Cameron Mcevoy

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Sometimes, an investor is presented with the exciting prospect of picking up a dual-income residence at below-market buying rates. Many readers will be very familiar with the ‘duplex’ housing type in Australia. Throughout most capital cities and regional centres, duplexes have been a popular choice for many decades.

Modern innovation on the humble duplex design have also paved the way for new investor opportunities.

For those not familiar with duplex property types; a duplex property is effectively two conjoined properties occupying one block or plot of land and will share at least one common wall. Both dwellings in a duplex are constructed at the same time, however, depending on the title structure, they may be strata or non-strata titled.

If strata titled, each dwelling may be sold and owned separately. However if not strata-titled, it means both dwellings within the duplex can only be sold together. Sometimes investors can purchase both sides of a strata-titled duplex, enabling for the opportunity to owner-occupy one half, whilst renting out the other half.

[smartcode_project:default project_id=27728]

Each dwelling in a duplex is completely separate with no shared rooms or entrances. Each dwelling has its own bathrooms, bedrooms, living areas, courtyards and sometimes their own garages. Duplex designs have come leaps and bounds in recent years, evolving from what were once pretty ugly property types that were viewed as only occupying dodgy suburbs.

This was because decades ago, tenant demands were very different to what they are today. Typically, ‘good quality’ tenants favoured only houses on large blocks, located in suburbs very far from the CBD centre (greater than 20 kilometres). For this reason, duplexes were harder to market, with rental return sometimes not being strong, due to renter demand preferring detached houses.

However, fast forward to 2014 and as the cost of land skyrockets across most major capital cities and renter demand is shifting towards smaller living spaces (but in closer proximity to CBD centres); the concept of the duplex has become a popular talking point again.

[smartcode_project:default project_id=4807]

So here are some of the pros and cons for the duplex housing type:

Pros 

<ul>
<li>
The biggest pro is the potential to pick up two income revenues on what is effectively one property. 
	 </li>
	<li>
If well-purchased, this rental return rate can make for a positive cash flow from the outset. 
	 </li>
	<li>
Duplex properties tend to fare better in terms of re-sell value compared to a traditional house that has had a granny flat added to the property. 
	 </li>
	<li>
The potential to have no strata title structure creates an opportunity for investors to not only reduce holding costs (thereby adding more rental return to the property), but it also enables greater control over the expenditure of both properties. 
	 </li>
	<li>New providers and builders are innovating in this space. Designs are way more aesthetically pleasing these days and are in fact are being designed to give the appearance of one big house (from the street) rather than a duplex or an uglier ‘bolt-on’ house. This adds curbside appeal to both dwellings and helps maintain street value, and for investors this also enables greater capital growth potential for both dwellings.</li>
</ul>
[smartcode_project:default project_id=7275]

Cons 

<ul>
<li>
Whilst it is great having no strata costs; the reality is as owner of both halves you must maintain both dwellings as you would any other detached house. This can mean three to four bathrooms to maintain instead of just two; two kitchens instead of two; two gardens; HVAC systems and so on. 
	 </li>
	<li>
Further to this; you thus lose many of the ‘economies of scale’ gained when owning a unit in a strata titled complex of say a dozen or so units/villas. Things like roof maintenance become much more expensive when split between only two dwellings versus a dozen. 
	 </li>
	<li>
I mentioned the opportunity to live in one half and rent the other, however there could be capital gains tax consequences to doing this. The reason being it is effectively one title on the overall property. On the flip-side however, you could strata title each one and owner-occupy one dwelling (and never rent it out as an investment property) there is potential to qualify for capital gains tax concessions for that dwelling only. However… 
	 </li>
	<li>
Traditionally duplexes on one title are harder to sell. This is because you can only market the property to either owner occupier investors or owner occupiers who require a second dwelling for extended family. So, it shrinks the prospective buying pool, which may result in a less favourable sales price when you do find a buyer. 
	 </li>
	<li>However, this may not be such a bad thing, because as our aging population gets older; the potential demand for properties that can occupy a young family, along with the grandparents, is significant.</li>
</ul>
Image courtesy of the the NNECAPA photo library/<a href="https://creativecommons.org/licenses/by/2.0/" target="_blank">CC</a>.
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cmcevoy-Go82SmsJA9

The pros and cons of investing in a modern duplex

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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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The pros and cons of dual-key investment properties

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Most first-time investors – and indeed established portfolio owners alike – will have apartments and units as part of their core investment property acquisition strategy.
From a public/tenant liability perspective, apartments are often thought of as a safer property type in this regard, in comparison to detached houses. However, this is not to say apartments and units aren’t without their own risks.
Here’s a short list of safety risks you need to know about, as a landlord, that might come back to hurt you, if left unchecked.
<ol>
<li>
Curtains and vertical blinds  Recent compliance changes in several states pertaining to curtain/blinds are very important. For most curtains and blinds; a rope-style pulley system is the commonplace curtain raising/lowering/opening mechanism. However, many older-style pulleys (say blinds older than four or five years), are a child safety hazard, and children can be at risk of choking if caught in the connected pulley strings. This risk is an easy and cheap fix; just Google ways to replace or cut and repair the pulley strings to make sure they are compliant. 
</li>
<li>
Safely opening windows  On to windows as opposed to blinds now, and the requirements per-state/territory change, so be sure to research the compliance rules specific to the state your property is in. In some states, the rules on the gap a window is able to open (for units where the windows are above a certain height from the ground – so, some ground floor units may be exempt) is undergoing change currently.  The safest thing to do is ensure your apartment’s windows are fully compliant with your state’s rules. This is again a child safety issue, and rules were introduced to prevent children falling out of high windows. For instance, in some states there are rules that require windows to open to no more than just 12 centremetres width. 
</li>
<li>
Fire alarms need to be tested regularly  This sounds like one of the most obvious unit and apartment safety issues, but I am constantly surprised by the number of investors I speak to who do not regularly check the working function of Smoke and fire alarms in their properties. The simplest way to regulate this is to ensure your managing property agent checks them for you (and signs off on the inspection report, having indicated they are in working order). However, this isn’t already an iron-clad guarantee that the devices are functional or have even been checked. From a legal standpoint, should any fires break out, the managing agent may not be held accountable to this either. Smoke alarms vary in price, from as low as a $9 K-Mart job, all the way to premium products that include regular servicing options to ensure compliance and safety is checked and maintained. These are the safest and most legally-liable solutions, though the cost is much higher for this piece of mind. 
</li>
<li>
Balcony balustrade heights  Balcony balustrade height requirements vary from state to state, however it is something to check in on for both newer and older apartments alike. If a balcony balustrade on a property you are considering purchasing as an investment appears to be quite low, it is work querying this with the selling agent. Also, investigate compliance issues that may result from a child (or adult!) balcony fall or accident as a result of a low-built balustrade. Again, ground floor apartments and units are often exempt from this requirement. 
</li>
<li>
Internal and external stairwell balustrade heights  Similarly to item number four above; be conscious of balustrades on stairwells both inside the unit and outside too. The exceptions of course are any ‘common property’ stairwells. Any accidents or deaths pertaining to incidents on these common-property stairwells are handled by the strata plan liability insurances, and not individual unit or apartment owners.  I was actually caught out on this in my most recent property purchase. The property featured a modern ‘floating’ internal stairwell that simply had a raised, open-air hand rail, with no connection to the steps below it. This meant that a child or infant could potentially make it half way up the stairwell, then fall off the steps over the side balustrade, and injure themselves. 
</li>
<li>
Get a building and pest inspections report and read it carefully The above stairwell discovery was only found when I had the building and pest inspection report completed, prior to cooling off period ending. I’d identified the issue and investigated a plan to resolve it, prior to the cooling off period ending, and I make the same recommendation to would-be investors out there reading this, to do just the same. A building and pest inspection is so valuable for this reason. Sure, it is a few hundred dollars extra expenditure on the property, however it can save thousands later on. Most investors and property buyers assume this report just reveals any structural faults and rodent/insect problems, however the real value lies in the ability to foresee liability issues early on, before you complete your cooling off (aka ‘back out of the deal!’) period.
</li>
</ol>
You can visit Cameron's blog at <a href="https://www.propertycorrespondent.com.au/" target="_blank" rel="nofollow">Property Correspondent.</a>
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Six apartment safety risks every investor must know about

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Many residential property markets around Australia are currently in a ‘hot’ phase of their cycles. By that, I mean that these markets are in the maximum peak property values of their current market cycles.
It is a great time for sellers but a tough time for buyers.
Buyers in markets like Sydney, Brisbane, Perth and many regional centres are facing tough times right now. There are a number of contributing factors as to why these markets are so hot; not limited to the following:
<ul>
<li>A record low interest rate environment is encouraging some first time buyers in to the market who otherwise would not have been able to afford to.</li>
<li>First time Australian citizen investors, enticed by the low interest rates on offer and an increase in construction upstarts for off the plan investment purchases, are buying up properties at very high rates.</li>
<li>In regard to non-Australian-citizen/foreign investors, the introduction of relaxed government policy as well as incentives offered for certain degrees and levels of foreign investment in Australia has made for a property buying frenzy from foreign investors.</li>
<li>The ever-increasing urbanisation of Australia’s population is resulting in more people moving to capital cities as well as established regional cities also. This in turn adds demand.</li>
<li>The general ‘FOMO’ effect (fear of missing out) as a result of the above factors adds a heightened sense of urgency to another property-seeking group, mainly upgraders and second or third time property buyers.</li>
</ul>
All of this of course adds up to high asking prices in many markets. However, initial high buying prices isn’t the only challenge that occupants and residents of these hot markets will face. Different groups will be affected in these hot markets, and in different ways:
First home owners
Despite low interest rates on offer, first home buyers remain consistently out-bid and out-priced within their desired suburbs. The other worrying factor for these buyers is that even if they stretch to their absolute maximum buy rate to secure a property now, they are doing so in a very low interest rate environment.
If first home owners are stretched to their limits now, how they will cope when interest rates fluctuate back up to higher levels over the next 24 months?
I am not of the view that a massive property bubble is forming, however I don’t deny that in low middle income areas where first home buyer volumes are higher, should a significant volume of them fall under mortgage stress over the next couple of years property values in those areas may stagnate for several more years to come.
Australian-based investors
I use the phrase ‘Australian-based’ for this investor group to encompass both Australian citizens who naturalised in this country for most or all of their lives, as well as those who are newer arrivals to Australia but call Australia home (in other words, they live here full-time).
Investors who have purchased residential property in hot markets are no different to those who seek out properties in emerging or undervalued markets; all interested only in the return they get on their investment. This means that providing that either strong capital growth potential, or high rental return, are evidenced in a property purchase, they will consider a property in any market climate – hot or cold.
The problem is hot property markets mean that capital growth for that market/post code is usually at its maximum. That means that for investors seeking immediate capital growth, this will be unlikely for several more years because the property is at its peak right now.
<blockquote>
The consequences of suburb specific saturation by investors have not yet been truly seen.
</blockquote>
This means that if an investor in a hot market is truly a savvy buyer, versus a poorly-researched, ill-advised wannabe investor, they must be seeking 'hot’ (and immediate) rental return over capital growth.
That  paints an alarming picture for overall housing affordability in these markets. Investor owned properties must be charging very high rents to occupants of their properties right now to ensure their investment isn’t a massive loss-maker for them. That means that not only are property buying rates high in hot areas, but so are rents. Overall affordability to live in these cities  becomes poorer.
Non-Australian and foreign investors
Similar factors exist for foreign investors in comparison to local ones.
However, there is another factor at play. Recent investor profile data research from Australian Property Investor magazine suggests that local investors tend to buy in the same city (if not in a nearby suburb) to where they live. Foreign investors typically purchase, site-unseen, in markets that they have never lived in, nor even (in many instances) have visited.
I guess the missing ingredient here is the ‘sense of community’ that mass-property buying, condensed into a small group of ‘favoured’ suburbs or areas, erodes and the effect this has on an area. Some suburbs can become at risk of being investor ghettos whereby the ratio of owner-occupier to investor-owned property is so high that a genuine sense of community within that area becomes quickly eroded.
<blockquote>
Investors should look to emerging markets where owner-occupier to renter ratios are much more balanced.
</blockquote>
This then changes the dynamic of that entire area; eroding the gentrification developed over decades, in the space of just a decade or so of heavy investor-buying. Of course, it is not the fault of (nor should the blame be pointed at) the foreign investors themselves; but rather local and state councils, policy-makers and governments whose planning departments allow this occur, as well as property developers who exclusively market to foreign investors from the moment the first block foundation concrete is poured, en-mass. 
I draw a parallel here to post-World War Two Melbourne, where ‘outrage’ existed over the Italians buying out entire suburbs within just a couple of years after the war. The difference however, is that these communities owner-occupied the areas, made a great contribution to the ‘sense of community’ those areas had, and in hindsight were one of the major market driving factors that has given these suburbs the wonderful identity (and desirability) they have today. Yes, some areas were almost entirely ‘foreigner-owned’, but these people became locals and celebrated their communities.
Fast forward to 2014 and there is a lot of uncertainty around the concentrated foreign-investor buyouts of entire suburbs. This is because investors are not living in the suburbs themselves. They do not have say a vested interest in ensuring the local park lands are maintained, or that roads don’t become too congested, or that units and houses are not occupied by too many people, and so on.
It is no doubt clear that hot property markets offer rewards and benefits for some property owners. However, the implications of investor buying extend beyond just bumping the rental and purchase prices up. The consequences of suburb specific saturation by investors have not yet been truly seen. Ever the optimist as I am, I remain doubtful that investors buying in hot areas, at a grand scale, will be a positive thing for those areas.
Investors should look to emerging markets where owner-occupier to renter ratios are much more balanced.
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Investor saturation in suburb hotspots will have consequences for residents and investors

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Valuations are at the heart of property investment – particularly when it comes to getting finance, or being refinanced, with a lender.
You might also just be asking ‘<a href="/news/27120-how-much-is-my-home-worth-judging-a-propertys-value" target="_blank">What is my home worth?</a>’ and a valuation may appear to be the natural way to answer this question.
<blockquote>
MUST KNOW ELEMENTS:
IT'S NOT AN APPRAISAL
THEY'RE NOT AN EXACT SCIENCE
THERE ARE MULTIPLE TYPES OF VALUATION
COMPARABLES ARE HEAVILY RELIED UPON
YOU CAN ASSIST THE VALUER 
</blockquote>
There are also many reasons why you’d want to get an independent valuation – observer<a href="/expert-insights/investing/21919-five-great-reasons-to-get-an-independent-valuation-cameron-mcevoy" target="_blank"> Cameron McEvoy aptly describes five crucial reasons you’d consider this</a> - and so it pays to be aware of what is involved.
Here are five ‘must know’ elements of valuations:
1) It’s not an appraisal
You may have had an appraisal with a real estate agent, and now believe that your home can fetch in excess of $630,000 on the current market. This may be the case, however a real estate agent’s appraisal is not a valuation, and will not be accepted by the bank as such.
While most real estate agents act with professionalism, investors must be aware that it’s not unheard of for real estate agents to alter the appraisal they provide you to match your expectations, and to be fairly bullish with their appraisals to secure a listing.
A valuer, however, is immune to these pressures, tasked with one job and one job alone – valuing your home.
2) They’re not an exact science
It will be of no surprise to any savvy investor that figuring out the price of a property is never an exact science, even for those trained in the valuation field. Similarly, obtaining two different valuations also isn’t an unheard of occurrence, and is the reason many investors will head to a different bank to obtain financing, particularly after a renovation.
Observer <a href="/expert-insights/investing/24155-wednesday-july-3-upper-right-mark-armstrong" target="_blank">Mark Armstrong refers to bank valuations as being ‘murky waters’</a>. “Remember if a valuation comes in too high and the bank loses money on the loan then the valuer maybe legally liable,” he notes, which may suggest why there is also a general impression in real estate that valuers are conservative with their estimates.
Similarly, it has been pointed out time and time again, such as <a href="/expert-insights/investing/13600-home-valuations-can-be-subjective-" target="_blank">by Mal James in this article</a>, that valuers are subjective. This is because they are human beings, and they act with the information provided and their knowledge to come up with the best possible response.
3) There are multiple types of valuation
While we’re focusing on a fairly rigorous in-person valuation, there are a number of different types of valuations. From the DIY desktop valuation (which have <a href="/expert-insights/investing/16329-diy-website-property-valuations-mostly-askew" target="_blank">varying results of accuracy</a>), to the ‘kerbside’ drive by valuation, be aware that not all are created equal.
RP Data lists four different types of valuation that you'll want to understand:
<ol>
<li>Full valuation</li>
<li>Short form or pro forma valuation</li>
<li>Restricted valuation (to include “restricted assessment”, “kerbside” and “drive by” valuations)</li>
<li>Desktop (to include electronic valuer review - EVR)</li>
</ol>
4) Comparables are heavily relied upon
One of the major aspects that valuers look at to come up with a final figure is that of 'comparables'. That is, recent sales in your area that are close to your property in location and type. A valuer will be required to judge whether your property is superior or inferior to these sales, and so adjust their valuation accordingly. If you want to get an idea of how the valuation may stack up, it'd be worth finding out the latest sales that they will be looking at. This also means that for properties in remote areas, or unique style homes, it will be trickier for the valuer to come up with a figure and, therefore, more subjective and down to interpretation.
5) You can assist the valuer 
As with any property, present it with its best foot forward for the best change of securing a good valuation. While valuers do not want to be harassed, told how to do their jobs or provided information that could sway them against the numbers, you can be helpful and provide information about improvements undertaken since purchase.
Be on site, ready to ask and answer questions, and have all the information about your property on hand.
Despite the reasons to get a valuation, there’s always the other side of the argument. If you’re considering a valuation, you may also want to hear <a href="https://www.urban.com.au/expert-insights/investing/19324-tuesday-upper-right-terry-ryder" target="_blank">Terry Ryder’s thoughts on why valuations are a “waste of time and money”</a>. Late last year, Property Observer also covered a <a href="%20http:/www.propertyobserver.com.au/financing/26422-valuation-industry-needs-overhaul" target="_blank">heated debate that asked for an ‘overhaul’ of the valuations industry</a>.
Tips for those wanting to get the best from a valuer:
<ul>
<li>Provide them a list of comparable sales (potentially inside the same project, as well as some that are not). While not all valuers will use them, some will. 
</li>
<li>Apply for finance six months before completion, not six days and if you find the valuation comes in low it gives you time to get a third and a fourth. 
</li>
<li>Attain your own valuation, using a valuer that is on your bank's panel of valuers. 
</li>
<li>Ask to see a soft valuation so you can check the comparables used and the comments made. 
</li>
<li>Bear in mind that the valuer often has a different valuation for mortgage purposes as opposed to sale purposes. But mainly: 
</li>
<li>Do your research beforehand.  Go out and look at 100 or even 10 before you make a purchase decision. If you've done your research you should be confident it will value up.</li>
</ul>
Source: CPM Realty
FURTHER USEFUL READING 
<a href="/expert-insights/finance/15169-property-valuations-get-them-right" target="_blank">How to get property valuations right</a>
<a href="/expert-insights/investing/15397-property-valuation-101" target="_blank">Property valuation 101</a>
<a href="/expert-insights/26499-letters-to-the-editor-valuation-experiences" target="_blank">Letters to the editor: Valuation experiences</a>
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jduke-EHk3XBmHkn

Valuations: Five must know facts

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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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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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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.
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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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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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Cameron Mcevoy

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