Are there any first time home buyers left? There may be, according to this article but the once growing horde is slimming down somewhat.

It's getting harder and harder for first time home buyers to get into the market as interest rates increase and property values continue to soar. Salaries haven't kept up and the only home buyers left in the market are second or third generation purchasers.

So what options are left for the little people?

It wasn't that long ago that we began scoping the financial landscape for our first home - and that was before the big property boom. Today, most of our friends shake their heads wondering how first time home buyers will ever get into the market. Will their mortgages exceed their lifetimes? Will their children inherit their debt?

Hopefully these won't be the outcome as there may be a few options available for first home buyers. Here's a few loan options;

• Zero Down Payment Loans - Before you even contemplate this as an option you need to understand that buying a home with this type of loan, at the end of a property boom, is the worse thing you could do. Prices will invariably drop and if you default on your loan payments you could end up owing the bank more than the home is worth.

  Having stated that, these loans are a great option for first home buyers. They don't require a deposit so you can get into one just as quickly as getting into a rental contract. The downside is you don't have the deposit to offset any of the interest payments.

  But still, with property prices increasing, you won't be able to save enough deposit to get into a home as you will continue to get further and further behind.



• Allow boarders and proposition your bank manager - There is one thing working to your advantage here - rent is also increasing. Not only is it hard enough to buy a house, it's becoming too expensive to rent.

  Draft a plan that allows you to accommodate a few boarders in the spare room, thereby increasing the amount you can use to service a first home loan. Banks are always looking for good options to loan money and a well thought-out plan should give them enough confidence to lend you enough for a mortgage.



• Shack up with your best friend's wife (and him, of course) - Try splitting the loan between two couples. There is a little more paperwork and bureaucracy that will need to be attended to in this situation but it can be done.

  Both couples split the home and amenities while only paying half of the mortgage. When it comes time to sell, the other couple buy your half out or you split the price that the house sells for. Easy.



• Get the parents to pay half - As most parents are into their second or third home they easily have enough equity in their home to use as capital on a new mortgage. If you play your cards right you could even get them to pay half of the mortgage so that it becomes an investment for them as well.


• Source a first time home buyers grant - Many governments are now offering grants to first time home buyers to help get them into their own home. Finding viable sources can be as easy as searching Google or visiting a home display centre.



It is getting harder for first time home buyers to get into the market, but it's not impossible. Take some initiative and find alternatives to get the result you're after.

Posted by Stuart at 6:12 AM | Permalink | Comments (1)

Selling your own home can seem like a mission unless you're prepared to get your hands a little dirty. Simple changes and repairs can make the difference between the time it takes to sell and also the price you finally secure.

So here's a quick list of things you can do (and in most cases will cost virtually nothing) to improve your home's chances of selling fast.

Outdoors

1. Mow the Lawn
2. Weed the garden beds
3. Create some Explore-Lust
4. Replace the mailbox
5. Plant some cheap flowering annuals
6. Let your pets have a holiday at the local boarding kennel (So your prospective buyer doesn't have to step in anything as they peruse your house)
7. Repaint or replace your old fence
8. Create a new path or update an old one
9. Add a focal point such as a statue or container plant
10. Remove any rubbish that lays around the garden
11. Hang a bird-cage near an outdoor area
12. Hire some outdoor furniture while you advertise your home
13. Set up a square vegetable garden
14. Remove spiderwebs from the gutters and eaves
15. Clean the windows
16. Hire a pressure washer and hose down the driveway
17. Replace any chipped or damaged paving
18. Trim plants, shrubs and trees
19. Clean the curb directly in front of your home
20. Get a close friend the critique the street appeal of your home
21. Take any rubbish to the dump

Indoors

22. Paint or repaint the walls in neutral colours (it may have worked for you with psychadelic illuminates but it won't work for many others)


23. Fix leaky taps


24. De-clutter the whole house


25. Remove any mould from bathroom tiles


26. De-odorize your home - especially kid's bedrooms and bathrooms


27. Sparingly adorn furniture and walls will family photographs (most agents will tell you to remove all of these
    but they can improve your chances of selling if your target market is families)


28. Make sure the kitchen appears light and fresh


29. Rent some furniture while advertising your home and put your furniture into storage - Unless of course your furniture is modern and appealing


30. Store children's toys in storage boxes


31. Clothes cupboards should be neat and tidy and well organised

Daily Indoor Maintenance

32. Vacuum and/ or sweep the floors


33. Keep towels fresh and neat in bathrooms


34. Clean mirrors so that they sparkle


35. Keep toilet rooms clean and neat


36. Make sure dishes are clean and put away


37. Burn incense candles or use an air freshener


38. Keep freshly cut flowers on he kitchen cupboard

The Shed

39. Find a place for all your tools - otherwise rent a storage shed and stow most of the clutter items there


40. Dispose of unused paint tins and chemical bottles


41. Clean and tidy is the key - remove sawdust (unless it's fresh and looks appealing)


42. Remove oil stains from the floor

Posted by Stuart at 7:53 AM | Permalink

Ask a real estate agent which investment option is better and she'll tell you "Property". Ask a stock broker which is the better performer and he'll unequivocally state "Stocks." So which is better?

You can make up your own mind but here's six reason's why I'd invest in stocks over property.

For the record, I'm not saying that I wouldn't invest in real estate or that it's a bad idea to do so. I'm merely stating that there are reasons why stocks are much better

1. Liquidity

The beauty of investing in stocks is that if everything goes pear-shaped, either with your investment or your own life situation, you can readily liquidate them. In fact, you could have them sold and the money transferred to your bank account within an hour.

To liquidate property requires are far more tedious and time consuming exercise. The property needs to be listed with an agent who will then network with clients to view the property. If there is no interest at this level, the property will be advertised and in due course a buyer will be sourced.

Then there's the settlement period which could take from between 1-3 months before you actually see your money.

2. Transaction costs

Transaction costs when buying a property include stamp duty tax, conveyancing fees, mortgage transfer fees etc and could be well into the thousands of dollars. Selling your property will also incur fees including the agents fee, unless you go down the for sale by owner road and perhaps some legal costs. These exit fees will also be in the thousands of dollars.

Stocks, on the other hand, enjoy marginal transaction costs. Taxes may apply and perhaps a small percentage by a broker but nowhere near the amount we're prescribing with a property transaction.

3. Stocks outperform property in the long term

Traditionally stocks outperform property over the long term trend. Why? Because property is an asset used by companies which obviously affects their share price. Any upswing in property values is reflected in the company's balance sheet which determines their dividends or stock value. Downturns are also measured against the company's financials.

If the companies were no longer making profits then stocks would go down but so too would the value of property. People would be laid off, property values would fall as people try to reduce their mortgage debt and the value of stocks would still remain higher.

4. Ability to enter the market

Try getting into the property market with $5,000 and you'll find listed property trusts may be your only avenue (although most of these require larger entrance investments). However, with $5,000 you could start investing in stocks immediately.

This is the problem for new home buyers. Coming up with a 10-20% deposit on a $400k home is near on impossible. I imagine that in years to come many young people will turn to investing in the stock market long before they contemplate buying a house.

5. Maintenance costs

Stocks cost nothing to keep. Real estate, on the other hand, will consume large chunks of maintenance money. At the very least fashions and trends change and there is always the need to update and keep your property relevant in a fickle market - unless your prepared to accept less when selling it.

Gardens, lawns, fences, plumbing, painted areas... the list goes on and on - and on.

6. Transaction ease

This is where stocks stand out. As previously mentioned when it comes to liquidity stocks are very easy to sell and buy. All it takes is a phone call or internet transaction and the investment is yours.

Real estate takes much more. Time, legalese, paperwork etc makes a transaction to purchase or sell property look more like signing a peace treaty with a warring nation.

While property seems to have many downsides to investing than stocks, there is another option than buying a physical property - Managed Property Trusts. These are similar to stocks in that you are buying a share of the property rather than the whole property.

Many managed property trusts are listed on the stock exchange as well and enjoy all the convenience of buying and selling as stocks have.

Posted by Stuart at 6:44 AM | Permalink | Comments (3)

Balancing the decision to register your house with a local real estate agent or try and sell your own home can be a very daunting proposition. While you will reap the rewards of not paying out commissions if the house sells, the flipside is the wasted advertising and time and effort that accumulates if you can't sell your own home.

Not to mention the many charlatans and con artists who will try to sell you a plethora of resources and tools to help sell your house. Finding objective advice can be just as difficult.

So what are the pitfalls and what strategies can the average person use to sell their own home and pocket the best return? Keep reading for some easy tips to get you moving - literally...

Continue reading "How to sell your own home in 7 easy steps" »

Posted by Stuart at 7:37 AM | Permalink | Comments (1)

When most people consider purchasing an investment property they normally think in terms of residential or commercial rentals. That is, they buy a property expecting to rent it out to long-term tenants. While this is an effective investment proposition and has been successful over the years there is less known about purchasing a holiday investment property.

We've just come back from a weekend in Fremantle staying in a holiday property. The unit was sited amongst a block of 1 and 2 bedroom apartments that was oiginally built in the 70's. From the outside the building was very ordinary but inside the unit the owners had renovated the living space into something very tasteful and comfortable.

We came across this unit from some online hunting and were able to secure it for $70 per night (fairly cheap when you consider most hotel rooms range from $110+ per night). The selling point for us though was its own kitchen and amenities which allowed us to cater for ourselves without having to dine out for every meal.

It then challenged us to think about the possibilities of buying into this market fo a couple of reasons;

1. Cheap holidays - obviously this is the biggest bonus. Not having to fork out cash every time you want to take a holiday is big plus.
   


2. Location - If you have your own property in a location where you are likely to use it often then it can also provide a major benefit. Most of our family live in Perth so we always trek north for Christmas, major family functions and the occassional gathering. This event, with our four children, can sometimes be an insurmountable mission especially when we require staying with family members. Being able to have our own place that isn't too far from the action but far away enough to give us some space would be great.
   


3. Rental income - when we're not using the property we can rent it for others to use and hopefully this will pay the mortgage.
   

Continue reading "Buying an investment property for your holidays" »

Posted by Stuart at 7:34 AM | Permalink

Perhaps boom prices do bring out an element of stupidity in investors but I'm not sure one can count on this when offering an investment for sale.

The real estate in my local area is still booming and has been for the past 2 years with no sign of receding and prices have increased more than 40% annually. Even though it has been booming and demand is far outstripping supply it amazes me that some good quality homes take a long time to sell. I couldn't understand it until my neighbour decided to put his house on the market at a price that one would expect to achieve had they been living closer to the beach.

In fact, a house which has far more street appeal and would be on a par with my neighbours sold in less that a week for A$75K less than next doors is demanding. Does he think that investors are stupid? Obviously.

I would assume that even in a boom investors are not without their faculties and able to make sensible decisions. One would have to reason that if an investor bought this house at the advertised price, it would take him at least 12 months before he was able to break even on the investment. And investors know that if a boom has been occurring for more than 2 years it probably won't continue for another two.

I think boom prices just result in stupid sellers.

Posted by Stuart at 7:49 AM | Permalink

While everybody has a belief system (Christian, Islam, Catholic, Buddhist, atheist, agnostic etc) this hasn't always translated into their dealings with money. Many investors, especially those who hold nominal beliefs, would argue that the two, Money and Beliefs, are not congruent and should be dealt with at arm's length.

If you believe that gambling is a bad thing you may not venture to a casino but you may invest in Aristocrat Leisure because it's share price keeps booming. You may not believe in promiscuous lifestyles but it doesn't seem to rate a bleep on the radar when purchasing those Ansell stock options. Or does it? Can our belief structures begin to dictate our investment portfolios and still make solid returns?

Todd Larsen, quoted in this article Investors bet on their faith says,

Investors are finding that they don't have to sacrifice returns to invest with religious values in mind. Some faith-based funds have consistently outperformed the broader market, and performance between screened and unscreened funds is competitive

Could it be possible that what you stand for can actually stand up to the investments that go against your values?

Posted by Stuart at 7:45 AM | Permalink | Comments (1)

Could it actually be healthy for you to own your own home? Apparently so according to this US News article.

It makes sense though doesn't it? If you were able to make all the decisions yourself what a difference it would make on your well being. You would be able to take more pride in the home in which you live, adding to and changing the landscape, removing walls that no longer worked in your home and even painting the kids bedrooms the colours they wanted rather than what you're landlord wanted.

Continue reading "Homeownership! Renting vs buying a home" »

Posted by Stuart at 6:59 AM | Permalink

After reading this article it seems that Florida South home sales are on the decline. But I have another theory that's unrelated to price.

I don't live anywhere near Florida South but the housing boom that continues in Busselton, a coastal town I live in, is sharing similar success with it's US counterpart. For the past 2-3 years we've been experiencing phenomenal sales growth in the real estate market. We built our house and land package in 2003 for a combined total of A$150,000 and today it's value is closer to A$400K.

Why the amazing values? This is where it seems to be in familiar territory with Florida South homes. Coastal properties always seem to attract more attention and buyers are always prepared to pay more for them. But there is another reason, I suspect.

It seems terrorism is getting the wealthy more jittery when it comes to investing and more importantly where they live. A large amount of recent buyers in our area and even further south are foreigners who are cashed up and willing to buy quickly and price isn't the most important variable. Safety is.

I presume that this is also the case for Florida south homes as people increasingly want to move away from the more identified metropolis' of New York and Los Angeles.

I'm interested to know from those building or selling real estate in the Florida South area whether my theory is close to the truth.

Posted by Stuart at 8:39 AM | Permalink | Comments (1)