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Four Reasons You Need A Buyer’s Advocate When Buying A Home At An Auction

Posted by on Feb 2, 2015 in Uncategorized | 0 comments

Traditional real estate buyers often picture themselves being led through beautiful properties by a buyer’s advocate eager to help them find the perfect home, but even if you prefer to take a less traditional route to homeownership, a buyer’s advocate can still help you. In particular, if you want to buy a home at auction, a buyer’s advocate can be essential. Here is a look at four of the critical reasons you want one of these professionals by your side before you start bidding: 1. Insider Knowledge Of The Real Estate Market According to Australian Property Investor Magazine, the number one element you need to succeed at a real estate auction is knowledge of the property’s value. Without that, you may bid too high and end up financially upside down before you even move into the property. Alternatively, without knowledge of the property’s value, you may even accidentally pass up an amazing deal. Buyer’s advocates have the knowledge you need, and with an advocate beside you at an auction, you will know when it’s advantageous to jump on a good deal and when you should stop bidding. Buyer’s advocates buy and sell homes everyday, and they keep apprised of local real estate values. That knowledge can mean the difference between getting your dream home at a great price and losing your savings to a horrible house. 2.  Expertise In Auction Activities At the average auction, 70 percent of the bidders are investors and 30 percent are regular citizens trying to buy a home to occupy. That means that the bulk of the people at most real estate auctions are skilled bidders who understand the process. To an auction newcomer, the wealth of experience among the other bidders can be extremely intimidating, but again, with a skilled advocate at your side, you gain the expertise you need. In addition to helping you decide when to bid or not, buyer’s advocates understand the auction process – they can answer all of your questions on issues such as where to stand, how quickly to bid, how much cash you need in case you win the bid and any other questions you have about logistical elements. 3. Registration And Sales Contract Assistance Whether you are a traditional buyer or a maverick who wants to get a home at auction, a buyer’s advocate can help you wade through the paperwork involved. These professionals help you keep papers organised, ensuring that you don’t waste time or lose essential documents. Through the auction process, a buyer’s advocate can help you with everything from registering for the auction – a process that is only required in certain states – to reading the sales contract. An auction sales contract should be fairly straightforward, but it’s attached to a massive purchase, and to protect yourself, you should always have a real estate professional or solicitor look it over before you sign it. 4. Connections To Inspectors And Loan Professionals A buyer’s advocate can help you obtain inspector reports on the property before the auction, but if the auction house does not have those reports, the buyer’s advocate can help you schedule the necessary inspections. As most buyer’s advocates work with inspectors on a relatively regular basis, they know exactly whom to call, and their reliable inspectors help to ensure...

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How Negative Gearing Affects Your Income: Advice For Executive Property Investors

Posted by on Feb 2, 2015 in Uncategorized | 0 comments

The executive rental market in Australia is an attractive proposition for property investors. In some parts of the country, executive tenants are willing to pay up to $3,000 a week for the right luxury properties, so it’s unsurprising that many investors have their eye on this lucrative market. Like any other type of real estate, executive property investors should carefully consider the tax implications of any purchase, including the effect of negative gearing. Learn how negative gearing affects the value of your investment, and find out why this important tax break is under fire. How negative gearing works Gearing is a term that property investors commonly use. In fact, gearing simply refers to the process of borrowing money to buy an asset, including property. A significant proportion of property investors have to take out a loan for a property that they intend to lease out and, of course, everyone hopes to make an annual return on their profit. To make a profit, you must receive an annual rental income that exceeds the cost of any interest that you pay on your loan. As such, you can end up in one of three gearing states, as follows: Positive gearing means your annual interest is less than your annual property income – an overall profit Neutral gearing means your loan interest equals your rental income Negative gearing means you are paying more in interest than you make in rental income. At face value, negative gearing doesn’t look good because it seems as though you aren’t making any money from your property investment. The good news is that you can take advantage of negative gearing in your tax return and still see an overall profit. Using negative gearing as a tax break Australian tax regulations allow property investors to offset losses made by negative gearing against other taxable income. For example, if you make an overall annual loss of $20,000 on your executive rental property, you can offset this against any other income to cut the amount of tax you pay. In real terms, this tax break often means that you don’t actually make a loss. It gets better, too. While negative gearing allows you to offset the cost of these losses against your income, your executive property is likely to increase in value. As such, even if (on paper) you make a loss from your executive property every year for ten years, you can offset the value against tax AND benefit from the increase in the property’s value over that period. Unsurprisingly, some property investors use this situation to their advantage. For example, some people may take out finance that exceeds what they can realistically receive in rental income knowing that they can offset the losses against tax and that benefit from property value increases in the longer term. Unsurprisingly, this situation has led to criticism from many people. Why people oppose negative gearing Critics of negative gearing argue that the system artificially increases property prices. In turn, this price issue makes it harder for first-time buyers and creates an environment that only benefits wealthy property investors. Australian government data seem to support this theory. In 2011/12, Australia was home to 1.9 million property investors, with an overall net rental loss of nearly $7 billion. Unsurprisingly, a 2014 review of the...

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