Espresso September

September 2009

Property investors - still the smartest guys in the room As the recent global financial crisis has shown, many of the world’s most senior investment and banking types have feet of clay. These hidden faults have seen the collapse, rescue or restructure of dozens of formerly gigantic and powerful investment banks including well known names like Lehman Brothers, Bear Stearns and to a lesser extent Morgan Stanley and Goldman Sachs. So why does the relatively humble Australian residential property investor continue to end up at the top of the investment heap? Investment income What a market! The continuation of quality rental yields in the 5 - 6% bracket is nothing short of sensational. All of Australia’s major capital cities have multiple suburbs yielding from 5% all the way up to an average of 8.6% in Darlington, NSW. Cost of borrowings With 5 year investor mortgage loans available at around 7% and with rate rises being telegraphed pretty clearly by the Reserve Bank, there is a clear cut path to locking in costs for the next market cycle. Demand Continuing population growth, increases in immigration, first home buyer subsidies, historically low mortgage rates, state government stamp duty packages and continuing stock shortages say it all really.

Add value and keep control When I buy shares in BHP Billiton (fine company that it is) I have zero ability to change the way they do business. When I buy a unit or house I know exactly what I have to do to increase both its rental value and ultimately its resale value. Location There are libraries full of data about each and every post code in Australia. You have access to council, state and federal government data that may impact the value of your investment. You also know how much each post code averages in both rental yield and capital growth.

….Angela wishes all dad's a happy fathers' day

Although we seem to be heading towards economic recovery faster than everyone expected, some market commentators are still predicting rough weather in the next few years as many corporate and sovereign debt issues have yet to be resolved. Either way just keep quietly investing in quality residential property. You’ll be richer for the experience.

The simplest law of economics states that when demand exceeds supply prices will increase.

Brain booster The dog named Jam is heavier than the dog named Jelly. Copper weighs more than Brandy but less than Pumpkin. Brandy weighs more than Jelly. Pumpkin weighs less than Jam. List the dogs in the order of their weights, starting with the heaviest. (Answer on page 2) (Answer on page 2)

Did you know... Requests to the right ear are more successful! Studies show that sound from both human ears is processed differently within the brain. Researchers have noted that humans tend to have a preference for listening to verbal input with their right ears and when given stimulus in both ears, they’ll privilege the syllables that went into the right ear.

Angela says… Think about DIY lease terms Having a vacant property over Christmas can be a financial drain (not to mention inconvenient) so it pays to think ahead for the type of lease term that suits your situation. The widely accepted options for a fixed term agreement are six or twelve months however this is not a hard and fast rule. Any lease term can be tailored to suit you - the one catch is that it must also be attractive to a tenant. Now that we are in September, if your tenant vacates in accordance with the lease, consider whether September 2010 is a good month for you in terms of future holiday plans or whatever else is happening in your life. Likewise as we approach Christmas if your property becomes vacant perhaps a fourteen month lease from December to March would be better. It saves the property falling vacant again at the busiest time in most people’s calendars. Often you will find this suits the tenant too - who wants be stuck with the stress and cost of moving at Christmas? Or if selling is on the cards for you, perhaps a nine month lease would work best so you can end the tenancy and sell the property in the next Spring market... Don’t rule out longer term agreements either. While you benefit from greater financial security, a two year lease can be particularly attractive for relocating tenants or families who have a lot to move and want to stay in one place for a while. Lease terms are a key point of negotiation so talk to us about what might work best for you next time your property becomes available. required?

September Rental Review Brisbane region rental prices

PriceFinder has estimated that rental prices for both units and houses have increased by 5% in the 12 months to August 2009. Rather than using medians, PriceFinder performs individual rental reviews for each property in both the current

Brain booster Do you have ‘e-waste’? There are a number of recyclers who collect electronic waste such as computers, fax machines, photocopiers and screens. Check out www.ewaste.com.au or www.cleanup.org.au for lists of ewaste recyclers in your area.

returns a much less volatile result than median estimates.

(From page 1)

The heaviest dog is Jam, then Pumpkin, the next heaviest is Copper, followed by Brandy, and the lightest dog is Jelly. STRATEGY Guess and check - write each name on post it notes and move them to test the sequence.

period and again 1 year earlier. This

Over 150 individual properties were included in the sample. The suburbs included in the review: Hamilton, Sandgate, Kedron, Annerley, Sherwood, Loganlea, Strathpine and Capalaba. To learn more about the PriceFinder system go to www.pricefinder.com.au.

Have you run out of patience with your property manager?? Call us you will be pleasantly surprised. t: 0412 242 327 1, 31 Derby Street, Vaucluse NSW 2030

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$2200pw

Chamberlain Avenue, ROSE BAY Breathtaking Panoramic Views of Sydney Harbour 3 bedroom home with open plan living and dining areas flow on to expansive harbour facing terraces. There is a huge media room with en suite which can be converted more living or bedroom. Internal lift. An abundance of natural light all day. Solid Silver Ash timber kitchens with Caesar stone tops and s/s Miele appliances. 3 marble and limestone bathrooms plus powder room. Small courtyard garden. All bedrooms have built in wardrobes & balconies. Reverse cycle multi zone air-conditioning Massive internal security garage for 2 cars (more space can be arranged) Back to base security alarm. Internal laundry. Visual intercom system. This property is well placed in close proximity to shops & beaches, both ocean & harbour. Scots College & Cranbrook School are 8 mins away. Kambala School and Kincople are within walking distance.

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PARKING SPACE – MURRAY ST DARLING HARBOUR 2 secure parking spaces 24hr access close cross the bridge or take the monorail to the CBD

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