
Also, given you would have one high value asset instead of two lower valued assets after 30 years, some would argue that it is better to own two properties so you can sell just one if needed and still hold the other. As I said previously, the exist strategy is very important to consider before you buy as these decisions need to be included in selecting the overall approach.
Finally, your own income levels and risk appetite will influence how much you have to spend and that may limit the type of strategy that you can afford to buy.
As we always say – the right strategy for an individual investor depends on individual circumstances. We always need to consider the investment strategy alongside the tax strategy and the finance strategy. There are so many moving parts to consider before an investor even starts to look at properties to buy. It is so important to plan prior to executing!
I hope this article has helped you to understand that investment strategies need to be tailored. Too many investors start off blind and make mistakes. Getting professional advice can help you tailor the right mix of growth yield based on your unique circumstances.
Get in touch if you would like to know how we can help you. You can make an enquiry with Streamline Property Buyers Team. We are the Most Qualified Team of Brisbane Buyers Agents.
It is not a surprise to most of us that the Brisbane Property Market has seen strong growth over the last 12 months. We have seen this in the news headlines for months. There have been a lot of buyers in the market, and very few sellers, and this is putting strong upward pressure on prices. So how can you start an investment portfolio in Brisbane if you have not been able to save a deposit for another purchase?
If you already own a property in Brisbane, this means that you might have some strong equity growth in your property! In the last 12 months alone, according to CoreLogic Data, the median value of Brisbane house prices increased 17.7% and unit prices increased 7%.
Let’s quantify what this might look like for you. See below a table of previous values and current values based on the median price growth for Brisbane in the housing sector. We have also included a column for the growth that might have been achieved over the last 12 months based on the median rate of growth for the city.
August 2020 Value
August 2021 Value
This growth in property values over the short term, is not something most property owners think about. But the fact is, being able to leverage from this growth is what can enable any property owner to kick start an investment portfolio themselves.
When looking to invest in property, most individuals are seeking either a boost to their current cashflow position, or longer-term growth which contributes to wealth creation. The balance between income now (ie: investment yield) and growth in the future (ie: equity) will always depend on an investor’s unique circumstances.
Regardless of the investment strategy (ie: the balance between capital growth and yield), it is always better to maximize investment debt when you also have personal debt (ie: a home loan that you are paying off). This is where a clever finance strategy can ensure you get the best tax advantages associated with your investment properties as well. These three factors must ALL be considered based on an individual’s personal circumstances when you start an investment portfolio for your future.
For many property investors, the hardest part is actually saving the deposit to get started. A lot of investors think that you need to set aside additional cash until you have enough to cover the contributions towards a deposit, as well as purchase costs for a property purchase.
But in actual fact, this is not the case when you are already a property owner. Whether you already own a home or another investment property, you can use the equity growth in that property to start an investment portfolio! Here’s how …
The equity is simply the difference between the current value of a property, and the amount owing on that property (eg: the mortgage amount). The equity position can be increased either by paying off the debt (ie: through repayments) or through growth in the asset value (Ie: capital growth).
Generally, a bank will allow you to borrow up to 80% of the value of a residential property without needing to take out Lenders Mortgage Insurance (LMI), subject to their assessment criteria of course. LMI only applies when the amount of borrowed funds exceeds 80% of the value of the property. What this means is that you can potentially tap into the additional funds that sit in your home as equity. This is especially exciting because, with recent market growth in Brisbane, the market itself has done a lot of the hard work in creating the equity!
So how can you take advantage of this increased equity in your property to start an investment portfolio?
It is really quite simple!
1.Get in contact with your Mortgage Broker today so that they can provide a valuation estimate on your existing property to determine its current value. Your Mortgage Broker will also help you calculate your available equity.
2.Perform an assessment of your borrowing capacity for another property purchase.
3.Re-mortgage or re-finance your existing facility to draw out the equity as an equity loan which you can use as a deposit for the next property purchase (again your mortgage broker can assist with this process).
4.Ensure you can afford the investment as well as any additional repayments that may be necessary to hold that investment property.
Once you understand how much you can afford to pay for an investment property, then you can start your research in terms of where to buy and what to buy so that your investment purchase achieves the goals you have set for yourself and your family. We encourage all investors to seek professional assistance if they are unsure of what type of property might be best for their unique circumstances.
In terms of Brisbane as a location for your investment, there are a few things that make our city a great pick!
1.Brisbane is a very affordable market. Our median dwelling value is $598,615 according to CoreLogic Data at the end of July 2021. Compare this to other capital city median values below.
Median Value as at July 2021
2.Brisbane offers strong gross rental yields of 4.0% compared to Sydney at 2.5% and Melbourne at 2.8%.
3. Brisbane has experienced positive net migration due to interstate migration over the last 12 months which means more people are moving to the great South East, and therefore more people need somewhere to live.
4.Brisbane also has a rental crisis right now, with the city-wide vacancy rate sitting at 1.3%. Rents in the housing sector have increased 9.4% over the last 12 months.
5.Brisbane’s response to the covid-19 pandemic has been superior to other capital cities and we have the lifestyle that many Australians are seeking, which is why so many people are moving interstate.
6. A lot of infrastructure which will better connect south-east Queensland will be fast-tracked due to the announcement that Brisbane will host the 2032 Olympic Games. This will benefit our city both in the lead-up to the Games and for many years thereafter.
To find out more about what is happening in the Brisbane property market right now, visit the Streamline Property Buyers’ blog HERE where we provide monthly Brisbane property market updates.
The list of reasons why Brisbane is a great place to invest right now could be longer, but we have outlined just a few. If you want to set yourself up for a better future by using equity from your existing property as a deposit for an investment property – speak to your mortgage broker today. This is a great way to start an investment portfolio. Using this strategy and taking advantage of the recent growth in the Brisbane market, without having to save cash for a deposit is clever. It is a great way you can get ahead and potentially begin your property investment journey.
Have you ever considered using a Buyers Agent in Brisbane? Do you know how a Buyers Agent can help? This article explains some of the benefits of using a buyers agent in Brisbane to assist you with your next home or investment property purchase.
The process of buying and selling property in Australia is somewhat different to many other countries around the world. In America, for example, most people buying property are represented by a Buyers Agent and most people selling property are represented by a Sales Agent. In Australia, the role of a Buyer’s Agent is just emerging.
With the projections for the Brisbane property market looking so bright, now may be a great time to use the services of a Buyers Agent in Brisbane to find the perfect property, but you may be wondering, what is a Buyer’s Agent? Let’s explore this further.
What is a Buyers Agent in Brisbane?
A Buyers Agent (also sometimes referred to as a Buyers Advocate) is a fully licensed real estate professional that specializes in searching for, evaluating and negotiating the purchase of a property on behalf of the buyer. A Buyer’s Agent works “exclusively” for the buyer and acts in their best interests. A Buyer’s Agent does not SELL real estate.
What does a Buyers Agent in Brisbane actually do?
Working with a Buyers Agent in Brisbane will ultimately make the whole process of buying a home or investment property stress-free.
Buyer’s Agents help property buyers to:
Save time – all property searching, inspecting and property due-diligence can be done for you
Eliminate frustration – no time on your weekends wasted looking at properties that do not match your requirements
Stress Less – having professional representation during the property buying process guarantees you a less stressful process
Improve Options – buyers get access to all properties that are available for sale both, on and off-market when working with a buyers agent due to their extensive agent network and strong agent relationships
Get a better deal – having a strong sense of understanding property values is important when it comes time to negotiate and to determine the property price
Improve confidence – know you will not overpay because you are being represented
A quality Buyers Agent in Brisbane will also uncover everything about a property that you may not even think to check.
There are so many layers that can be uncovered that may impact on what you can and cannot do with a property, and also whether a property will be covered by certain insurances or not.
Of course, getting a building and pest inspection these days is mostly standard practice, once a contract for the sale of a property is entered into.
But what about the things you cannot see? The things that are underground, the development that is approved for an area or even the land zoning or overlays that effect a particular property?
Using a Buyers Agent in Brisbane may be worthwhile if:
You don’t know the local Brisbane market very well
You are time poor and don’t have time to search for and inspect lots of properties
You keep missing out on properties that you like because other buyers act faster than you
You are uncertain about what to pay
You are frustrated as a result of dealing with Sales Agents
You feel overwhelmed with the entire process or certain parts of the process
You don’t know where to buy
You are having trouble finding properties to buy
You have found a property but you are not confident to bid at auction
You would simply prefer to be professionally represented.
This short video explains some of the advantages of working with a Buyers Agent in Brisbane.
Also, if you do not already know how to check flood maps, for example, in areas that are affected by river flooding, creek flooding, or overland flow a buyers agent will be able to perform all of this due diligence for you.
All of these types of flood issues will impact on a property, and may also have an effect on the premiums payable on an insurance policy for a property. It may also limit opportunities for manufacturing additional equity in a property through renovation or development.
This is information that, as a property buyer, you would want to be aware of given the size of the investment that is made when you purchase a property. You just don’t want to make a mistake.
There are many more areas that form part of a comprehensive property due diligence search, especially in some areas around our City. By engaging a Buyers Agent in Brisbane, who is able to outline all areas that you need to be aware of, and who can undertake all of the due diligence searches on your behalf, you are ensuring that you are entering into a contract for a property purchase fully understanding everything about a property – both what you can and cannot see during an inspection.
The video below explains some of the pitfalls when relying on on-line property listings. Property buyers can waste a lot of time inspecting properties that do not look like they did in the listing images.
This article has explained some of the benefits of working with a Buyers Agent in Brisbane. It is not for everyone, but for those who are looking to be professionally represented, there are huge advantages for property buyers.
Please feel free to reach out if you need assistance with your property search. At Streamline Property Buyers we will ensure you don’t make any costly mistakes.
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Would you like to understand more about working with a Buyers Agent in Brisbane?
When is the property market frenzy in Brisbane going to stop? The residential market in Brisbane has been in a rapid period of growth for months. Prices are escalating every week and with buyers who have been missing out, we are seeing that they are becoming even more eager to secure a property with every week that passes by. Buyers are even taking big risks just so that their offers are competitive. We are seeing buyers dropping out the finance clause and even eliminating the condition that allows them the security of a post-purchase building and pest inspection. This leads to the question … how long is this property market frenzy in Brisbane likely to continue and when might it start to slow down?
In a strong seller’s market, like Brisbane is right now, there are more buyers than sellers and this has the effect of pushing prices up. It comes down to supply (properties) and demand (buyers) and the depth of the imbalance is what has the greatest impact on the rate of price growth.
Supply is tight right in Brisbane right now because sales volumes have increased 38.5% over the twelve months to May 2021 according to Corelogic data, whilst total listing volumes are -23.8%lowerin Brisbane compared to the equivalent period of 2020. This means there are FEWER properties available to buy through the major real estate portals of realestate.com.au and domain.com.au. The number of properties for sale is a LOT LESS so supply is LOW.
But what about DEMAND in the Property Market Frenzy in Brisbane?
Well, the demand for property can be measured in a number of different ways. We can look at how many people are physically inspecting properties on a weekend. This is a sign of “real-time” demand that helps us to understand how many people might be interested in a particular property when it is listed for sale and open for inspection.
We can then also get a good understanding of demand based on how many offers are put forward for a single property that is available for sale. This helps us to understand the buyer depth in a particular location.
Then we can review the number of people registering to bid at auctions across Brisbane. Obviously, everyone who registers to bid is a serious buyer, subject to the price point of course. The property market frenzy is causing stress when people are missing out at auctions and beginning their search again.
Brisbane Auction crowd – Property Market Frenzy
Auction clearance rates can also be an indicator that helps us to understand the market demand. When the auction clearance rate is high, we know that there have been a lot more cases where the seller’s expectations have been met because there have been enough buyers to push the price up to allow the property to reach the reserve price.
Demand can also be demonstrated through other information such as lending data. The number of finance commitments throughout Australia hit record highs in April 2021.
Lending data also tells us where the demand might be coming from in terms of who is driving the demand in certain locations. For example, we know that first home buyers have started to pull back from loan commitments, an indication that there are fewer first home buyers actively looking to buy compared to 3 months ago. But we have now started to see an uptick in the number of investors who are seeking funds for a property purchase so this indicates that the demand is being driven by a change in the composition of buyers. Owner Occupiers are still the group driving the majority of the demand in Brisbane, based on lending data from ABS and APRA and our own observations.
Things that contribute to the demand for Brisbane Property include both macro and micro level indicators.
At a macro level, all markets across Australia are being fueled by low interest rates. The RBA has clearly stated that interest rates will remain low until inflation reaches a target band of between 2-3% and minutes from a number of their monthly meetings suggest that rates are unlikely to see any change until 2024 at the earliest. This makes money cheap and makes property purchases more affordable for many buyers across Australia.
Also, the National Economy has recovered at a much faster rate than anyone expected following the worst of COVID-19. We have seen unemployment tighten and consumer confidence rebound to very high levels. These factors contribute towards people having the confidence to make big purchasing decisions such as the purchase of a home or an investment property.
At a micro level, Brisbane is a little different to other national capital cities around Australia. We have a unique set of circumstances that make our demand metrics EVEN higher than other locations around the country.
First, the South-East Queensland region has seen record levels of interstate migration off the back of COVID-19. Whilst other large cities are declining in their population, Brisbane is GROWING and this is contributing to the additional DEMAND for Brisbane Property.
Brisbane Property Market Frenzy
A growing population puts pressure on the availability of rental properties as well. After hitting a peak in 2016, the pipeline for new dwellings in inner Brisbane has been declining and we now have a situation where the new supply pipeline is years away. In the meantime, new residents to Brisbane have to find somewhere to live and this is putting pressure on the rental market.
Vacancy rates at a city wide level are at 1.3% in Brisbane Property. At a suburb level, we are seeing vacancy rates as low at 0.4% – sometimes even less. When there are very few properties available to rent, we see rental price growth happen very rapidly as well. Supply and demand works in the rental market just as much as it does in the sales market.
More people moving to Brisbane means more buyers also competing for the same limited amount of stock. Population growth is increasing the demand for properties in Brisbane, and this is unique to our city right now.
To understand WHEN this property market frenzy in Brisbane might slow down we need to understand WHY this is happening.
First, we can’t see the population shift slowing down any time soon. People are recognizing that Brisbane provides a more affordable option than other major east-coast cities of Australia and also provides a more relaxed lifestyle. Our Covid-19 response has also been superior to other cities overall, so many are seeing Brisbane as a safe haven for their families in this ever-changing environment.
Second, whilst interest rates are low buyers will continue to take advantage of cheap finance to upgrade their home or invest into a market that shows good prospects for both capital growth and yield requirements.
Also with an improving economy buyers will continue to have the confidence to invest in large assets such as Brisbane property, finding it a safe place to put their money.
Unless we see a large volume of sellers come to the market all at once, which is extremely unlikely, the high demand will continue to outstrip the available supply and prices will continue to rise into the foreseeable future. We do expect this frenzy to continue for some time yet. For how long? No one can accurately predict this. But when we start to see a slow down on the ground, when we start to see fewer offers on properties available for sale, or when we start to see fewer registered bidders at auction, we might change our opinion on the strength of the market growth. But for now, hold on and make the most of the ride. Brisbane has been waiting for this to happen for many years. Now is definitely the time for Brisbane to shine on the national property growth charts!
Get in touch if you would like to know how we can help you understand Brisbane Property.
Buying a property can be daunting especially in a competitive market like Brisbane is right now, and with the rising popularity of the Multiple Offer Process. When a property market is so hot that there are more buyers than sellers, we often find that more than one person wants to buy the property. When two or more property buyers put forward an offer to purchase a property, the purchase becomes a Multiple Offer Process.
Buying with the multiple offers process can be stressful. It is a highly competitive environment, but there are certain things that can be done to improve your prospects for success. Of course, understanding the process is the most important first step, so let’s take a look at how this works in Brisbane.
There are certain obligations that a real estate agent should comply with in this situation and there are also best practice guidelines set out by the REIQ.
Section 22 of the Property Occupations Regulation 2014 (Qld) states that an agent must act in accordance with their seller client’s instructions unless it is contrary to the conduct provisions of the Property Occupations Regulation or otherwise unlawful to do so.
Of course, the Australian Consumer Law prohibits conduct, in trade or commerce, which is misleading or deceptive or is likely to mislead or deceive. Agents must, therefore, exercise a degree of caution to ensure that any representations which they make in the course of marketing a property, are accurate and not likely to mislead or deceive.
Under a multiple offer process, Agents have an obligation to:
Immediately inform their seller clients of all offers made,
Act in accordance with instructions from their seller clients, and
To obtain the maximum sale price for the property.
However, in obtaining the maximum sale price for the property, agents must treat all buyers honestly and fairly and not engage in misleading or deceptive conduct and/or unconscionable conduct.
Conduct that may be considered misleading or deceptive and/or unconscionable can include, but is not limited to:
An agent playing potential buyers off against each other in an attempt to draw out further offers and drive up the sale price; and
An agent advising a buyer of the existence of a higher offer in circumstances where a higher offer does not exist has lapsed or has previously been rejected by the seller.
Agents also have obligations to the buyers in this situation to:
To advise every buyer that they have received more than one offer on the property
To give each buyer the opportunity to revise their offer, if they wish to do so
To let all buyers know that once their offer has been submitted, that they may not have the opportunity to negotiate further – their offer must be their “Best and Final.”
Real Estate Agents in Brisbane who adhere to ethical and professional standards outlined by the Real Estate Institute of Queensland (REIQ), would distribute an “Acknowledgement of Multiple Offers” form to all buyers when there is more than one offer on the table at one time. This is signed by the buyer and returned to the Agent with the offer.
All offers are meant to be private and not able to be disclosed to competing parties. It is effectively a “silent auction” process – but with one chance only to secure the property. The process is often confusing and stressful for a buyer who may not understand what they need to do to make their offer stand out.
In many instances, a Seller is looking for the best price. This is the objective of most sales campaigns when a vendor is selling their property. But in some cases, the terms that accompany an offer can make a big difference also.
Here are some things a buyer can do to make an offer stand out under a Multiple Offer situation in Brisbane:
Increase the size of the deposit – this gives the seller and their agent the confidence that the finance will be approved.
Align the settlement date with the Seller’s ideal timeframe – understanding the seller’s motivations can often work to a buyer’s advantage.
Be finance ready – a shorter time frame for a finance clause, or an offer without a finance clause will be more attractive for a seller.
Shorten the timeframe for the Building and Pest Inspection – pre-book a building and pest inspector so the timeframe can be shorter.
Stretch that little bit more – most buyers put forward round numbers when making an offer. Buyers who add an extra few hundred dollars to the end of the offer amount can sometimes be successful because of the extra stretch.
Write a personal letter – We have seen this done successfully in Brisbane. Buyer’s who try to find an emotional connection with the seller can sometimes pull on the heartstrings of a seller and convince them to choose their offer.
Consider waiving the right to a “Cooling Off” period – if your buyer is certain about the purchase this is also possible.
Be flexible with other conditions – understanding the seller’s circumstances will help to align any additional special conditions in their favour. For example, rent-back clauses can be useful when the seller has not yet bought elsewhere – so get to know the motivation behind the sale!
The Multiple Offer Process can be overwhelming for many buyers, but understanding the process often helps to provide more confidence. Being able to position an offer favourably, even outside of price, can often be the difference between buying and missing out.
We explain the importance of finance pre approval when buying property in Brisbane. The property market in Brisbane is extremely competitive right now and you need to ensure you have a finance pre approval when buying a property.
The high volume of buyers searching for a property
now outweighing the number of properties that are available for sale. When there is a
supply shortage (ie: low listing volumes) in conjunction with high demand (ie: a large
vole of buyers), then ensuring an offer is competitive becomes incredibly important.
Brisbane is a market whereby the majority of residential property sales occur by private treaty. This
means a property is listed for sale on the major real estate portals, and once buyers have seen the
property, they can submit an offer to the seller to be considered. When there are multiple buyers
who are interested in the property, multiple offers may be submitted by a specific cut off time for
the seller’s consideration.
The objective of a seller is always to get the highest price, but they are also looking for certainty of the sale. When offers are submitted through a private treaty sales process, many of the offers will be subject to certain conditions, such as a building and pest clause or a finance clause.
A finance clause can be inserted into a contract of sale to enable a buyer to obtain a final approval
from their lender before the purchase becomes an unconditional sale. This usually involves the bank
sending a valuer to the property that has been purchased to ensure that the bank also values the
property at the purchase price. If the bank valuation comes in at the purchase price, then the
paperwork is finalised and the final approval can be issued. When a bank valuation comes in under
the purchase price, a buyer can cover the shortfall, contest the valuation, or withdraw from the sale
contract and get the deposit refunded.
To ensure that the post contract phase to obtain a final approval is fast, quite often a pre approval when buying property is
required. This means that the bank has assessed the majority of the documentation associated with
obtaining a loan for a property purchase and has provided guidance to a buyer in relation to the
amount that they can comfortably afford to pay for a property purchase.
Where we sometimes see things breaking down is when buyers don’t have a finance pre approval when buying property.
In the majority of circumstances, having a pre approval when buying property in place provides more certainty to buyers, which
in turn provides more certainty to sellers and their agents, as long as this is disclosed when making
Results from a recent study by Aussie Home Loans confirmed that 52% of property buyers do not know where to begin to obtain a finance pre approval when buying property and 54% said they had missed out on a property because they did not have a finance pre approval in place. These are very alarming statistics.
Sales Agents will often be asking buyers if they have a finance pre approval in place to ascertain the risk of
that buyer not following through with the purchase. When a contract is entered into, and a buyer is
not finance ready, then often requests for an extension of the finance clause can cause a purchase to
fall over. In a market where buyers who may have been the under bidders are waiting to hear if a
contract has crashed, there is a real risk to buyers who may not have a pre-approval in place if the
timeframe required to obtain a final approval pushes out.
The same survey by Aussie also revealed that 91% of buyers “feel stuck” which is holding them
back from making a property purchase. Reasons for this included current market conditions, competition from other buyers or not being able to find the right property.
Of course progress is within reach if buyers do their homework and get organised in advance. When
a buyer can beat the competition due to having better terms in relation to an offer, it often puts
them in a more favourable position in a highly competitive market. If two offers are made at a
similar price, then the offer with the more favourable conditions is likely to be the one that a seller
Remember, sellers want certainty, and so do their agents. Having a finance pre approval when buying property ensures that when the right property comes along, a buyer is ready to make the move. It also ensures that the offer is more competitive than others whose terms may be less favourable when there are multiple offers that a seller can choose to accept.
Property Markets cycle through periods when there are more buyers than sellers, and then when the market cools, the cycle changes and there are often more sellers than buyers. These market cycles depend on the supply of dwellings (measured through listing volumes and new homes being built), and the corresponding demand for properties (the number of buyers who are ready to purchase). Regardless of market conditions, the type of property that you need to target should never change. The focus needs to be long-term and buyers need to avoid getting caught in the fear of missing out (FOMO) that often creeps into their mindset in tough market conditions.
We see it often. When there are more buyers than sellers, people get frantic. The market moves quickly and prices often escalate at a pace that is unbelievably fast. Properties are listed, and within days they are under contract. Buyers are making quick decisions about spending huge sums of money on an asset that they will hold well into the future.
But with the frantic speed, we also see some people start to take unnecessary risks. Some of these are outlined below.
Making Cash Offers
Buyers often make offers that are no longer conditional to obtaining a final approval on finance. Whilst this can provide a competitive advantage in a seller’s market, it also exposes the buyer to a certain level of risk.
We see buyers offer to purchase properties at amounts well over the seller’s expectations. The buyer then takes on the risk that the property valuation does not come in at the purchase price. When this happens, it means the valuer can not see evidence of other sales that support the purchase price. Remember, a valuer is engaged to protect the interests of the bank. They provide the bank with the reassurance that the property will achieve the same purchase price if the property needs to be sold in the very near future.
When there is no finance clause to allow a buyer to withdraw from a contract, in the event that a property valuation does not come in at the purchase price, the buyer will have to put forward more cash or equity to cover the shortfall. When buyers do not have the capacity to cover any shortfall, then it puts the buyers in a very difficult situation. Failure to obtain the funds to settle on a property, where there is a legally binding contract in place, exposes a buyer to contract breaches, which is a dire situation to find yourself in.
Watch our video on Risks associated with making an unconditional offer
Overlooking a Building and Pest Inspection
Quite often in Brisbane, buyers will make their offer subject to a satisfactory building and pest report being obtained once a contract has been entered into. When there is a lot of competition from buyers for a property, we sometimes see buyers eliminate this condition from their offer to ensure that their offer is “cleaner” and more competitive.
The obvious risk associated with this, is that there may be major defects with the building that can not possibly be detected during a standard open house inspection. It is rarely possible to inspect the ceiling space, investigate moisture readings in walls or crawl into under-floor cavities during a standard inspection. A lot of defects or pest issues are not visible to the naked eye, so further investigation provides a level of security that the asset you are buying is not going to come with hidden surprises.
Accepting Compromises just to get into the Market
We also see buyers start to make compromises on things that they would not accept under normal market conditions. Buyers become fearful about how fast a market might be growing in value, and therefore just to get into a market they consider properties that might have impacts that will affect the asset long term.
But the focus for some buyers shifts away from the long-term outcomes. Remember property is an asset class that generally delivers superior results the longer it is owned. Making compromises just to get into the market makes little sense if it will impact the long term performance.
Taking Short Cuts
Taking the time to complete the necessary thorough due diligence is critical. In a fast moving market, it is easy to overlook the importance of thoroughly investigating a property before making an offer. When a property is only listed for a couple of days before it is under offer, every buyer should ensure that they understand all of the potential impacts on a property BEFORE they consider it a suitable purchase. By skimping on the due diligence, buyers can often be blindsided by issues that were evident if in fact, they took the time to investigate further.
Property markets always cycle through periods of boom and bust. It is inevitable that property buyers will ride the emotional journey and react in various ways that may be dependent on market conditions. FOMO is a real problem that many buyers do experience. It can really cloud judgment and cause people to make irrational decisions.
If you are feeling FOMO when looking to buy, perhaps getting professional assistance will ensure that your decisions will be focused on the long term outcomes. Buyers should NEVER take unnecessary risks or purchase a property that is not an ideal match for their circumstances. Remember, property is a long term asset and the transactional costs are high if you make a mistake. You want to get it right up front
Let’s face the facts … most of us only ever buy a very small number of properties in a lifetime.
But for us, it is our profession, so to help property buyers, we have compiled the following 7-steps to outline the process so you can have more confidence when buying a property.
1. Step 1 of the Buying Process – Get Finance Ready
We wanted to start this article at the very beginning – right when you first make the commitment to invest in your future and purchase your very own property.
When you first decide that buying a property is your next step, there are a number of things you will need to do to get on the front foot.
First, get out and about and do solid research into the current market and property values. This will assist in making realistic goals for you next property purchase. The market will change when the time to actually buy comes, so monitor the market right up until you are ready to put in offers. This will keep you educated so you don’t frequently miss out on properties that appeal to you.
Look for a mortgage broker that you trust so you can discuss your property goals with them. You may need to meet a few mortgage brokers until you find the right one for you. Some will be more focused on finding you the lowest interest rate. Others will create a longer term finance strategy. This will depend on you as an individual and what you are hoping to achieve in the future. All mortgage brokers will have their ideal clients so it is best to ask which type of property buyer that they specialise in.
You may find a mortgage broker that caters to the first home buyers’ market which may be great if you are feeling nervous about the process and need a bit of support. However if you are looking for a mortgage broker who has experience with investment strategies then that may work better for you if you are looking to invest. We always recommend talking to your mortgage broker about your long term plans, because even if you are buying a home, if you have plans to upgrade in the future, then some mortgage strategies might be better suited than others if the first property is to be retained and converted into an investment.
Make sure you are on board and comfortable with the broker you have selected.
The Mortgage Broker will be able to put a plan in place and will be able to help you with the following:
How much you can afford to borrow
Give you education on current interest rates
Educate you on the different set finance options and loan products (principal & Interest vs. Interest only, fixed & variable rates, offset and redraw facilities)
If there is a particular budget you have in mind they can let you know if that is achievable
Educate you on all fees involved when purchasing a property
Set a plan in place so you have a clear idea of what you can afford to buy
Mortgage brokers are also free for consumers to use. They get paid by the lenders they place the home loan with so you are not up for any costing with going with a broker.
Once you have your goals in place as well as a plan on how to achieve them you can move to the hardest step in the entire process…
You may find that your bank may do a bundle package to provide an attractive rate so it is important to look into all of your options and work out which one will work the best for you.
2. Step 2 of the Buying Process – Saving the Deposit
Saving the deposit for your property purchase can feel like the longest journey so it’s important to stay focused during this process. It is very easy to lose sight of what you want to achieve when the end goal seems so big.
Our top tips for saving the deposit are below:
Revise your budget to see how much can be saved each month and each pay date, ensuring you break down the savings goals into smaller more manageable goals helps keep you motivated and on track.
Now is the time to stop any unused memberships and look at ways you can reduce your spending. This may be gym memberships you don’t use or cutting down take away from three times per week to once per week. The important thing to remember here is not to go overboard, restricting your spending too much may end up being more harm than good, you still need to enjoy yourself during this process but make a conscious effort to manage your money a lot closer.
Pay yourself first. On each pay day it is important to revise your budget and move the amount you have allocated straight to a savings account, this way you don’t accidentally reach into that amount with your everyday spending, out of sight, out of mind. Treat your savings account like a bill that is due each month.
Have a designated saving account for your property purchase. This is important and there are a lot of options on how to do this so look into what would work best for you. Term Deposits can prevent you from spending money due to limits on withdrawals. Be disciplined and avoid potential spending sprees.
By following the above steps you will be well on your way to your first property purchase.
3. Step 3 of the Buying Process – Pre-Approval stage
Once you have your deposit saved you are ready to put things into action. The hardest part is complete and now it’s time for the next step in the buying process.
What is a pre-approval you may ask?
A pre-approval is an “in principal” commitment from the bank that you can borrow up to a certain amount of money for the purchase of a property. Banks will assess your financial details and credit history to ensure that you are a suitable candidate for a mortgage. Having a pre-approval in place gives you confidence when entering the searching phase. This is because you will know what your top budget is and you can confidently know where you stand when negotiating with agents.
Re-engage with your chosen mortgage broker at this stage. They will be able to assist you in this process and run you through the steps of getting that pre approval in place. The pre-approval phase is a valuable step in getting you closer to your new purchase.
Pre- approval is not formal approval so be careful when putting in your offer as you still may need a finance clause in the contract of sale in order to for banks to make a final assessment on your application. Your mortgage broker will be able to assist in how long the finance clause may need to be in place.
4. Step 4 of the Buying Process – The search begins
This is where the fun really begins. There is a lot of decision making during this phase so it can often feel quite stressful during this part of the process.
We have compiled three tips to remember when searching for a property to buy:
If it is meant to be… it will be. There may be instances where you may miss out because another buyer was willing to pay more than you, especially when the demand for property is high and there is a lot of competition. If you miss out simply, move on as your ideal property is still waiting for you. It is ok to feel disheartened … but do not let it consume you!
Going to multiple open homes every weekend can become overwhelming and exhausting. You may be feeling very excited for the first few weekends, however if the right property is not presenting itself, then this can get exhausting very quickly.
We recommend completing comprehensive research before inspecting. Do you like the area? Does it have the right floorplan for your needs & is the property still available?
Just because it is listed online, it should be available…right?
You would be surprised how many agents still show homes that are under contract or sold off market. This is the agent working for the seller in case the contract doesn’t work out, but it is also wasting your time so give the agent a call and ask them as many questions are you can.
Take photos and a measuring tape. In high demand markets there is not usually a second… or third opportunity to inspect and take measurements, or you may have forgotten what some parts of the house or site look like.
After you have walked through and made an assessment if you really like it then take another walk through to take pictures or videos of every corner of every room & measure the important spaces (eg. fridge space, washing machine space, bedrooms and living areas) to ensure your furniture fits.
If you are overwhelmed by this searching process or want to know about off market opportunities, then looking into how a buyer’s agent can help may be of benefit to you.
5. The Buying Process – Making an offer
Making an offer on a property is serious business.
There is so much to consider in such a short space of time and this process can become overwhelming, especially when the competition is high.
You need to understand how much to pay and how to present your offer to the seller or their agent. We have written an in depth Article on the Contract Process in Queensland that you can find HERE.
If you are fortunate enough to purchase property using cash, then your offer will be strong. However most people do have to go through the banks and obtain a loan to purchase a property. This means that there needs to be some conditions on the contract before the offer is made.
The items you need to consider when putting forward an offer are:
Initial and balance deposit amounts
Finance clause and how long to satisfy
Building and pest inspections and time frames
Any other special terms that are needed (due diligence, rent back, body corporate searches etc)
You may think that the highest bidder always wins … and this is likely is most cases, but not always. There are many instances where the highest offer has not been the accepted contract due to other offers having better terms in place.
Our best tip to you is to talk to the agent and figure out what is really important to the seller when it comes to selling their property. Once you have this information, you can use it to make your offer more appealing to the seller. For example, this may be a longer settlement because the seller has not yet found their next home and therefore needs more time to relocate.
Sometimes the agent may pre-populate the information for you on a contract to help guide your offer. However it is important to note that you can change these particulars to suit you or the seller more favourably.
Everything is negotiable ….
6. The Buying Process – Conditional and Unconditional Stage
Once you submit your offer and it is accepted, if the offer is subject to any conditions then you enter the conditional stage in the Buying Process. This is where you would organise a building and pest inspector and work with your mortgage broker and bank to satisfy any finance clause included in the contract. You will need to engage a solicitor that is based in the state you have purchased to communicate with the sellers solicitors and handle the conveyancing process.
It is very important for you to get a building and pest inspector to provide a report if the contract is conditional to a building and pest inspection. They will look into all the sections of a property that you cannot physically see from a standard property inspection and provide a report of their findings. You want to know that the property has no hidden defects or maintenance concerns, as there are huge costs associated with buying a property and mistakes can be costly.
If you do find something that you may need to fix, you can try and negotiate the cost of repair off the purchase price or get the seller to rectify it prior to settlement. It may be something structural that could put you out thousands of dollars without actually adding any value to the asset, so uncovering these issues at this time is critical. You also may have the option to withdraw from the contract if the results of the building and pest inspection are not to your satisfaction. These are all options available to you under a building and pest clause.
Once you have completed your inspections, obtained your final finance approval and satisfied any other conditions in the contract, your contract will become unconditional. This is time to celebrate! At this time the solicitors will prepare for the settlement to take place on a specific date.
7. The Buying Process – Settlement
This is the final stage of the buying process and one to be heavily celebrated! All that hard work has now paid off. Settlement day is when the seller will receive the payment of the agreed contract price and the buyer will legally take ownership of the property.
This is where key collection takes place, that picture in front of the sold sign can be taken and the moving in process begins.
I hope the seven steps have brought some ease to the buying process journey. If you need help with finding and securing your property please reach out at Streamline Property Buyers.
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Whether you’re visiting Brisbane for the first time with children or moving here, it’s great to have ideas on what to do around the city. To help your time in Brisbane be as enjoyable as possible, we have put together a list of child friendly activities.
So, what to do in Brisbane with Kids?
1. Lone Pine Koala Sanctuary
Lone Pine Koala Sanctuary is in a beautiful riverside location in Fig Tree Pocket with a range of native Australian animals. It will be hot in summer so we recommend going earlier in the morning if visiting at this time of year. Another benefit of going early is that the kangaroos won’t be having their midday sleep so the kids will have plenty of opportunities to feed them.
2. South Bank Parklands
South Bank Parklands is across the river from the CBD and provides lots of fun and free activities for kids in Brisbane. There’s swimming lagoons and Kodak beach with views to the city, a water park for the younger ones, playgrounds, cafes and restaurants.
If you are visiting in the Summer you’ll be seeking out plenty of water play opportunities! There are a few other waterparks around Brisbane – read this Brisbane Kids article for more information.
3. QAGOMA, Queensland Museum and the State Library
If you need a break from being outside these are all great options for having a cool and dry place to visit in the middle of the day.
Close by is also the Queensland Museumwith the dinosaur garden and lots of interesting and educational displays.
The State Library also provides cool relief with it’s children’s cornertucked away from the rest of the library so that the kids don’t need to be quiet. There is plenty of room to play, climb, build, explore, discover, listen to stories, and find their favourite books.
4. Roma Street Parklands
Roma Street Parklands is a lovely inner city location which has a Children’s Garden and a Parkland Explorer Train which kids love. Unfortunately due to the pandemic the train service is currently suspended. The parklands usually have outdoor movies in the summer months and a beautiful Christmas fairy garden but all of that is up in the air too. Keep an eye out on the Brisbane City Council website for updates on events in the parklands here and for the Parklands Explorer Train here.
There are excellent playgrounds for the kids and plenty of green space to lay a picnic blanket and enjoy relaxing in the beautiful gardens.
5. City Cat tour of the City
Whilst you’re close to the CBD you could also explore along the Brisbane River. There are multiple stops for the city cat along the river to visit New Farm Parkwhich has an excellent playground and the Brisbane Powerhouse which has art exhibitions and various live shows.
Howard Smith Wharves along the river has a wonderful view of the Story Bridge and city as well as cafes and restaurants. There’s green space where you can lay a picnic rug and order food from Felon’s Brewing Co. so that the kids don’t have to sit still in a chair. Click here for a list of the restaurants – the Gelateria comes highly recommended!
Kangaroo Point Cliffs is a great place for a walk or picnic and to watch the rock climbers and abseilers. If you like to be a part of the action, Riverlife provides many guided outdoor activities and hire of equipment.
6. Walkabout Creek Discovery Centre and Enoggera Reservoir
The Discovery Centre does have a small admission fee and you do need to book online to make sure you get in – especially in the holidays. If you’re booking into the weekend show that includes your admission to the centre:
The Wildlife Discovery Show is a Ranger-led presentation every Saturday and Sunday at 11.00am and 1.30pm. Your ticket purchase also includes same-day admission into our Wildlife Centre.
The Enoggera Reservoir provides an opportunity for a natural swimming experience complete with turtle spotting. There is a section designated for swimmers and outside of that non-motorised watercraft can be used. Walkabout Creek Adventures provides hire of equipment to enjoy on the water or on land. Please note that the area near the swimming location is quite rocky and you will need a picnic blanket to enjoy sitting there.
7. Moreton Bay Beaches
If you have transport and are interested in exploring a bit further afield then head north east to Sandgate Beach and surrounds where it’s fun for the kids to have a paddle and walk on the mudflats at low tide. There’s plenty to explore in this area so have a look here for more ideas – Visit Brisbane.
It gets very busy here with line ups for fish & chips so try to have an early lunch or picnic.
We hope this helps you to plan what to do in Brisbane with kids. Enjoy!!!
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