In general terms, a more functional and well located property will achieve a higher valuation figure than one less so, therefore, if you are in the process of attaining a valuation of a property to use as a refinancing tool for your investment portfolio then ensure it has the above two characteristics.

Whether you are requesting the valuation privately or through a bank or finance broker, there are 3 basic “Golden Rules”.

1. Present the property well. Ensure it is neat and tidy.

2. Have as much information for the valuer as you can.

3. Leave them in peace to do the job.

The Essential Property Valuation Checklist

For the Bank, Finance Broker or Valuer ¨

o Rates Notice.¨

o List of improvements and costs in an easy to read format.¨

o Clear instructions. Ensure you communicate whether you want an “as if complete” valuation (in the case of improvements under construction) or an “as is” valuation reflecting the property as it is inspected by the valuer.¨

o Clear contact details including your full names, phone numbers (home and mobile), email address and any alternate contact details that may help ensure a complete and accurate profile.¨

o Access Details. Make sure you provide the best contact numbers to call so that access can be made quickly and easily. If you have tenants, ensure the tenants are suitably informed as to exactly what the situation is so that they don’t try to deny access.¨

o Clear directions to the property if it is in an out of the way location. If there is any doubt as to the address of the property (such as it’s on a corner allotment or the properties in your area have recently been renumbered) then supply all possible address locations. This allows the valuation company to search the various government database systems in the event that you were not able to supply a rates notice.

For The Property ¨

o Make any improvements prior to the valuation and ensure they are complete. Be careful of overcapitalizing by attempting to add value through improvements that try to place the property into a higher price bracket than it is likely to actually sell for. Outdoor living areas are examples where improvements can add value more than their cost providing they are functional and well presented. Other examples are kitchens and bathrooms.¨

o Clean up the yards and gardens and mow lawns.¨

o Repair any obvious defects.¨

o Clean the interior of the house.¨

o Prepare the house as if you were selling it. Presentation is an important factor in any valuation.

During The Inspection: ¨

o Copy of the building floor plans and elevations.¨

o Rates Notice.¨

o List of recent improvements and costs in an easy to read format.¨

o Recent sales evidence that you are aware of. (Note: general hearsay may not be accurately recorded and therefore may not be able to be utilized).¨

o Leave the valuer to perform their duty. The actual valuation inspection time does not take long so don’t be surprised if it seems like the valuer hasn’t seen everything and don’t take them on a guided tour. They are professional people who are trained to look for relevant items and can do it quickly and effectively. Tell the valuer to come and see you if they want to clarify anything and leave it at that. The valuer will appreciate it.¨

o Be Honest.

After The Inspection: ¨

o Be Patient. Don’t ask the valuer what they think the property is worth. They still have substantial research to complete after they inspect your property and therefore will not be able to give you an accurate figure on site. Wait until you receive word from the finance broker or bank or until you receive the valuation from the firm directly.¨

o Liaise with your bank or finance broker to find out the assessed valuation figure. Few institutions are able to give you this information due to banking privacy laws. ¨

o Do not ring the valuation firm (unless you ordered the valuation directly yourself) as they are legally bound to deal only with the requesting party, i.e, the bank or lending institution.¨

o Be realistic with the anticipated assessed value. There may be a difference between the resultant bank valuation and that of a real estate agent as one is trying to win your “listing”.

(published by Propell National Valuers)

After three consecutive rate rises earlier in the year, the RBA today decided to leave rates on hold in July.

“The current setting of monetary policy is resulting in interest rates to borrowers around their average levels of the past decade. Pending further information about international and local conditions for demand and prices, the Board views this setting of monetary policy as appropriate,” governor Glenn Stevens said earlier today.

The RBA has raised official interest rates six times since last October, taking the official cash rate from the historic lows of 3 per cent to what the central bank considers a more normal rate of 4.5 per cent.

But while interest rates are largely considered to be back at ‘neutral levels’, a spray of new data suggests future rate increases remain on the cards.

The monthly TD-Securities-Melbourne Institute inflation gauge rose 0.3 per cent in June for an annual reading of 3.6 per cent – well above the RBA’s 2 to 3 per cent inflation target band.

In addition, ANZ’s latest Job Advertisements Series found job ads are currently growing at the fastest rate since November 2007.

The total number of jobs advertised rose by 2.7 per cent in June, to an average of 169,690 per week.

But ANZ’s chief economist Warren Hogan said the recent strength in job advertisement numbers is not broadly-based.

In fact, the rise in job advertisements was driven entirely by a 3 per cent rise in internet advertising.

“The mixed result for the Job Series only added to the RBA’s case for keeping policy rates unchanged for now,” Mr Hogan said.

(Written by The Adviser)

Many thought prices would fall significantly due to the global economic crisis, and they didn’t.

Then we expected prices would ease when government grants to first-home buyers dropped, but that does not seem to be happening either. 

So where do we sit at the beginning for 2010?

With Australia’s population tipped to be heading towards 35 million, and a shortage of new accommodation being built, the pressure on residential property prices is likely to continue for quite a while.

Of course there will be dips in some markets from time to time but, if you try to time the very bottom of markets it’s likely you will never invest.

Conditions are ripe for a sustained recovery in residential property prices, economic forecaster BIS Shrapnel says in its Residential Property Prospects, 2009-2012 report.

“Low interest rates, solid growth in rents and housing shortages evident in most markets” are the factors that will drive prices, the report says.

And although interest rates are on the rise, they are still very low. Interest rate rises will widen opportunities for investors to get into prime residential markets.

First-home buyers have dominated the market but rising interest rates and falling grants will curtail their activity.

Rising interest rates are not nearly as big a problem for investors. This is because, for an investor, the interest on borrowings is a tax-deductible expense, which is not the case with a home buyer. Investors on the top marginal tax rate only have to wear about half the increase in mortgage payments arising from interest rate hikes.

Negatively geared real-estate investments are also expected to become more attractive to high-income earners who have had the amount they can tax-effectively contribute to superannuation drastically reduced. This will increase competition for suitable properties, which will also help to underpin prices.

So what’s your predication for 2010?

The start of a year brings about new resolutions, so how about making 2010 the year you took control of your financial future. The year you establish your property investing goals and went about making them happen.

Keen rose to national attention in 2008 after predicting that housing prices in Australia were on the verge of a collapse. Unsurprisingly, the tabloid media leapt onto the sensational story, generally failing to mention that Keen’s views were not shared by any other mainstream economist.

Rory Robertson was himself quite pessimistic about Australia’s economic outlook at the outset of the Global Financial Crisis. However, after a public email debate on the Australian housing market, Robertson challenged Keen to a bet on Keen’s views that housing prices would collapse by the end of 2009.

Keen has now been forced to concede defeat, following the release last week of data showing that house prices had increased by 6.2% in the year ending 30 September 2009 and were at a new peak.

Keen will have to make a 200km trek from Canberra to the top of Australia’s highest mountain, Mt Kosciuszko wearing a t-shirt saying “I was hopelessly wrong on house prices! Ask me how.”

The Business Spectator’s Christopher Joye wrote that Robertson had delivered a public good by holding “extreme views to account“. Joye was also critical of the print and electronic media, who had reported Keen’s views without mentioning that they were not shared by any other recognised authority in Australia. Joye wrote that Keen’s “dire prognostications” were simply “manna from heaven for journalists looking to shock their audiences.”

Since the win, Robertson has been enjoying his victory. He reiterated his confidence in the fundamentals of the property market by saying:

“For fun, if Australian house prices ever fall by 40 per cent from any peak in my lifetime, I will follow in Dr Keen’s footsteps. Similarly, if Dr Keen proves the existence of the Loch Ness Monster, I will take the walk.”

One thing that we can learn from all of this is to be wary of relying on market predictions that we encounter in the tabloid media. Anyone who had sold a property in reliance on Keen’s predictions could have suffered significant losses.

Further, all of the levity surrounding the bet skirts the issue of what actually has been happening with Australian house prices since the beginning of the Global Financial Crisis. Certainly, the data shows that the market ‘cooled’ by 3.8% from its peak in February 2008 to its trough in December 2008. But the results for 2009 are clear – despite (or perhaps because of) the uncertainties surrounding the world economy, Australian house prices continue to grow robustly.

Posted by La Trobe Financial 12 November 2009

Access to your credit bureau file will remain limited by the law, with lenders only accessing with permission at the time of a credit application. The greatest fears surrounding this proposed change is that by allowing lenders increased investigative powers into borrower’s credit history  this will cause greater financial exclusion.

In a credit market that has seen severe tightening of credit policies to the point where many borrowers who once had easy access to credit are now being scrutinized over minute details, the proposed change will again exclude even more borrowers from lending.

Now more than ever it’s important that you keep your financial records clean. Ensure sufficient funds in your accounts for direct debits and cheques. Watch your credit defaults. At the time of weighing up the worth of fighting a telecommunication company or the like, consider the cost of the long term effect if you end up with a default.

If you know that you are looking to take advantage of the rising property market, get your finances in order. Don’t wait for the lenders to put on the breaks even further before you take action.

The point the journalist was trying to explain was that if you have a house & it goes up in value; you’re really no better off. This theory has been thrown around by both property skeptics and property lovers (like Dolf Deroos) for many years, and if I take the skeptics side for just a moment, I agree that if you had a house worth $400,000 and it increased to $500,000 within any timeframe, then logic suggests that if you sell to upgrade, you’ll need to spend say $600,000 for the house that was worth $500,000 back when you bought your last purchase (for $400,000).  So the real loser in this instance is the renter who is forced to enter the market at a higher price.

BUT, the true winner is he or she who has multiple properties, the astute property investor.

Let’s say you had 4 properties (3 rentals & 1 you live in) and you paid $400,000 per property on the same day. Now let’s say the Reserve Bank is right (and we hope they are) and the price increases in the next 2 years to $500,000. Now we’ve just had an increase of $400,000 (4 x $100,000) and yes, if we were to sell the home we live in, replacement value would be $500,000, but if we sold the other 3 because we want to cash up our investments, we’ve just pocketed $100,000 per property (less any expenses – this is a very simplistic and hypothetical explanation for illustration purposes).

So if this is the case, it shows that there is a loser, a status quo and a winner in this circumstance. It’s not a secret, never has been, but you invariably will be in one of these 3 categories. My old boss told me a saying many years ago “The difference between a rort and a perk is that a rort is just a perk you’re not in on!”

There’s many things to learn along the journey of multiple property ownership one of the most important is to realise than investing in property is a journey not just an event or series of events (one of the many things we do and teach as part of our property sourcing model through our property coaches and support evenings), so choose to be the right person in this story.

The last point in the report on the radio by the journalist said this “there is one group of people who are going to gain from this, landlords [aka the person with 4 properties], but unfortunately usually it’s the wealthy upperclassman who have investment properties so we now see a divide between the upper and lower class.” Last point, if you do research (which the RBA has) you’ll find the majority of investment property owners are ‘middle class’ at best, average Australians not the elitists, but more on this in  another blog. Opportunity knocks, the time is now.

Westpac, St George and RAMS are the latest lenders to follow in the footsteps of CBA, ANZ and NAB who tightened up on their policy for self employed borrowers six months ago. The change will greatly impact the low document loan segment of the market where borrowers are now required to provide the past 12 months Business Activity Statements and in many instances business transaction account statements. This dramatic policy change does not leave a great differentiation between full doc and low doc loans.

When low doc loans first became available they were not brought to the market by these major lenders but by the non major lenders, so it is no real surprise that our major banks have never been fully comfortable with this style of lending, particularly in a market where they are more than ever picking and choosing their new customers.

Good news for those customers still dealing through these major lenders and battling with their less than satisfactory servicing issues, this will reduce the volume of applications to the lender and therefore hopefully bring us back to a time where purchase settlements are once again taking place on time.

But where do you now sit if you are a self employed applicant who does not fit within the lenders strict new guidelines? It’s back to the non major lenders for you, and when we say non major this thankfully does not always suggest non competitive. There are many lenders in our market today that have chosen the low document segment of the market to specialise in and therefore offer great competitively priced products. And the add bonus, you too will no longer have to deal with less than satisfactory servicing issues.

However, like many thing in our current economy this is subject to change without prior warning. Unfortunately no one has a crystal ball to see when things will return to the ‘good old days’. As much as Australia is in a very positive position compared to the rest of the world, with the impact on our economy being so much less than anticipated we still are not able to anticipate what changes will still need to be made before we once again return to full strength.

So the biggest piece of advice we can give you in the lending industry is – do all you can today, because tomorrow is another day. If you’re considering investing further in property, buying your first home or renovating the family home, even if you’re not ready to spend the money now, put those things in place that will ensure you’re not limited when you are. Unlock your equity, get a preapproval, whatever it is to increase your chances now of not being affected by any further changes.

Remember tomorrow will see the end of the Governments increased FHOG offering, this will inevitably bring about more changes within the property market. Are you ready to seize the opportunities?!

However, most economists and forecasters now appear to think an interest rate rise is likely before Christmas.

According to Herald Sun economic commentator Terry McCrann, it would take something dramatic for the RBA to lift rates as early as October.

But the longer it holds off, the more likely the individual banks will increase rates independently, he says.

“If they could be confident the RBA would hike in October or even November, they would wait – aiming to slip in, say, a 35-40 point hike on the back of an official 25-point move,” McCrann says.

“But if the clock ticks by and there’s no official hike, who will be first?”

According to statistics, the Australian economy is doing well but there are still many households that can’t afford to make higher debt repayments.

The good news is that Australia is weathering the global downturn really well. It is the only major developed country to record economic growth last financial year.

Aussie households and companies are still spending and expanding despite the financial crisis and recession in other countries.

The spend-now attitude has been encouraged by the Federal Government’s $60 billion stimulus package of cash handouts. Unfortunately all that fun has a downside.

There is concern that spending and economic growth will get out of control, inflation will start up again and interest rates will rise.

When people spend a lot, prices increase, which causes inflation to go up. When people don’t have money to spend, prices and inflation can go down or at least stay steady.

The RBA uses interest rates to control inflation. Ideally the RBA wants inflation to be between 2 and 3 per cent, which it believes is the right level for the normal forces of supply and demand.

When economic growth – spending and expansion – is in danger of going up too fast, the RBA increases interest rates to reduce spending and to slow down growth in the economy.

When the economy looks like it might slow down too much, the RBA cuts rates, to free up or create some spare money and keep spending ticking along.

Its guiding measure, however, is inflation. However, these decisions are made in advance of the growth or the slowdown actually taking place so RBA board members must constantly estimate what will or won’t happen in the future.

So the great news is our economy is in a strong position and will only continue to go from strength to strength. The down side, interest rates need to increase in line with this.

Now is the time to make sure your portfolio is stable and can withstand the increase. Implement those strategies that are going to see you through the market ups and downs coming through with a portfolio that will enable you to realise your future dreams.

The question on many people’s lips is if I extend my debt position now will I be able to hold my portfolio when the market returns to its ‘normal level’?

It is in response to this question that some people make the decision to fix in their debt, at least now knowing that their repayments won’t be changing for a set period of time. History does however show that those that ride the waves of variable are better off in the long run. This is where a redraw or offset facility could come in handy. You could simply calculate your payments based on an interest rate you are comfortable with long term, say 8.5%. Putting this amount into your loan or offset facility each month would allow a surplus to build up during the lower times and give you somewhere to dip into during the higher times.

You need to also realise that when a bank lends you money they assess your ability to repay the debt. As we know banks are generally quite conservative and therefore they use sensitivity when establishing what you can afford. When assessing your loan repayments they will often do this at 1.5% above what you are actually paying. When taking your rental income into consideration they generally only use 75% of what you are currently being paid. So as you can see the bank is ensuring that when there is a change in the market for the worst you can still make your repayments.

It’s also important that you understand the position you are in now and where you want to be in the future. Unfortunately we can’t predict all of life’s twists and turns however we can take the steps to ensure that we are making educated decisions at the time and thinking down the track.

One thing I always recommend to my clients is to have a ‘buffer’. This is a surplus of cash or borrowed money put away for a rainy day. Many of our clients use the strategy of unlocking equity to fund that next investment, all we do is ensure that we borrow that little bit extra to tuck away. This is where you go if the council rates all come in at once and you haven’t put enough money away, or if you’re having to pay for repairs whilst waiting on reimbursement from the insurance company. This ‘buffer’ will bring life’s surprises back into your control and save an adverse effect.

So as you can see with a little forward thought and planning it is possible to reduce your risk in property investing. This is where a Finance Strategist brings value to the table over your every day mortgage broker. They can ensure you are considering every aspect of your investment journey. If you haven’t already, take the time to talk to one of our Strategists you will soon discover if they have something different to add.

What I have observed to be the case in many instances, is that it is your smaller lending institutions like credit unions, community banks and the like, at face value tend to carry some of your most competative interest rates.

So where’s the issue with chasing the greatest rate? If your single goal in life is to own your own home and pay off that mortgage as quickly as possible, then nothing. However if you’re considering going beyond that then there is so much more you need to consider.

Many of the smaller lenders choose not to carry as higher level of risk as other lenders, they tend to put the brakes on much sooner. This means that based on your income, assets and liabilities you won’t be able to borrow as much money into the future, therefore limiting the number of properties you can accumulate.

This can particularly be the case if you choose to fix with these lenders as you will inevitably be faced with the decision of paying high fees to break out of your loan to buy that next property or wait out the term of your loan and lose that great buy.

So as you can see there really are so many more questions that need to be considered when funding your property. We don’t have a crystal ball but as much as possible we need to be considering the future and the consequences of our decisions now. What is it they say, ‘short term pain for the long term gain’!

Who you take advice from to grow your property portfolio is of high importance, so stop and ask the question – “Are you a property investor yourself”?