Cameron Mcevoy

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As a buy-and-hold investor, I’ve come across tenants of all walks of life.
Bachelors, single mums, share-house friends, retirees, young families; I thought I’d had a taste of every type of tenant possible. But then I realised, this is incredibly naïve. The truth is the diversity of the rental pool at any given time is as limitless as the diversity we find in humanity. So, I recently had my own little ‘witching hour’ of property insight recently with one such tenant.
With over seven billion people living on planet Earth, there is a practically infinite volume of lifestyles that people can live, making for so many different types of tenants that one could attract to their property.
Today I thought I’d share one such ‘out there’ example.
I recently acquired a new investment property that very much added up for me. After much due diligence on the area itself, the property itself, and some crunching of numbers, I made the decision to purchase the property.
This decision was made despite the appearance of the property which was, how do I say it, a little ‘kooky’. Upon looking at the property ad online, the property clearly appeared to be inhabited by, well... a practicing 'witch'.
Some of the interior features included:
<ul>
<li>Gothic statues hung above the kitchen cupboards</li>
<li>Animal skin rugs, an Eastern European throne chair, hanging Native American dreamcatchers, and many, many candlesticks adorned the living area</li>
<li>Dolls, fairies, tepees, more dreamcatchers, a witch’s hat, and mystical elements appeared in the bedrooms</li>
</ul>
To most prospective buyers, the creepy appearance of this property would have been enough to turn them away. Clearly, the price of the property, which was slightly below market rate for such a property in the area, was compensating for this appearance.
But to the trained investor looking a little deeper under the surface of things can sometimes fruit some great surprises. Upon further investigation, I discovered that:
<ul>
<li>The appearance, whilst full of kooky knick-knacks, was pristinely maintained. Not a speck of dust, not a single mark on the tiles, the floors squeaky clean. Clearly this tenant went to a great deal of effort to make the property appear clean – at least for the sale.</li>
<li>Why did the tenant do this? Turns out that she has been living there for 10 plus years, and had no desire to move out anytime soon. She clearly treated the property like it was her own, owned home.</li>
<li>I also learned that the tenant had been OK with incremental rental increases (in line with market rate) over the years, another good sign for the investor.</li>
<li>The body corporate of the property checked out well, as did the building and pest inspection. The townhouse was in a small complex, at the back of the block, avoiding the noise of any nearby roads.</li>
</ul>
Sometimes the quality of a tenancy applicant, or a tenant you may ‘inherit’ when you take ownership of a property, needs to be judged beyond any perceptions you have about that person based on their lifestyle.
I couldn’t care less about what a tenant in my property does in their personal life, so long as they comply within the requirements I maintain when seeking a good tenant.
These things are:
<ul>
<li>On-time payment of rent always; and understanding/respecting the odd occasion when rental rates need to increase in line with the market</li>
<li>Not damaging the property and generally looking after it</li>
<li>Reporting malfunctioning appliances, or maintenance works required; as/when they come up</li>
<li>Respecting common property areas and neighbours nearby</li>
<li>(Ideally) looking to stick around for as long as possible</li>
</ul>
If you have employed a highly skilled and competent managing agent to look after your property then they are the ones to make the best guided ‘judgement call’ on the quality of any particular tenant.
At the end of the day, astute investors need to draw up a list of the things that actually matter when seeking quality tenants and look beyond initial perceptions when weighing up tenancy selection decisions.
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cmcevoy-Go82SmsJA9

My investment property witching hour: Cameron McEvoy

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Residential property is virtually a national pastime for many Australians around the country.
In my native city of Sydney, residential property is arguably the number number one topic of conversation at BBQs, dinners out, family gatherings, and office water coolers.
So it is no surprise then that property conversations and public discourse over the past 12 months have focused on the topic of weakened housing affordability as a (possible) result of an increase in foreign investors in the market.
The challenge in discussing it properly, of course, is that up until recently whilst some initial figures have been published by the RBA and a couple of news outlets, there hadn’t been a thorough market analysis of affordability based on foreign influence.
However the federal government has listened to concerns and as a result it has commissioned an inquiry into foreign investment in Australian residential property.
Though the study is ongoing and results are yet to be released, the initial feedback was that foreign investment in Australian residential property has not been a major contributor to any ‘price bubbling’ occurring in capital city markets throughout the country.
Further perspectives outside the governmental inquiry however, have been coming to light in recent weeks and it has been interesting to hear the views put forward.
What is certain right now, however, is that residential property buying is strong in many major capital city markets around the country.
Influential factors such as limited land supply in high demand capital city suburbs (both inner, middle, and outer ring ones), current home owners blocking higher-density construction within city limits areas, and a low interest-rate environment are all stimulating a buying frenzy among locals and foreign investors alike.
These factors have collectively led to a major values growth ‘boom’ period in several markets.
The elephant in the room though is the notion of the foreign investor – in particular the Chinese investor – who are <a href="https://www.urban.com.au/news/30256-alan-oster-says-foreigners-at-record-9-5-of-established-property-demand&amp;sa=U&amp;ei=31IGVLWyJcm1uASly4CQAw&amp;ved=0CAwQFjAD&amp;client=internal-uds-cse&amp;usg=AFQjCNFZsUDNoWBGMXa-JMkKcYIwiyPgGQ" target="_blank">accounting for small but rapidly increasing percentages</a> of all residential property buyers.
However, this is where the research may be coming up short. Like asking the question ‘which came first, the chicken or the egg?’, looking at sales data volumes over time may not account for the buyer's motivations for purchasing the properties they did; for the prices they did; during this time.
As a Sydney native who invests in this city (and is also currently looking for a home to purchase too), I’ve been privy to sentiments expressed “straight from the horses’ mouth” recently from both colleagues in the industry and other buyers ‘on the ground’.
When I am out at open home inspections most weekends, I’ve been speaking to other buyers with interest, hearing what the feedback is. It is certainly true that local buyers are ‘believe’ that foreign investors are having a significant impact, despite concrete official data confirming it.
So, the ‘real’ impact of more foreign buyers in the market could actually be a placebo-like effect. It is likely that the ‘scary thought’ of all the foreigners pushing locals out of the market is the actual catylst for locals pushing themselves out of the market! Or, the ‘FOMO’ (Fear of missing out) effect.
Regardless of your personal position or belief (however well or poorly researched it may be) on foreign investment jacking up prices for locals, the reality is that there are too many contributing factors to any property market’s growth (or indeed, lack of growth) at any one time to be sure.
One area where I do have a concern is in the ‘official’ data. One example here may be that foreign buyers (Significant Investor Visa or otherwise) are not permitted to purchase established dwellings – they are supposed to only be purchasing newly built stock.
However, most in the industry know that this is just not happening and is likely to go unchecked. Foreign buyers, especially from non-western cultures, are using one of the oldest group-buying strategies in the books, consortiums or shared-buying, to crack in to the established property market.
Article continues on the next page. Please click below.
 
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Buying through a consortium means that a distant family member or family friend who is an Australian citizen (and thus not counted as a foreign buyer) may aggregate funds from several other family/friends together who themselves are not Australian residents or citizens.
This enables for the purchase of established houses on land (often without the need for a mortgage as the funds collected between the group/consortium are usually enough to buy the house outright).
As someone who is looking for a house (not a unit), on a decent size block of land in Sydney, I can confirm that I’ve seen this in practice during inspections.
How do you I know? I’ve been engaging in conversations with would-be buyers at inspections who have told me they're using this strategy themselves.
Whilst I do not take personal issue with the notion of foreign investors buying established houses (provided that the scale/extent of this permitted does not substantially prevent local buyers from entering the market), I do take issue with the official inquiry overlooking these purchases.
Consortium-style buying is often unofficial and unstructured, making them very hard to trace and keep a paper trail on. The Australian culture of group-buying (when it actually does happen – which is highly infrequent) is all about drawing up official legal contracts, split loans, and so on (at the point of property purchase – which of course helps to keep more official records on the group buying going on).
Foreign group-buyers tend to have just one person or couple (who have either residency or citizenship status) gather all the funds separately and externally, who then brings these to the solicitor as one lump sum in cash at the point of purchase.
This makes the true nature of the transaction highly difficult to trace locally and will likely not be reflected in any official findings. That said, China’s government has recently put rules in place to make it harder for Chinese nationals to bring funds overseas for investment purposes.
It will be interesting to see the findings of the inquiry as these become available. What will be more interesting though, will be to see if any governmental action is taken thereafter.
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How foreign buyers are cracking into the established property market

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To the inexperienced buyer, finding a quality property at an affordable price is pretty hard to do.
Whether you are a home buyer or investor, this is very hard to do, especially in Australia’s major capital city markets.
Buyers without experience face difficulty drawing a distinction between a crappy property that is full of potential and a property that should be avoided completely.
I’ve always been intrigued by the phrase ‘buying a lemon’. Perhaps I take the opportunist view a little too much though, because this lemon phrase is very similar to ‘what do you do when life throws you lemons? You make lemonade, of course!’.
In the reality of a property context though, this is rarely true. With property it is more accurate to say that some properties are lemons, sure, but only a few of those lemons are actually ripe and ready for harvesting. Other property lemons, though, have fallen off the tree long ago; turned brown, decayed, and are utterly useless.
So, we have ‘ripe’ property lemons and ‘rotten’ property lemons.
In my experience, I would distinguish between ripe and rotten by asking oneself: ‘What are the property’s problems that I can change (cost-efficiently, of course), versus those problems that either cannot be changed or are too costly to do so?’
By no means is this a definitive list; but here are some ideas of ripe lemon (possibly worth buying) ‘problems’ compared to rotten lemon ones (deal-breakers that translate to ‘walk away now’).
<ul>
<li>Rotten Lemon Problems:</li>
</ul>
Location:
First of all comes the biggest problem one cannot change in a property; its location and the other properties surrounding it. If the property is too far away from fundamental ‘renter must-have’ proximity features (transport, work node access, shops, schools etc) than this is something you cannot change, no matter how beautiful the property itself is.
Aspect/outlook:
We cannot change the way the sun rises and sets every day, for instance (though I would like to meet anyone who could!). To some future tenants and buyers aspect is very important. Ensuring enough sunlight is given to living and communal areas is important.
Serious structural problems:
During your due diligence, building, pest and/or strata reports will identify any serious structural issues. For house buyers this will be the house itself. For unit buyers, the strata report will highlight upcoming major capital works and maintainence scheduled in coming years.
Any serious structural problems identified are almost always hugely expensive to fix. When these are identified, the property is a true rotten lemon. Whether it's an investment or a home, you’ll be up for a lump sum of cash to repair it that you may not have so readily handy once the loan itself finalises.
So what about the things you can change? And cost efficiently, too? 
Click through to the next page to find out.
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<ul>
<li>Ripe Lemon Problems:</li>
</ul>
Outdated and ugly properties:
Drab, old, and outdated look (internally for units and both internally/externally for houses). Expert property ‘flippers’ Nathan Birch and Cherie Barber have built entire wealth strategies around this very specialty.
Ripped up ugly carpets can expose beautiful floorboards; cheap fresh paint can add exponential value and appeal, and so on. Inexpensive light (cosmetic) renovation can help bring what looks like a ‘dud’ property up to scratch.
The problem is, selling agents are keenly aware that buyers know how to spot these properties and accordingly the discounting offered may not offset that cosmetic renovation outlay required.
Ugly, cluttered yards:
Poorly presented properties frequently feature cluttered rear yards, sometimes overgrown, or with poorly placed/planted trees and overgrown garden beds. Buyers need to look beyond this to realise this property may not be a lemon and could offer scope for future improvement.
Not enough bedrooms:
More of a house opportunity than a unit one; but consider the problem of too few bedrooms. If the property is especially discounted and the major reason is, say, it is a two bedroom house in an area where three bedrooms is the expectation, there may be scope to cost efficiently reset some internal walls to create a third bedroom.
In older houses this is usually done by consolidating large laundry rooms into kitchen cupboard laundries (when a kitchen is also being renovated) and re-purposing that laundry space.
Awkward layouts:
If it is an older house it may feature an awkward layout that impractical to today’s families/inhabitant types. However, this is another example of ‘ugly duckling’ perceptions; particularly if, at first inspection, the rooms are being incorrectly presented.
How many times have property photos showed dining rooms being used as studies/offices, and so on?
If priced accordingly, there may be an opportunity to consider a poorly laid out property if there is scope to easily move some rooms around later on to suit a better layout.
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Making lemonade from property lemons: How to pick the properties ripe for renovation

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Over the weekend I attended the Sydney Home Buyer and Property Investor Show, at Sydney’s Olympic Park. Having visited the show every year since 2011, I was on the lookout for any new trends and shifts in booth exhibitor types.
Below are some observations I made about the 2014 show in comparison to recent years. Of course, the types of companies that were exhibiting may not be reflective of overall market demands and shifts. However, it does offer an insight into to the changes year on year and this variety of show booths helps as a measuring stick of the trends emerging in the Sydney/NSW markets, from both a home buyer and residential property investor perspective.
 
<ol>
<li>
Lender exhibitors shift focus Every year, the major Tier #1 and Tier #2 lenders exhibit and 2014 was no exception. What I did find interesting this year was the promotional shift towards ‘service’ loan product features over others like rate and inclusions/features. In a low-rate environment this makes sense for lenders as it may become hard to discern and differentiate mortgage products based on rate alone. 
</li>
<li>
Exhibitor stands providing bilingual signage is on the up This has been present for many years; with traditionally a number of developer and ‘off the plan’ sales stalls printing their signage and leaflets/info packs in both English and <a href="https://www.translatorscafe.com/cafe/article84.htm" target="_blank">Simplified Chinese</a>. However this year, in my observation (and I wasn’t counting precisely), the uplift of bi-lingual signage stands was substantial. Almost every developer and/or property sales stall was bilingual, with some of them even being Simplified Chinese-only. Also, several of the major and minor lenders featured bilingual signage. 
</li>
<li>
More focus on ‘first timer’ small scale developments Peter Koulizos gave a lecture on small-scale developments 101, and it was easily one of the biggest crowd-drawers during the show. Small developments have been a minor focus of previous shows however there was a clear sustained interest in this topic during this show. Similarly, Cherie Barber’s Renovating For Profit show also drew large crowds, as they often do each year. Several magazines have given extra attention to small developments in the last six months and this could indicate a market shift towards development versus passive investment. 
</li>
<li>
Homes with attached granny flats and second dwellings at the back Detached granny flat companies have been consistently prominent in the last couple of years at the show, however this year there was a clear dominance of developers and builders offering home builds that come complete with an attached granny flat/second dwelling at the back of the property. Think of these as duplexes where the second dwelling is hidden away behind the first. The clear difference was that these properties, unlike duplexes, sit on one title, on one block. From an investor perspective this might be a little unappealing, however for home buyers/builders, this approving could offer a handy value-add. 
</li>
<li>
Off the plan apartments ever prominent Another observation consistent with previous years was the prominence of off-the-plan apartment developers selling their product. Many of these are in high density residential towers being built in most eastern seaboard capital cities around Australia. I did observe a number of international developers too; with offerings in Indonesia, Great Britain, and New Zealand. Interestingly, USA-based property spruikers were lower in volume this year compared to previous years. Below are some photos taken of some of the major speakers who presented during seminars and lectures on the day.
</li>
</ol>
 
<img class=" wp-image-698 aligncenter" src="https://www.propertycorrespondent.com.au/wp-content/uploads/2014/07/Sydney-Home-Show-2014-1.jpg" alt="Sydney Home Show 2014 - 1" width="576" height="346">
<img class="aligncenter wp-image-696" src="https://www.propertycorrespondent.com.au/wp-content/uploads/2014/07/Sydney-Home-Show-2014-4.jpg" alt="Sydney Home Show 2014 - 4" width="576" height="346">
<img class="aligncenter wp-image-695" src="https://www.propertycorrespondent.com.au/wp-content/uploads/2014/07/Sydney-Home-Show-2014-3.jpg" alt="Sydney Home Show 2014 - 3" width="576" height="346">
Photos: Author.
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Five observations from the Sydney Home Buyer and Property Investor Show

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Foreign residential property investment is arguably the hottest topic in Australian property circles right now.
Whether it is at a BBQ, dinner party, or casual drinks after work, when the topic of ‘house hunting’ or property pops up shortly after the topic of foreign investors gets introduced.
Prime Minister Tony Abbott has declared Australia is ‘open for business’ and this sentiment has certainly extended to foreign investment in our residential property class.
Though foreign national investment in single family homes, apartments, and units has been a common occurrence for years in this country, there has been an undeniable upswell in foreign investor-purchased property in the six months of 2014 thus far.
So is this a good thing or a bad thing?
Though market commentators and economists are divided on whether the influence of large waves of foreign investors are having a positive or negative effect on the residential property market, foreign investor influence is certainly being felt in capital city markets.
However, unlike other commodities and investment classes that foreigners ‘can’ buy into in this country, residential property is a delicate asset class; unlike gold, shares, natural resources, technology, and even commercial/industry property investment, residential property investment has social and societal consequences, not just economic ones.
Positive: Investors bring wealth into Australia
Foreign investors bring new money into Australia, greatly influencing our economy. This investment can return dividends for our wider economy as it stimulates further growth into our cities and potentially a better quality of services.
Negative: Higher foreign investor demand could artificially ramp up prices and drive overall housing unaffordability
Yes, this is cited by most Australians who complain about foreign housing investors. Though many Aussies may form this view based on hearsay and/or a lack of researched opinion, the truth is they may be right. The city of Vancouver in Canada is a perfect case study of this. Canada’s relaxed ‘Immigrant Investor Program’ was introduced back in the 1980s and basically enabled for a wealthy foreign national to ‘buy’ their way into becoming a Canadian national, simply by investing a fairly small ($800,000) loan to the Canadian government. The government would then pay back the investor over a five year period and issue a visa in return.
Many of these people purchased investment property specifically in Vancouver, and then left again. However, the buying frenzy over many years saw Vancouver become one of the least affordable cities to live in in the world; with residential property becoming hugely unaffordable for median-to-above-average Canadian income-earners who lived there. The tap was turned off however, in 2012 when the program was abolished. There are concerns by Australians that a similar approach could happen here. 
Positive: Our construction industry gets a much needed boost
Our construction industry – which collectively and peripherally employs over one million Australians – benefits immensely as new residential estates and apartment buildings are demanded by investors, construction companies are employed to build them, thus creating jobs and stimulating the economy. 
Negative: Money laundering on a global scale?
Though Australia welcomes foreign cash injection into Australia, foreign investor funds into residential property are usually pretty unregulated. With a number of investors simply paying cash outright for developments off the plan, the developer takes the cash on a ‘no questions asked’ basis.
The lack of paper trail means that Australia runs the risk of accepting funds that could be ‘dirty money’. Once word gets out of the ease with which funds can be routed into residential properties, Australia runs a risk of an upswell in corrupt foreign funds entering the country. 
Article continues on the next page. Please click below.
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Positive: City planning ensures that construction projects get approved in highest-demand areas
Several cities such as Sydney have faced residential property undersupply issues in their highest demand suburbs and working nodes for years, and foreign investment could help resolve this. Local council areas will consider medium and high-density planning applications by developers in much-needed areas that may not have been possible had there not been enough foreign investor interest to get the project off the ground. Foreign investment helps to encourage construction of higher density housing in these areas to meet current demand. 
Negative: Not everyone wants to live in a shoebox
It is a good thing that foreign investors are helping to build high-density housing (apartment towers) where they are needed most. In high-demand suburbs not everyone wants to live this way.
Developers can make higher profit margins on towers of this scale, versus, say, single-family homes with yards. As land increasingly becomes the prize commodity, developers are under pressure to effectively fit as many people on to the smallest parcel of land that they are legally allowed to do. However, not everyone wants to live in high-rise apartment buildings. 
Positive: Foreign investor demand in certain areas may result in much-needed rezoning
This rezoning could be in the interest of all; and could help open the floodgates to encourage greater provisions of services in much needed areas; things like improved road works, more schools and hospitals being built, and greater stimulation for small businesses to enter areas where higher population growth has been earmarked for. 
Negative: A more expensive property market can cause house-crowding
Many factors contribute to house and unit median prices increasing – foreign investors are just one of them. However, any contribution to making high-demand property exponentially more expensive for occupants could result in house crowding; or worse, illegal housing facilities being built.
A recent example is the Alexandria, NSW, <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2014-07-02/squatters-rescued-from-massive-fire-in-inner-sydney/5564762" target="_blank">fire that revealed an illegal housing ‘shanty’ facility</a>, which endangered the lives of dozens of people illegally living in squalid conditions. This, in an inner suburb area of Australia’s biggest city.
I’ve <a href="https://www.propertycorrespondent.com.au/overcrowding-properties-happens-stop/" target="_blank" title="Overcrowding In Properties – Why It Happens &amp; How to Stop It">written previously</a> about house and apartment crowding and this trend is only on the up. Beyond the immediate safety problems of cramming, say, 10 people into a two bedroom apartment, are the drain on local services and council facilities.
This is where foreign investors could be contributing to making high-demand properties more expensive from the outset, and for a portion of urban Australians such as students, new arrivals/immigrants, and low-income earners, overcrowding; whilst not an attractive option; may be an option they resort to, if they cannot afford the rent on their own. 
Positive/Negative: How much does our economy and society really benefit from foreign national property investors?
A number of news outlets have reported on foreign investors paying cash for their properties and leaving them untenanted/vacant most of the time. I have not been able to find sources that verify this as being a significant occurance/portion of foreign investors; however, there is risk of this occurring more in the future could grow.
If an investor is not using a local (Australian) bank to finance the purchase; and then leaving the property vacant for much of the year, this is a bad thing both economically and societally. Yes, the property investor may pay their dues in the form of council rates and so on, however, with vacant properties in high-demand areas it does little to ease any supply/demand shortfall currently being faced.
Negative: Councils get greedy for revenue, at the expense of citizen quality of life/services
This one is less a finger pointed at the foreign investor more so than it is the greed of some local councils back home.
As mass-scale property developers, themselves fuelled by the lure of foreign investors with very deep pockets quite willing to pay ‘asking price, and above’ for their giant unit blocks; present their plans for submission to councils; the councils themselves are hard-pressed to say no.
This can result in council areas approving higher housing density than perhaps they have the true infrastructure to actually handle. In other words; the lure of developer revenue is too great, at the expense of quality of life and sense of community for the inhabitants of the area.
Councils do this because they believe that the revenue generated by mass development will be used to provide better services to their area. The problem is, most councils under cook the true cost of these services provisions in the first place, or worse, they re-allocate the funds they receive from the developer somewhere else, before the development is complete.
This then sees a suburb increase enormously in population, without the infrastructure and investment in things like community programs, parks, public transport, and local commerce, provided. <a href="https://www.urban.com.au/property-observer" target="_blank">Burwood</a>, NSW, is a good example here.
The Sydney suburb has a very relaxed local government, and is hungry for the foreign-investor-driven high-rise developments to be built there, yet the council is plagued with a backlog of infrastrucutre items it cannot possibly afford.
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Increased foreign investment in Australian residential property: The pros and cons

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A little while ago ago I wrote an article about cultural superstitious beliefs and how these may attract or deter would-be buyers to or from a prospective property.
However, in the year since I wrote about <a href="/expert-insights/investing/24574-july-17-observer-cameron-mcevoy?start=1" target="_blank">superstition from the buyer’s perspective</a>, I’ve observed the quiet emergence of what I consider to be a fascinating phenomenon: the actual marketing of property based on superstitious beliefs.
Though they may carry no superstitious beliefs themselves, choice of property based on superstitious factors may help or hinder the future sale of your investment within some segments of the buying market.
But first, allow me to expand on ‘superstition’ and its relationship with property buying.
People all over the world and from all kinds of background, walks of life, and religious and non-religious belief structures, develop and practice superstitious belief systems. These may relate to notions of light and dark, numerology and numbers, death and birth, and physical space belief systems such as feng shui.
So what does this have to do with property?
Well, some cultures around the world take superstition in their life a lot more seriously than others and the seriousness of this consideration can – and definitely does – extend to property purchase choices.
In western cultures such as Australia, the UK, and much of North America, superstition has an arguably minor impact on the ability to market a property. For instance, there is no evidence to indicate that properties with the number seven (lucky in western culture) and ones that have the number 13 (unlucky) sell for more and/or less than any other numbered property in that market.
However, in many Asian cultures, particularly China, Malaysia, Korea, and Singapore, numerology is serious business. The number eight, and long numbers with lots of eights in them, along with number combinations that form eight (e.g. 71, where 7 + 1 = 8), are extremely lucky. Conversely, the number four and numbers that form the number four are considered to be the unluckiest (due to the sound of the word for four, sounding very similar to the word for death).
Click <a href="https://en.wikipedia.org/wiki/Numbers_in_Chinese_culture" target="_blank" title="Numbers in Chinese culture">here</a> for a Wikipedia page that details the number-based beliefs practiced by millions of people throughout Asia.
There are other superstitious factors beyond just numerology that would-be buyers – along with your possible future tenants – may find unappealing and result in them striking your property off their hit list.
Deceased estates (most have no problem with this, yet other cultures find this a major deterrent due to the belief that recent death draws bad luck), Feng Shui and property design/composition, and even colour schemes of properties, may be enough to secure or deter prospective buyers and renters.
It should come as no surprise then that with the rise of foreign buyers in many Australian cities and suburbs emphasis on some of these factors increasingly being made. Yes, there are many buyers from Asia who are attracted to Australian property; many of them originating from China. And yes, this lucrative market is absolutely being marketed to, in a way that is specific to them.
In a similar way that ‘blue collar’ beer brands such as VB and Tooheys New are marketed towards say NRL football fans in lower-medium socio-economic areas, based on their perceived likelihood to be both an NRL fan and have an affinity for these modestly priced beer products; Asian property buyers are being marketed to, specifically in a way that will pique their attention quickly.
But not only are properties being marketed to superstitious buyers to make them more attractive, they are also being built in such a way to attract them too.
A good example is a new high-rise residential tower development in Sydney’s prestigious Eastern Suburbs. Here, the entire tower will not have any numbered floors that have the numeral ‘4’ in them. So, it is being built without a fourth, 14th, 24th, 34th, and any 40th – 49th floor numbers. This strategy clearly goes beyond just marketing to a niche buying group; but to actually creating new property catering specifically to this group – that being the superstitious foreign investor.
I was perusing some property listings on an app on my smartphone the other day, and also came across this curious entry below:
 <img class="aligncenter wp-image-678" src="https://www.propertycorrespondent.com.au/wp-content/uploads/2014/06/2014-07-03-Marketing-and-Building-Property-Based-on-Superstition-A.jpg" alt="2014-07-03 Marketing and Building Property Based on Superstition A" width="346" height="477">
See the fourth property down the list, priced at $659,888? There is no logical reason to price a property ending in ‘$888’. Instead, this pricing strategy is clearly aimed at attracting the superstitious Asian community and possibly foreign investors who access this app and are superstitiously minded.
Then there is the new mega-tower to be built in Melbourne’s CBD, Australia 108. Even though the tower will actually now only have 100 floors and not 108, the ‘108’ name will stay. In this recent <a href="https://smh.domain.com.au/real-estate-news/construction-on-southbank-megatower-to-start-2015-20140626-zsmtm" title="Construction on Southbank mega-tower to start 2015">article</a> it is mentioned that: "Architect Nonda Katsalidis said the project will be marketed toward foreign buyers. 'That’s the reality. Malaysians, Singaporeans, Chinese.'"
It will be interesting to see how this trend continues into the future. Will properties continue to be aggressively marketed (and indeed built), towards and based on the superstitious customs and beliefs of specific cultural groups?
The good news is this; if you’re like me and superstition doesn’t faze you one bit, fear not, you are not alone. The vast majority of would be property buyers and renters place little to zero value in any superstition-based choice making.
So, whilst it is smart to be aware of trends in property positioning to the market, the best thing an investor can do is buy property based upon the simple investment fundamentals and not any superstitious beliefs.
Investing based on time-proven, data-driven fundamentals consistently beats and disproves lucky numbers, any day of the week.
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Very superstitious: Marketing and building property based on superstitions

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Finding good tenants can be hard.
Buy-and-hold investors typically seek two desirable traits from tenants:
<ol>
<li>Good quality tenants who look after the property and pay their rent on time</li>
<li>Not only finding these good quality tenants, but hopefully tenants that offer longevity to their stay. So, tenants who will stay for a couple of years or more</li>
</ol>
In my investment experience, whilst I’m yet to have a tenant ‘quality’ issue, if you have sourced good quality managing estate agents with a proven track record of property management experience, you should be OK on this front. I have had a somewhat ‘mixed bag’ when it comes to maximised tenant duration.
For some properties I’ve had young family tenants in them for four plus years, yet for others I’ve had a high turnover; with one property changing tenants every six months on the dot. Obviously for investors; minimising vacancy periods or ‘down time’ is a major objective and in one financial year even just a couple of weeks of vacancy between tenants, if unplanned for, can throw the holding cost and tax structure of an investment property in to a tailspin.
So, I’ve recently found myself in the precarious position of being ‘between tenants’ for one of my properties. However, instead of sitting tight with a vacant apartment for a couple of weeks, I chose to take action.
Like somewhat of a guerrilla investor, I’ve been busy most nights after work going over to the property and adding what I call ‘short-term value’.
I’m no Cherie Barber or Nathan Birch (two of Australia’s most revered fast-turnaround property ‘flippers’), however I’ve taken several cues from their YouTube channels to put together a list of time and cost-efficient things you can do in the shor- term to add value to your property whilst between tenants, to maximise return potential and capital growth.
Cost and Return Analysis:
In no order, here is what I’ve been able to do, by myself, after work every night, for the last two weeks. I’ll tell you to the total cost of the improvements along with the result in terms of rental return improvement.
This property is a small (67 square metre) two bedroom apartment in an old 1960s apartment block in Sydney’s Inner West.
<ul>
<li>Tile painting in the bathroom ($230)</li>
<li>Re-painting all bedroom/bathroom/front doors ($60)</li>
<li>Replacing all doorknobs with modern ones ($65)</li>
<li>Replacing living room and kitchen lights with modern ones ($160 including electrician)</li>
<li>Re-netting and re-tubing all flyscreens ($28)</li>
</ul>
Total cost (investment): $543
Asking weekly rent before renovation: $380 per week 
Actual weekly rental return, post-renovation: $420 per week
Rental return gain per week: $40 (effectively an extra $2,080 in rent per year; almost four times return on initial cost). This amount almost pay’s for a full quarter’s strata fees. Plus, the capital gain realised, though I do not yet have a post-renovation valuation report, will be a worthy reward for what has been a duck-in/duck-out light renovation.
To Sum Up
I’m a firm believer in the notion these days that property investors need to ‘manufacture’ return instead of just waiting for it and guerrilla renovations are an easy way to do just that.
Yes, the old investment adage ‘time in the market versus timing the market’ still does apply, but that doesn’t mean you can’t give it a little nudge every now and then.
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Guerrilla renovations: Adding value and rental return on the cheap

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New investors can sometimes neglect the importance and value of getting a depreciation schedule for a property.
But the truth is, there are just so many reasons to get one for your investment property. Tax depreciation potential is so integral to my personal investment strategy that I even get depreciation schedule quotes on properties I haven’t even purchased yet.
I’m not an expert on depreciation myself; which is why I’m writing today about an area that is perhaps not as commonly considered when talking tax depreciation.
Most investors (myself included) tend to focus on units and apartments in their buying strategy. These property types are typically more accessible financially for first time investors and those on limited budgets. Plus, and as trends in recent years have uncovered, the stereotype that units do not acquire capital growth as fast as detached houses, has been (rightly) challenged and disproved in some instances.
Certainly from a depreciation perspective investors immediately think of the ‘indoor’ items that can be accounted for in a schedule (things like ovens, appliances, HVAC, and so on); however, and as I am discovering, there can be substantial depreciation benefits to outdoor areas too.
<blockquote>
Depreciation can actually be claimed for outdoor structures, fixtures and fittings in investment properties.
</blockquote>
Depreciation can actually be claimed for outdoor structures, fixtures and fittings in investment properties. In fact, items outside a building can actually add value to a property. Rather than ignoring the street appeal, investors can include items in the yard or outdoor area to help attract potential tenants. The investor can then maximise their deductions by claiming depreciation on the eligible items in the front yard, backyard and balconies of their properties.
Deductions can be claimed on these outdoor assets as either capital works allowance or plant and equipment depreciation.
Capital works allowance, also known as building write-off, is based on the historical cost of a structure, excluding the cost of plant and non-eligible items. Outdoor structures which qualify for the capital works allowance include:
 <img src="/images/2014/06/18/mcevoy-june-28-one.jpg" alt="">
Plant and equipment items, including removable or mechanical assets, are also eligible for depreciation deductions. Each plant and equipment item has an effective life set by the Australian Tax Office (ATO).
The depreciation available on each item is calculated using the effective life. Some depreciable outdoor plant and equipment items commonly found outside a property include:
 <img src="/images/2014/06/18/mcevoy-june-28-two.jpg" alt="">
Assets outside a property can be worth thousands of dollars. Investors should take special notice when old assets including retaining walls, garden sheds, and driveways are removed and replaced during a renovation. They may be entitled to claim 100% of the remaining depreciable value for these items as a deduction.
A specialist quantity surveyor is qualified to calculate values and construction costs of these items and can ensure that investors are not throwing dollars away. What is relatively a nominal cost to the investor for this quantity surveyor’s depreciation report can return thousands of dollars over the life of a depreciation schedule for that property. Food for thought indeed.
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Why outdoor appreciation increases depreciation

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Brisbane, like other metropolitan cities in this first half of 2014, has had somewhat of a buying frenzy amongst both home buyers and investors.
Having recently procured a property there, I uncovered something rather alarming during my due diligence process.
It turns out that some councils within the metropolitan area of Brisbane have introduced different pricing for their council rates based on the type of buyer you are. If this sounds unfair, it is probably because it is. In fact, the story has recently <a href="/news/qld/31650-margaret-lomas-heads-campaign-fight-against-higher-council-charges-for-investors" target="_blank">gained momentum in Property Observer</a>, with industry expert Margaret Lomas adding her views to the matter.
The thinking behind this policy is that home owners are ‘doing it tough and need a helping hand’. There is an assumption by some Queensland councils – such as Mackay, Brisbane City, and Logan City – that investors can afford to pay higher council rates simply because they are investors.
I purchased a property on 5 May in <a href="https://www.urban.com.au/property-observer" target="_blank">Zillmere</a> (Brisbane’s northern suburbs) and was advised that my dwelling and ownership/usage structure (as an investor, so non owner-occupier) placed me on a ‘Category #14’ pricing of 42.8 cents per unit. Had I been an owner-occupier, my rate for the same property would fall under ‘Category #1’ (incurring a rate of 30 cents per unit).
This is clearly discrimination based on the ‘assumed’ status that investors are more cash-flow rich than owner-occupiers. The rate structures are not means-tested so there is no factual base for this pricing, rather just an assumption.
<blockquote>
This discriminatory approach in some councils throughout Queensland is merely a price-gauging and revenue-raising strategy at the expense of those trying to secure their financial future. 
</blockquote>
It’s unfair because council rates are paid to ensure that services to the suburb area such as rubbish collection, council clean-ups, bushland and fire levies, library and park maintenance; are provided for all dwelling occupants living in the area. Regardless of the occupant residing there, all occupants are entitled to the same services provision.
The biggest mistake these councils have made in their assumption of investor wealth, is that investors are cashed up and aren’t also ‘doing it tough’.
If councils want to penalise those who scrape together their savings to try and provide a better future for themselves and their families via investment, is this not discrimination? 
Regardless of how small or seemingly inconsequential the rate difference is between the two ownership types, it is the principle of the matter that needs to be challenged. This is because this council initiative may set future a precedent that other property related service industries may enlist.
I’ve observed in my investment career instances where one council will form a new policy and other neighbouring councils will adopt a similar policy in the years ahead.
Imagine if you were an investor and needed to send a plumber out, yet the plumber advised you that their service rate to you would be higher because you are an investor. Or if strata management companies gave owner-occupiers a discount at the expense of a rate hike for those lot owners who happen to be investors.
What makes this more embarrassing for some of the councils involved, particularly Brisbane City Council (BCC), is that the owner-occupier rate is not discounted, meaning that the rate hike for investors is clearly a revenue raising strategy.
Article continues on next page. Please click below.
<hr class="system-pagebreak">
Are councils neglecting the value that investors bring to their suburbs?
Investors actually bring revenue to an area when they buy and in some instances greater revenue than owner-occupiers. 
Why?
Think of the housing they provide for residents who aren’t yet able to afford their own ‘owned home’. Think of the job creation for the local community in terms of ongoing real estate agents managing and representing the property, bringing wage growth into that local business and council area.
Even when looking at the logical rationale behind this move; there simply isn’t one. Why? Because rates are currently structured to be paid per-household regardless of occupant volume residing in that household. If discrimination is to occur based on ownership status, why are these councils not also discriminating based on occupant volume?
Is occupant-volume a fairer way to price-structure council rates?
Think about what these rates cover. These are things that if rate pricing structure is to be introduced logically should be based on occupant volume of the property, not the type of occupant that resides there. 
For instance, a single person occupying a four bedroom house is likely to produce much less rubbish and stormwater drainage wastage each week, than say a family of five, occupying that same house.
The single occupant may only even put their bins out once every two to three weeks, yet the family of five may be putting an overflowing bin out, every single week. Surely this would be a better standard of measure to determine the rates that occupants pay.
This kind of ‘user-pays’ services approach is employed in several places around the world such as Singapore and ensures that services usage is minimised and costs kept down as much as possible, for all.
Is this pure discrimination and revenue-raising?
This discriminatory approach in some councils throughout Brisbane and greater Queensland is merely a price-gauging and revenue-raising strategy at the expense of those who are just trying to establish and secure their financial future. 
Oh and the other thing is this, specifically the Logan City Council (LCC) as well as Brisbane City Council (BCC) have formed these policies in recent times. Is it just coincidence that these two council areas (and their encompassing suburbs) have had the highest investor penetration in the last two years out of all of Brisbane metropolitan area and would stand to benefit most from an increased rate revenue from the investor community?
The trend could be on the rise with other city and municipal council areas in Brisbane and Queensland. So if you are either an owner of an investment property or you are thinking of buying one in this state, ensure you call the council of the area your property falls under during your due diligence phase.
How can investors stand up against this?
My recommendation as a due diligence point for any investor, in any Australian suburb, is to call the local council and find out what their rate policies and pricing structures are. If you feel you are being charged a higher rate unfairly, you should challenge them on this in writing. 
It is likely that the matter is not financially viable to pursue from a legal perspective; however, the more noise created about this strategy the more the spotlight is placed on councils to consider changing their pricing policies.
I personally will be challenging my higher-rate status with Brisbane City Council in light of this, purely out of principal.
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Variable council rates for investors is blatant revenue raising and discrimination

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Previously, I looked at <a href="/expert-insights/buying/30232-the-pros-and-cons-of-investing-in-a-modern-duplex" target="_blank">the positives and negatives of duplex housing from an investor perspective</a>.

Today I'll explore a more recently evolved ‘sister’ property type to the humble duplex – the ‘dual-key’ property.

Dual-key properties are a fairly recent emergence; however they have existed for decades in places such as Sweden, Japan and the United States.

A dual-key property is effectively one main property, with one front entrance door/hallway. The property then has a living room, bathroom, kitchen and one or two bedrooms.

Sounds like any normal property so far; except that a dual key property has an additional dwelling inside of it. Usually there’s an extra bedroom that has its own door lock. Inside the bedroom is a studio apartment with its own small kitchen and separate bathroom.

Unlike duplexes, dual-key properties enable one space to be shared by two separate parties or tenants. The property may have only one entrance/front hallway, through which all occupants enter. Some dual-key properties have only this as a common area, however most typically have a shared lounge and kitchen. Usually each tenant will actually have separate keys that unlocks only their own bedroom and bathroom spaces.

The pros and of a dual-key investment:

<ul>
<li>Two income producing properties on one title (unlike some duplexes, townhouses and attached dwellings that may require separate titles).</li>
	<li>As the property unit owner will typically only need to pay strata for one property, not two.</li>
	<li>Each portion can still be let separately, offering investors great scope for maximum rental return.</li>
	<li>Arguably, in an ageing population that is also downsizing and urbanising, dual-key could be a smart play to reach into the urban dwellers who require extra space for a parent or elderly relative to live close-by (but still with some privacy and separation).</li>
	<li>Another target rental audience for these property types would be students. Most urban students desire to live within walking distance to everything; their campus, CBD centres, and transport hubs. Dual-key properties may be attractive to students who seek a well located, low maintenance/low common area cleaning property.</li>
</ul>
The cons and of a dual-key investment:

<ul>
<li>Because dual-key is a (relatively) new property type in the Australian market, many are being priced as such. It may be financially smarter, in terms of rental return, to simply buy two separate properties from the beginning.</li>
	<li>The jury is still out on whether this property type is high demand or not. The abovementioned student and extended-family demographics may appreciate this property type, but many others will not. Urban young professionals, for instance, may simply prefer to pitch in for a three or four bedroom share house instead.</li>
	<li>Banks and lenders may have reservations in approving mortgages for this property type.</li>
	<li>Dual-key properties may actually offer limited capital growth. However, some dual-key properties may be easily convertible back to a two to three bedroom single property later down the track.</li>
</ul>
It is a great sign of the times that dual-key properties are on the uptake. With limited urban space and continually high-demand to occupy it, this property type could be a good compromise between human density and quality of life.

As a prospective investment property however, like all property types, would-be investors need to crunch rental and capital growth numbers and consider all the issues a dual-key property type presents, before taking the plunge.

<h2>Check out our latest listings:</h2>

[smartcode_project:default project_id=22057]

[smartcode_project:default project_id=94811]

[smartcode_project:default project_id=24532]
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Cameron Mcevoy

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