New rules will affect investments in future

The new provision on ‘Cross Collateralization’ is reducing the opportunity for property investors to transfer a listed security from a lender to a third party. Bond, share, debenture are other types of assets can only be prescribed by regulation.

From now on, the real estate property will be considered as an in-house asset. Independent value analyzer should determine the value of these types of assets.

Transparency

The new rule compels clients and property investors to acquire listed securities from SMSF trustees at market value. It reduces property investor’s chance of getting a good deal out of market coverage but increases the transparency of business. Off market, transactions often bring about problems in price amounts and transaction dates. But, this new rule will be reducing that problem for good.

SMSF Regulation

According to the new law, SMSF can acquire information on listed securities from a third party investor. However, it is not clear whether the regulations will follow off market rules to get the job done or not. If the rule does dictates to proceed through off market regulations, it is highly unlikely that the information would be totally trusted by investors.

However, this rule indicates that SMSF trustees have to get a market evaluation of the real estate property from an independent valuer who is qualified enough to make right measurements. This process would make the whole program expensive enough for third party clients. For more information, please visit – http://www.lauchlanleishman.com.au/

Importance of Taking Hidden Costs Into Account While Investing on Property

Cost of a house can significantly escalate, if one doesn’t take note of hidden charges at the time of drafting budget. Lauchlan Leishman of Berkeley Capital Group believes that utmost importance must be given to hidden costs while planning to buy a house.

Hidden charges to be considered at the time of buying a house

Loan application Fee

You must consider the processing fee while making budget. Lenders normally charge few hundred dollars for legal contracts and credit checks.

Legal fees

A buyer has to pay transfer fee while buying a house from previous owner. The buyer also needs to seek the service of a legal professional for sealing a deal. This charge varies between $1,000 and $4,000.

Valuation fees

A property needs to be evaluated by the lender. Lenders pass on this fee to the borrower in form of application charge. Be ready to pay between $150 and $300 towards evaluation process.

Stamp duty

Lauchlan Leishman advises that one must put aside a significant amount of money for paying towards stamp duty charges. The amount of stamp duty also depends on the value of property and state you are residing in. There is some discount for first time home buyers.

Inspection fees

Inspection of property is one of the most important tasks that should be performed before buying a house. You may have to pay anywhere between $200 and $1000 for inspection as per the size of property you are buying.

 

Council rates

These kinds of fee are imposed on homeowners for various facilities like local library membership and garbage collection. It varies as per state and locality.

Apart from the above mentioned charges, Lauchlan Leishman advises that one must also be familiar with charges like mortgage insurance, body Corporate fees, moving costs, utilities, furnishings, repair of furniture etc.

Get The Best Return on Your Property Investment

Investing in properties has become extremely profitable. It is not restricted to buying property at lower price and selling it at a high price after some years, when its value increases. You can now buy a property and use it for earning rental income. As per Lauchlan Leishman, head of Berkeley Capital Group, those investment properties that bring good rental income for the landlords are considered as the best investment properties.

Rate of vacancy is tight. However, few of us can realize the actual situation. Let us check a figure of Australia to realize how tight the rate of vacancy is. As per a survey, 475 out of 1600 odd post codes have vacancy rate below 1%. This means 30% of the post codes have less than one percent vacancy rate. There’s more information available from the survey. There are 7 out of 10 post codes that have below two percent vacancy rate. 87% of the post codes have less than 3% vacancy rate. These figures clearly indicate how tight the situation of vacancy rate in Australia is. With excess demand of rental properties, there is increasing trend in the price of rental properties. Therefore, property investors are getting more interested to buy properties for increasing their rental income.     

There is more good news for real estate investors. Rental component of Consumer Price Index (CPI) is rising faster than average inflation rate. This trend is persistent since the year 2008. Australian Bureau of Statistics had come up with a separate rental housing inflation way back in the early 1970s. The recent trend, what is evident from 2008, was not seen earlier. This is, in fact, a good signal for the landlords as well as the property investors because they can earn more from rental income.

Since mid-2008, weekly rent is increasing at a rate of 5.7% per annum throughout Australia, as per CPI rental index of Australian Bureau of Statistics. The yearly increase of rent on a yearly basis in Brisbane is 6% whereas in Melbourne the yearly rent increase is 4.8%.

Increase can also be seen in the gross rental yields across Australia. As per ABS report, gross rental yield of traditional suburban detached housing is 4.5%. The small-lot housing is increasing at a better rate, more than 5%.

Now, let us check some of the places where rental income is increasing at an impressive rate. There is an undersupply of new houses in Queensland. That’s why the rental yields here are also very high, exceeding 6% gross.

Some of the hottest rental spots that property investors should look at include inner-western suburbs of Brisbane, Mackay, Toowoomba, Gladstone, Calliope, Emerald, and Roma. Northern suburbs of Gold Coast and Sunshine Coast are also witnessing increase in rent, which are higher than the statewide average of six percent per annum. After analyzing all these aspects, Lauchlan Leishman has suggested property investors to invest more and more in Australian properties that can yield higher rental income for them on a regular basis. For More, Visit – http://www.lauchlanleishman.com.au/

2 Most Lucrative Land Deals of All Times

Lauchlan Leishman of Berkeley Capital Group has brought information about the most lucrative land deals in the history of mankind. There are various properties in the world that have stellar valuations. Some of the well known ones are Antilla building of Mumbai with the valuation of $2 billion, Penthouse in London with the valuation of $200 million, and many more. However, the properties mentioned in his article will make these properties look miniscule.

The top 2 deals are mentioned here:

1. Alaska

In the year 1867, Alaska was purchased by the U.S. from Russia. Till date, this is considered to be the largest ever land deal in the history of mankind. Crimean War between Russia and Britain made the former out of gear. This is when Russia thought about selling Alaska to Britain. Russia was forced to sell it to avoid another Crimean War. Russia sold Alaska at $7.2 million to the U.S. If the valuation of sell is calculated on a per acre basis, then the sell price per acre was two cents.

Now, let us check what this chunk of land will value at present date. The total area of Alaska is 375 million acres or 586,412 square miles. If per acre of the land costs $100, the entire tract of land will cost over $37 billion. This should be mentioned here that the real valuation of Alaska is much more than the one mentioned above. It is because source of natural gas and oil are found in this place recently, in August 2012.

2. Louisiana

This is another property acquisition that made news all over the world. In the year 1803, US acquired Louisiana from France. At that time, the acquisition amount was $15 million. As per Lauchlan Leishman of Berkeley Capital Group, the total area of land in Louisiana is 800,000 square miles or 512,000,000 acres. At present each acre of land costs anything between $1,000 and $4,000, which takes the total value to $1.2 trillion.

Lauchlan Leishman of Berkeley Capital Group brings information about two most lucrative land deals of all times – Alaska and Louisiana.