invest in your future: shares vs. property
TRANSCRIPT
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Disclaimer
The property investment information provided in this presentation is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this information, you should consider the appropriateness of the information, having regard to your own objectives, financial situation and needs and seek appropriate advice.
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Topics
Shares versus Property
State of the market
What a Property Advocate/Advisor can do that Estate Agents, Financial Planners and Marketing companies cannot.
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Property buying patterns evolution?
European Style- Live with parents until they die and inherit the house!
Western Society Old Style- Save deposit- buy a home- pay it off over a lifetime and leave it to their kids. Live off the pension
Modern Westerner- Save deposit- buy house- pay some off, sell and move to a larger one every 7 years until age 70 then sell and move to retirement home, buy a caravan or Winnebago.
Progressive Westerner- buy a house, wait for it to go up- borrow against it and buy a negatively geared property just to save tax! Live off pension because they only buy 1 or 2, & both negative geared.
Future Westerner- buy a house, borrow against the growing equity, establish a property portfolio, leverage off the growing equity in the investment properties to buy more to achieve a balanced portfolio of capital growth and cash flow.
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Shares vs Property
Both have performed roughly the same over the last 50 years.
Shares are generally more liquid, more volatile
Property has greater leverage
A very average property with good leverage can beat a share market expert with less leverage over the long term. http://invested.com.au/67/property-vs-shares-real-
story-34626/
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Property Vs Shares
Example:
Deduct total holding cost for property (assumed 3k pa) 190k-30k =
160k versus 50k
Type Value Leverage
Loan Investment
Injection
Based on 5% growth pa for 10
yrs
Gross Profit
Net Profit = Gross Profit -
Investment Amount
Assumed
Holding cost pa
Investment Property
400 K 90% 360K 60K 650K 250
K 190K 3kX10=30k
Shares400 K 50% 200K 200K 650K 250K 50K 0k ???
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Australian Market“Since the property market bottomed out in May last year, capital city residential home values have grown a cumulative 7%, suggesting that the market is well past ‘recovery’ stage.
RP Data housing results showed dwelling values increased by half a % over August this year which is a slowdown from previous months, but an encouraging sign for the market.
July growth was recorded at 1.6% and June growth at 1.9%, taking the rolling three month change in capital city dwelling values to 4%. This is the highest rate of capital gain since the three months ending April 2010.
RP Data research director Tim Lawless said other cities recorded falls in values. Hobart saw the largest decline with a 1.2% fall. Perth values slipped 0.2%.
The election is over, the grand final is over, go Hawks, there are no excuses .
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Last 40 years
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Housing Price Movement
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Rental Market
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Reasons most don’t succeed…
Don’t know what you want
Don’t know what you should buy
Don’t know where
Don’t want to pay for advice
Lack of knowledge or time
Procrastination, there is always tomorrow mentality
Feeling of entitlement that Gov’t should look after them
Fear: illogical perception of what might happen. Knowledge helps give confidence. My education has certainly given me confidence
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They don’t know how to
put the pieces of the
puzzle together.
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Reality Everyone should have access to impartial advice and a
team with a strategy
Many people out there promote one thing or another: off the plan, house and land, apartments, townhouses, negative gearing, positive cash flow, inner city, regional, mining, rent guarantee, display homes, Reno, NRAS, Defense etc.
Each strategy may have it’s merit but not every strategy is right for everyone
I Avoid student, Tasmania, SA, <50sqm, high density,( i.e. lots of investors, competition)
Inner city typically is higher capital growth potential, regional is typically higher cash flow
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Property Advisor compared to:
Financial Planner: I offer a full strategy toward wealth creation in property, not shares and managed funds. FP’s are the opposite
Real Estate Agent: Represents the Seller, not the buyer
In march 1999 the office of fair trading had a video of the president of the REIQ stating “we have a legal, moral and fiduciary duty to promote and protect the interests of the vendor and no interest in the purchaser”
Marketing Agent: represent the seller, employed to sell specific product
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Traditional Real Estate Model
Source; Forrester Cohen
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Client’s Best Interest Model
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International Real Estate Sales Tracking System (IRESTS).
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Client’s best interest model
No direct relationship with the vendor
I don’t have a property lined up to sell; property choice is guided by your goals, and risk appetite
I help my clients do this by finding positive cash flow and/or capital growth properties around Australia. This process avoids spruikers who sell property without regard for what is suitable for the client.
I also focus on reducing the risk by undertaking and providing thorough research. I ignore opinion and hearsay. I choose to focus on analysis and facts.
One of only a handful of individuals providing a Statement of Advice for Property in Australia & with insurance to do so
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New Versus OldOLD
negotiate
Renovate/subdivide
Cheaper
Higher maintenance
Less tax benefits
Lower rents
Risk of
extensive repairs
NEW
Higher Rents
Lower Maintenance
Less risk of repairs
Bigger tax benefits
Greater appear for tenants
More expensive
Smaller
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Actual Example
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Another Example
450k, Dual Occupancy, 3 bed and 1 bed. Market rent $970, cash flow after costs $400 per week.
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Existing (not new)
I can locate deceased estates under value
Mortgagee in Possession
Properties 40% under market value
Subdivision opportunities/ Corner Blocks
Strata opportunities , i.e. 5 on 1 title
11% yield, highly positive cash flow
The software I have has better search parameters than RP data and Residex, and searches through Domain and Realestate.com and 30 others with specific search capability
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Fundamentals of Property Investing
Contract
Type of Property
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Statement of Property Advice
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Why choose me
I don’t sell property, property selection is based on your needs and risk tolerance, property guided by client not by the property itself
Disintermediation from the Vendor/ Developer
Disclosure of fees & relationships
Professional indemnity insurance for advice
Modeling Tools, thorough research,
Reduce risk, keep lifestyle, access to property you may not have had.
If you spend $1 wisely you usually make $2 or more, engaging me is an investment in yourself as it frees up your time, leverage off my knowledge.
Having an Advisor is great insurance.
If I can show you how to achieve a passive income of 2k per week in 10 years time, would you do it?
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IntroPackage OFFER
• Research capital growth and cash flow locations anywhere in Australia
• Source a property in these locations• Model costs for you• Assist with locating rental manager• Reduce Risk for you• Limit impact on your lifestyle
28BONUS OFFER 1: F
ree
desktop valuation of
your home
Refund th
is fe
e if you
go ahead w
ith a
property
choice
I
sourc
e for y
ou.
