October 18, 2021

#123: Listener questions - Top investment tips #1 - How price point drives strategy, optimising deductions, financial goal, how the future h

34 minutes

https://propertyplanning.com.au/propertyplannerbuyerprofessor/ In this week's episode, Dave, Cate and Pete take you through: Weekly market updates 1. Labour shortage predictions As ABC News shared, Australia is looking at having over 100,000 vacant jobs in the construction sector, including builders, tradies and project managers. This is likely to have a big impact on the state and federal government planned projects as well as residential builds. This will most likely influence purchasing decisions as well, as people looking to extend or remodel may opt to purchase instead of waiting it out on a long construction waiting list. 2. Vacancy rates In the latest vacancy rates released by SQM research, 5five of our capital cities have vacancy rates below 1%, Brisbane at 1.4%, Sydney at 2.7% and Melbourne at 3.5%. Melbourne and Sydney have the highest vacancies, due to the languishing CBD rentals, which currently sit at 8.4% and 8.2% respectively. For the rest of Australia, the rental market is extremely tight, based on an industry accepted rate of 2% being seen as the equilibrium. Future overseas migration is expected to add further pressure to the rental market, creating a need for investors, (or government to apply considerable funding to public housing.) Top investment tips #1 1. How does your future home fit with your investment strategy? One of the biggest pieces of the puzzle, which is often forgotten about, is how your future home plans will fit into your investment pathway. Having a clear understanding of how your investment purchase could impact your ability to purchase your future home is critical. Many end up having to sell properties to secure their dream home and this is one of the biggest killers of wealth that we come across. Happily, this can all be avoided with some planning. 2. Removing shades of grey - home vs investment When purchasing a property, it's important to be clear on whether it's a home or a an investment. You will make it really hard for yourself and risk missing the mark if you conflate the two. When trying to overlay investment principles on a home, you may end up with something that you don't love and life is too short! 3. Set your money goals for surplus cash flow and available funds buffers To work out what is an ideal price range for a comfortable purchase that won't break the bank, you need a clear understanding of your cash flow and expenses. This is a difficult exercise in and of itself, however covid has added an extra layer of complexity as people aren't spending as much as what they typically would have. Go through your expenses and determine what your living expenses are likely to be post-purchase, you may even discover areas in your spending that you can improve on. Set money goals of what you would like your surplus cash flow and available funds buffer to be after the purchase, and this will help you determine what price point you can afford. 4. The traps of looking for a bargain Hunting for a bargain at the expense of quality is one of the biggest mistakes that you can make and finding a bargain on an A-grade property is a rarity. If you find that a property is priced on the lower end, you need to ask yourself why? Is the property compromised and how? In a strong market, don't expect to buy a bargain and remember, to secure a property, you need to be willing to pay more than anyone else! 5. What is your financial goal for the property? Determining whether you are targeting capital growth, yield or a balance of the two will feed into the location and dwelling type selection. This is...

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