How to add value to your property

Essentially the simplest way to put it is, make it a place you'd want to buy and/or live in. The nicer things look the more value you will add - but this doesn't mean that you will need to do a major renovation. Small changes can also make a difference in the value. Also, if you spend more money, that doesn't necessarily mean that the value added is proportional to the amount of money you spent. Let's get into it: Paint Job This is one of the best and easiest ways to add value to your property. Painting will give the place a nice bright look but choose a nice colour. Keep it simple and select colours that are neutral and the majority of people will like. Painting will also get rid of any smell that has accumulated over the years in the property. When cooking, the smell tends to stick in the walls (especially heavy spices) so a new paint job can also get rid of any smell lingering. Outdoor Living Space If your property has a decent size backyard, it will be worth adding an alfresco or upgrading your existing one. You may want to add some electrical blinds for shade, or firepits and add some plants for character. You should also consider a nice landscaping job which makes the backyard a nicer place to be and entertain guests. If you're selling your property, these things help in fetching a higher price. Upgrade Kitchen The kitchen is considered the heart of every home - it's a high traffic area and is very likely used daily. Consider giving it a makeover, either with a cosmetic lift or even completely modernise the design. Minor upgrades such cleaning cupboards and cabinetry, swapping handles or changing the splashback makes the kitchen seem nicer. If you've got the budget consider changing the benchtop, sinks or even the entire layout of the kitchen. Upgrade Bathroom Another area which obviously has high traffic - upgrading your bathroom can make a big difference. You can consider replacing the shower screens or curtains and get rid of the mould in the bathroom. Replace cabinetry, swap out the handles and even consider a flooring upgrade, replacing sinks or toilets if you've got the budget. Flooring Upgrade Another easy way to add value to your property is to upgrade the flooring. If you have carpeted areas, consider changing these to floor boards as carpets tend to look very bad typically. Upgrade Entrance Street appeal increases desirability. If you're selling the property and you have an inviting entrance, it is likely to increase the property value. The whole "Keeping up with the Joneses' syndrome is strong with this one and many people want the best looking property on the street. Consider a decent entrance with some landscaping, replacing the main door or adding a porch. Build a Granny Flat This is probably the most expensive option on this list, but basically a guaranteed way of adding value to your property. If you've got a decent size backyard, adding a granny flat will attract more buyers. If you want to continue owning a property, you can also rent the granny flat out for more income!

Tips to Pay off your Mortgage Faster

In this post, I will be covering - as the title suggests - tips to pay off your mortgage quicker in Australia. When buying property, whether it be a place to live or an investment, you will likely have a mortgage on it. For me personally, these tips are better off to be used on a property you live in because that is actual debt. What I mean by 'actual debt' is that, it doesn't give you any tax benefits and there is no rent coming in (assuming you're not renting out a room or have a granny flat). In saying that, we can also use these tips on mortgages for investment properties and maximise cash flow. So let's find out how we can accelerate this: INTEREST CHARGED DAILY In most cases, interest on your mortgage is charged daily. Your repayments might be monthly, however the interest is charged daily. In a typical scenario, your mortgage repayments are monthly, which means that after each payment, your principal amount will go down by a certain month. If you look at your loan statement over the last year, you might notice that the amount of principal you pay increases each month. So how can you tackle this? We can change the default payment to weekly or fortnightly. This way the amount of principal paid will increase each payment as the interest is charged daily. EXTRA REPAYMENTS Well, this is common sense and I am sure you are aware of this. However, this can be difficult to execute with cost of living pressure and inflation rising. But, when executed correctly, it can make a big difference. Let's have a look: Assume you have a $500,000 mortgage and decide to leave it to default monthly payments. You will be paying your mortgage for the next 30 years. Assuming your interest rate is 5% - the repayments will be $1238 per fortnight. If you decide to make extra payments of just $100 every fortnight (you can if you skip that stupid brunch on weekends), you could potentially save 4 years and 4 months off your mortgage and save over $76,339 on interest alone. Source: https://www.loanmarket.com.au/calculators/extra-mortgage-repayments OFFSET ACCOUNT This is probably the most well known way of lowering the amount of interest charged on your loan. The way offset accounts work is pretty simple. Again, let's assume that you have a $500,000 mortgage and have an offset account linked to this mortgage. If you have around $40,000 in your offset account - the interest charged on your mortgage will be ($500,000 - $40,000 = $460,000) on $460,000. This would mean that each payment you will be paying off more of the principal. You can take advantage of this further by having your salary deposited into the offset account and using a credit card for your day to day expenses. Obviously, we have to avoid falling into credit card debt. So, most credit cards will have an interest free period (say 55 days) - this means that you don't have to pay off that credit card for almost 2 months in this case. Hence, reducing the interest charged on your loan as you have more money in your offset account. This can be tricky and mean more work but if you're saving tens of thousands at the end of your mortgage, might be worth the work? Definitely speak to a financial advisor before doing this - I am just some guy on the internet. SWITCHING BANKS BY REFINANCING You might see many ads from banks and lenders offering cash back offers for switching loans to them. This varies from bank to bank but you might get a few thousand dollars back just to move your loan from one bank to another. But don't move just for this cash back. You must compare the products of the banks and only move if the bank or lender is offering lower interest than your current lender. This way your monthly repayments can reduce plus you get a few thousand dollars. You can use the cash back to pay down the mortgage even further. Just beware, there is a lot of paper work involved in order to do this. Alright, that covers some ways to tackle the mortgage. Now we don't have to do this, but I would definitely do it for a property that I am living in. For investments, this can work out well because these strategies can increase your cashflow. Here's the disclaimer - I am not a financial advisor so this isn't professional advice. Properties are a big investment and depend on your circumstances - please seek professional advice before making your decisions. I am just some guy on the internet and only sharing what I would do. You can contact me though.

BRRRR Method

BRRRR Method No, it's not a motorcycle sound effect. BRRRR stands for Buy, Renovate, Rent, Refinance, Repeat. This can be a great way to generate wealth in property but it does require some work. Let's break down how it works:  Buy - You will need to purchase a property (obviously). Ideally, you should purchase an old rundown property where there is room for improvement.  Renovate - You will need to do some extensive work on the property. This requires more capital from your side to carry out the works. You may decide to make structural and aesthetical improvements to the property. Also, make sure its safe to live in.  Rent - Once the renovations are complete - you can rent out the property for a higher rent than before. As the property has been renovated and modernised, rental income will be higher.  Refinance - You can go to the bank and refinance your newly renovated property. If you have done the process correctly, the value of the property should have increased compared to what you bought it for. When you refinance, you can opt for a cash-out refinance (i.e. draw out equity) Repeat - Once you have completed the refinance process and drawn out equity, you can use the funds to start the process again.  Tips for each step:  Buy When you buy the property, make sure you are buying it under market value. Also it is essential to make sure that there is plenty of room for improvement. Its also a good idea to get an inspection report completed for the property to ensure that there are no significant damages which are expensive to repair.  Also ask real estate agents for a rental appraisal once the property has been renovated.  Renovate When renovating, ensure that you are not overdoing it. It's not necessary to get Italian tiles when upgrading flooring. Do some calculations and make sure to get 3 times more than what you're putting in.  For example - if the renovation is costing you $30,000. Make sure that the added value (or the expected valuation increase from the bank after renovation) is $90,000. Research similar sized properties or even newer properties to get a rough idea.  Rent Approach local real estate agents and compare their property management fees and also check their reviews. You will need to start looking for tenants before moving to the next step. Once the property has been renovated, rent it out as soon as you can.  Refinance Approach your current lender, or another lender to refinance your newly renovated property. It is important to engage a mortgage broker for this step and obviously go for the highest valuation and best interest rate for your strategy. You may find that the lender with the highest valuation might not have the best interest rate. In this situation, it's your call - do you want equity or cashflow?  Make sure to opt for a cash-out refinance so you can use the funds for the next step. When you do this, the extra added value will be transfered to your nominated bank account. Mortgage broker should help with this.  Repeat  Well this step is simple - just do everything again and keep going until you're bored or had enough.  Risks There are several risks to this method. It takes patience and effort to manufacture equity like this. Especially in 2023 when construction costs are increasing rapidly. You may find that your calculations to renovate the property from last month are no longer valid because the cost of materials has dramatically increased.  Another downside is that - while the property is being renovated, you will not recieve any rental income. You will need to pay down the mortgage from your pocket without any rent. If there are any delays in renovations, this period will extend and this might become frustrating.  Conclusion The largest benefit of the BRRRR method is that you are manufacturing equity. You are making an existing property more modern, more liveable and generally improving it in every way. If you do this correctly, you can expect to make some money out of this.  Usually in real estate, the best time is to buy yesterday. However, with this strategy you might need to consider some external factors before you take the plunge. Your calculations will need to be spot on. If construction costs keep rising, then all your effort might be for not much gain.  Here's the disclaimer -  This isn't professional advice. Properties are a big investment and depend on your circumstances - please seek professional advice before making your decisions.

Unlocking the Potential of Investment Properties to Accelerate Your Mortgage Payoff

Unlocking the Potential of Investment Properties to Accelerate Your Mortgage Payoff Investing in property is not just about acquiring assets; it’s a strategic move to build wealth and secure financial freedom. Specifically, in the context of Australia's vibrant real estate market, new investment properties come packed with features that offer considerable advantages and benefits. By integrating the 'Features-Advantages-Benefits' (FAB) framework, this blog will guide you through how these properties can be a pivotal factor in your quest to pay off your mortgage quicker. Features of New Investment Properties Modern Architecture and Design New investment properties in Australia boast innovative design and architecture. This includes energy-efficient buildings, smart home technologies, and layouts that cater to modern lifestyles. Prime Locations Many of these properties are situated in locations with strong growth potential, close to amenities like shops, schools, and public transport, enhancing their appeal to renters. Low Maintenance Being newly constructed, these properties typically require less maintenance, reducing the costs and hassle for investors. Advantages Attractiveness to Tenants The modern features and prime locations of these properties make them highly attractive to potential tenants, ensuring lower vacancy rates and more reliable rental income. Tax Benefits Investors can take advantage of significant tax deductions on new properties, including depreciation benefits, which can improve cash flow and reduce taxable income. Growth Opportunity Investing in areas with high growth potential means the value of the property is likely to increase, providing capital gains in addition to rental income. Benefits Accelerated Mortgage Payoff With the advantages mentioned, investors can use the additional income and tax savings to make extra payments on their mortgage, significantly reducing the loan term and interest paid. Building Wealth By carefully selecting investment properties, investors not only pay off their mortgages quicker but build a robust portfolio that increases in value, providing a solid foundation for future financial security. Cash Flow Management The rental income can provide a steady cash flow stream. When wisely managed, this can cover mortgage repayments on the investment property itself and supplement payments on the investor’s primary mortgage, accelerating the payoff process. Leverage Using the equity from your primary residence to invest in property amplifies your ability to generate wealth and pay down debt faster. As both properties appreciate in value, so does your overall net worth, enabling further investment opportunities or increased contributions to mortgage repayments. Conclusion Investment properties, particularly new constructions in Australia, present a multitude of features that translate into tangible advantages for investors. The strategic incorporation of these investments into your financial planning can significantly benefit your goal to pay off your mortgage faster. It’s not merely about having multiple properties but about leveraging the right features, advantages, and benefits they offer to achieve financial freedom and security. Choosing the right investment property requires careful consideration of your financial goals and market research. With the right approach and investments, achieving a mortgage-free life quicker than anticipated is well within reach for many Australians.