First Impressions Do Count

Ever walked down the street and thought...’yes I really like that house’ or ‘yikes! That house does nothing for me’?

At the very first glance of a property we instantly form an impression.   It is human nature to judge a book by its cover,

You'll never get a second chance to make a great first impression. You may have heard that people will form an impression of you, your character, your personality — an impression that is nearly indelible — all within the first 60 seconds of meeting you.  But wait...recent reports say now it could take as little time as a blink of the eye!

It may take just a tenth of a second to form an impression of a stranger from their face, BUT objects are categorized as soon as they are perceived!   OMG, that really leaves nothing to chance. 

Try this...stand on the opposite side of the street from a property and turn your back to it…then turn around to face it for a few seconds… and turn away again.  Anything that caught your eye in that time should be neutralized or removed.  Perhaps there was an over grown bush, a bright coloured balustrade, a broken window awning. If you noticed anything that did not bring you a ‘good feeling’ then the property hasn’t give you a good first impression.

Whilst it’s pretty important to like a house if you are living in it, it’s equally important for your tenants to like where they live too.  When developing property for our clients, we want a great ‘first impression’. When it comes down to it, we are creating a dream; for both our client as investors but also for their tenants so they look after the property and stay a long time. 

Once Property Bloom locates a development site for clients, we’ll move quickly to the design phase. We’ll ensure our design blends in well with the local surroundings.  We’ll look at direct neighbouring properties and what materials they are made of and we’ll look at the best property in the street (based on the highest sale price) and see what it is made of.  Whilst we’re conscious of not over capitalising, we still want to stand out in the street so our development will be noticed.

Today there is so much choice when choosing exteriors for the new dwellings that there’s really no excuse to produce a boring front façade. Street presence is what house facades are all about.  It can be a little overwhelming to start with. Do you go with metal roofing or concrete tiles? Do you choose a face brick or go for the clean rendered look?  Should you combine weatherboard cladding with other materials? Obviously your budget may dictate some choices.

When looking at exterior colours for your project consider this:

·         The roof represents around 30% of the total look;

·         The walls are roughly 60% and the;

·         The fascias and guttering represent about 10%

The exterior of even a low budget development can be maximised. Here are a few suggestions to discuss with your architect:

-          Use a combination of finishes – perhaps some rendered walls combined with face brick or other elements such as lightweight cladding or stacked stone (depending on location and budget).

-          Another finish making a big comeback is external panelling. There are products we use that look like weatherboard but are actually a lightweight fibre cement panel – its low maintenance and rot resistant.

-          Use contrasting brick work – two different face bricks.  It won’t cost any more as long as both bricks are within the builder’s range.

-           the mathematical precision of brickwork can be emphasised by using a contrasting mortar to the brick colour ie dark brick use a white mortar. Or by using a light coloured brick with flush mortar joint finish in a matching colour will give the impression of a large single-coloured area similar to a rendered surface. I call this the ‘poor man’s render look’.

-          Feature Columns –we’re not talking Julius Caesar style but contrasting brick or bagged columns to the front can add some interest.

-          Bagging – Is a lighter form of rendering which isn’t straight with perfect angles. Allows for the slight imperfections to be seen but can look just as good on the right property and is much cheaper.

-          Timber inserts to gables – A gable is the triangle formed by a sloping roof.  Rather than just paint it, you can use timber, aluminium panels or even Colourbond cladding. 

If you really do want to make a “statement”, remember the garden planting you put along your facade is another opportunity, and probably contributes just as much to the street impact. And the good news is, when you grow tired of a garden bed, it’s much easier to change about than the front of a home.

Granny and Investors Have Never Had It So Good

If you are looking to become a property investor things are looking good for you right now. And, if you happen to be the grandmother of an investor you could count your lucky stars.

Interest rates are steady after dropping over the past few months, rental returns are climbing and it’s a great buyers market.  But wait, there’s more... there is a way you can increase your return dramatically.

With the introduction of the Affordable Rental Housing – State Environmental Planning Policy (SEPP) or Granny Flat initiative introduced by the NSW Government in 2009, you can add a granny flat to your investment property and rent it separately, resulting in an increased yield and good depreciation benefits. You can also add a granny flat to your own home if you have a large enough block size.

This strategy allows investors to dip their toe in property developing starting with a smaller project like the granny flat to build their property portfolio.

The Sydney market can be expensive which is what sent one me further afield to find a more affordable investment area. 

After purchasing a few investment properties in Sydney, I found that they were all negatively geared. I needed to find properties that would assist with cash flow not drain me.  My research took me to the Hunter Region of NSW and it’s there that I found the perfect fundamentals for an investment market. The local economies are booming thanks to the coal mining industries but also very diverse with wine growing, tourism, manufacturing, agriculture, horse breeding and retail all supporting strong employment.  Coupled with massive government spending on infrastructure projects and strong demand for rental properties, I thought I’d struck gold.

Property Bloom™ now offers a granny flat service along with our other development strategies. We find properties suitable for a granny flat development, usually three bedroom houses on large blocks, but not just any houses. They need to meet a long list of our criteria.  We manage all the fine details, including renovating the house and building the flat, creating a positively geared investment. 

Investors will benefit from cash-flow from the rent on two dwellings and also receive good depreciation benefits on the new flat.  This means people can keep moving forward with their investment strategy.  Unlike buying a single apartment in a capital city for instance, which is likely to be negatively geared, adding a granny flat to a property that already has an existing dwelling can result in a cash-flow positive situation.

In the past granny flats were only permitted in certain residential zones, but this SEPP has opened up a whole new real estate door. The aim of the granny flat is to boost the supply of

affordable rentals by providing housing for the elderly so families can support each other, as well as the younger generation who are living at home and are not in a position to move out just yet.

Government projections show us that single-person households are likely to be the fastest growing sector over the next 20 years, so demand is definitely there.

Small secondary dwellings are an attractive option for singles and couples who don't need a lot of room and are the most likely people to be under rental stress. Young people are also staying at home longer and granny flats can provide extra space for them and be a lifesaver for Baby Boomers who were hoping to empty their nest sometime soon.

In the Hunter, we are finding properties for around $240,000 and with the addition of a 2 bedroom granny flat which we can build for around $95,000; it’s a really affordable investment for a total cost of around $350,000. These projects are creating a 9-10% gross rental yield, and like the northern beaches, the rental markets are extremely tight in the Hunter. This type of development suits someone starting out in developing or an investor looking to create a positively geared investment.

To take advantage of the NSW Government’s Affordable Rental Housing - State Environmental Planning Policy (SEPP) the regulations include:

·         Granny flat must be no more than 60sqm in size·         Land must be more than 450sqm·         Can only be one house and one granny flat on the land·         The land cannot be subdivided·         You will need to comply with the LEP of your council (contact council re building
 requirements)·         It must meet the requirements of the Building Code of Australia

For more information on the Affordable Housing SEPP go to:

http://www.planning.nsw.gov.au/plansforaction/pdf/Affordable%20Housing_Fact_Granny%20Flats.pdf

Being Present with Property

I’m not going to talk about interest rates and the RBA’s decision not to cut them this week because every man and his dog has an opinion on that right now. Rather, I’m going to talk about being Present in your investing. 

Being Present is what you experience when you are completely focused on this very moment. Often our thoughts and feelings are focussed on the past - which has already gone - or the future - which hasn’t yet happened. 

The way I see it, our cash rate is 4.25% at present and that’s pretty damn good in the scheme of things.  Yes it would be nicer at 4% but let’s not worry about a few dollars in extra costs if you can make a great rental return like most investors are doing right now...in the Present. 

Australia has escaped a lot of the wrath of the GFC (round one anyway) and we are lucky to have our mineral resources to thank for that.  Yes the cash rate is only .25% in the USA, but their housing market is up the creek without any paddles...yes the cash rate is only .50% in the UK but they are part of the Euro catastrophe with high inflation.  Yes the cash rate is only 1% in Europe but they are waiting for the GFS Round Two and there is a 10.4% unemployment rate in the 17 countries of the euro zone as reported by Reuters. 

Look, I’m no economist, I really can’t comment on what’s happening overseas, and it is unfair to compare our interest rate or economies right now with theirs.  All I can comment on is what’s happening in the regional towns Property Bloom is developing in...Presently.

If I were to give you a quick overview on these towns in the Hunter Region of NSW this is how it go; strong, diverse economies, low unemployment, high demand for rental property, decent quarterly increases in median prices and awesome average annual growth of median prices  of over 12%.

I was taught that paying interest is a cost of doing business and as long as we’re not paying 18% like my parents did in the late 80’s then I’m happy.
When it comes to property development funding you may (but not always) need to pay a little more, but if you get good accounting advice (and I’m not an accountant) then the interest you pay should be a tax deduction together with paying an experienced project manager to manage your development. Consultant costs such as this and others can be taken up in the depreciation schedule.  

When it comes to analysing the rental returns once you have completed your development it’s pretty simple.  If you are getting a higher net yield than the cost of your borrowings – the interest rate plus any fees – then you are out front.  If you decide to lock into a fixed rate and think that your rental return can be increased slowly over time whilst your rate is kept steady, then you will find peace of mind in holding your dwellings and taking advantage of the depreciation benefits that a new build will bring and hopefully some good capital growth to come.

My advice right now – in the Present - is not to get caught up in external (and particularly global) events that you have no influence over. Focus on the area you want to invest in and study it. Find out what is happening that will boost the local economy (infrastructure projects, new employment opportunites etc) and become an expert in that area. Look at what’s already happened or planned for the short term. Become Present in your town and understand the dynamics of now, not of what may be.

Get fired up for property development in the Year of the Dragon

The Year of the Dragon. 2012, has the potential to breathe life-shaping fire, to be magical and even mythical.

So as we approach the first day of 2012 under the Chinese Astrology Year – February 4 – we can look forward to a “year of great deeds, innovative ideas and big projects. This will be an advantageous time to begin new projects in business and socially”.

“The Year of the Dragon will bring excitement and big ups and downs in our lives,” according to one online site. 

I’m happy to say I’m a Dragon. After reading various overviews, I think it’s a pretty cool sign – I’m told it’s one of the most powerful and lucky signs in the Chinese zodiac. This is the Year of the Water Dragon, with water having a calming influence on Dragons’ fearless temperament, and also making them more perceptive of others. That’s good.  This also links into my Pices status. I do love a swim in the ocean!

It’s all fun and games to check in on our horoscopes –I always read mine in the Sunday paper – but really it’s up to you as we move into a new year to set down exactly what you want to achieve and not just leave it to chance, or Dragons, or any other belief.

Property development is like what we can expect this year from the Year of the Dragon: it is exciting, it does bring ups and downs (plenty of those) and hopefully in the end, it’s rewarding.

How can we sure up our property development results? I think it comes down to few simple rules:

1. Conduct massive due diligence before you decide to buy. You need to understand exactly what is permissible and what the local market needs in housing.  You should understand the local economics, where the employment is coming from and what projects are in the pipeline that can affect your development.  You should know the suburb inside out so that when a good deal comes along, you can jump on it.
2. Know what the potential outcome should be. Study rents and sales results in the suburb so you know what your dwellings will return/sell for. Put this into a simple feasibility spreadsheet.
3. Have a good property accountant who can check over your numbers and advise on the correct structure to purchase under to maximize your tax situation.
4. Have your finance pre-approved before you start looking so that you can move quickly to secure a good property.
5. Check out local builders, surveyors and tradies so you can quickly set up your development team.
6. Negotiate everything; purchase terms, deposit, renovation costs, building costs, agent management fees, etc. Each discount you get will lead to a better bottom line. Be careful not to “screw” your suppliers, as it needs to be a win-win situation for all.
7. Project manage your development closely so you can ensure it’s moving along as quickly as possible. This takes lots of time and patience. If you don’t have them, use a professional project management fire (like Property Bloom).
8. Consider holding property. It’s my opinion if you go to all the trouble and time to develop property the benefits of holding can be massive, especially in a few years time when you look back and ask yourself, “Why did I sell?”. Of course you need to have a good yield and depreciation benefits to support your holding costs.

So why not take advantage of the Chinese astrology forecast and make 2012 a year of great deeds, innovative ideas and big (property development) projects?