COMMONWEALTH Bank home loans General Manager Clive Van Horen says he’s seen an increase in borrowers making the most of the 75 basis-point drop in interest rates.

“An increased proportion of customers are ahead in their repayments” Van Horen says. “That figure has increased and it’s probably closer to 80 per cent who are ahead of their minimum repayments”
He also says that paying off debt as fast as possible has become increasingly popular among borrowers in recent years and the current European situation is only going to reinforce the same sort of customer behaviour”

“When the interest rate goes down and you keep your repayment amount the same … you are therefore paying off more of the principal and capital portion of the debt.”

For example, a borrower with the average $300,000 mortgage has an additional $47 a month in their pockets following the recent rate cuts. If they pour the entire amount straight into their mortgage they will shave 16 months off the term of the loan.

Overall, there was a general increase in prepayment levels since 2008, with a greater number of accounts well in advance of their repayment schedule.”

This is definitely the way to go if you are able to do so.

QUEENSLAND property owners have also had to deal with new `swimming pool’ laws – will it ever end? I wouldn’t be surprised if one day – with the rising cost of water and ever increasing rules surrounding the ownership of an inground pool – that they may become obsolete, a thing of the past despite the old slogan `beautiful one day, perfect the next’. It seems the very things Queensland is known for – the sunshine, beaches and water – are being costed out of our reach.
If you live interstate and haven’t yet heard, not only do your pools need to be fenced but now you need a certificate (at a cost of course) before you can rent out your investment property. This means as of July 8, 2011, it will be a requirement for the pool owner to get a certificate in place before any lease renewals can be effected.
From December 1, 2010 any property with a non shared pool that is sold must have a valid certificate in place at the worst case scenario 90 days from settlement. However there is a genuine risk as a purchaser or seller that your contract of sale may be unable to complete if you do not have a valid certificate in place in some circumstances. Contracts of sale have fallen over already due to the lack of a certificate being in place.
For rental properties the legislation has again changed recently and there is now an amnesty for properties entering into an accommodation agreement from January 8, 2011 until July 8, 2011. Now, I hope you got all that!

I suggest, although this is by no means advice – you should always do your own homework or seek advice from a solicitor or trusted professional, but if you are seriously looking for an investment property, I would probably seek one without a pool … less hassle, especially in Queensland.

I am often asked questions about what is a Body Corporate and what are we paying for when paying body corporate fees each quarter or annually. Do we have to pay them?

The simple answer is Yes. It is always best to know something about Body corporates before looking at buying into a strata-titled unit or townhouse complex. Knowledge is so important.

The body corporate is the governing body of a unit block and consists of the owners or their representatives.

When you buy a flat, unit or townhouse under strata title you are also purchasing rights to use common areas of the building and land. Along with these rights, come responsibilities and associated liabilities.

Fees levied by the body corporate are placed into a fund and used to carry out repairs and maintenance of common areas which include gardens, walkways, swimming pool, gym, lifts and carpark.

Body corporate members are responsible for decisions about repairs, maintenance and insurance affecting the whole property, not just for their own home.
With the boom in high rise residential apartments, more and more people have to deal with a body corporate. And as many of these developments feature extensive common areas, the cost of body corporate fees has jumped significantly. In some prestige apartment towers, body corporate fees can exceed $5000 a year. For most owner occupiers and investors, however, annual fees range from a few hundred to a few thousand dollars.

If you are purchasing an investment property, fees payable to the body corporate may be allowable as a full tax deduction each year.

If you own a unit but you do not live in it, remember to inform your tenants of the body corporate rules. You must supply them with a copy of the rules when they move in and any new rules as they are made.

Most state and territory government websites offer extensive information on the laws governing body corporates. Also check out the Law Institute website and the Real Estate Institute in your state. Sate consumer affairs department are another good resource.

It is interesting to meet potential buyers of real estate, particularly those who are `investment savvy’, in other words they know what to look for when buying an investment property.

The first thing that is so very important is to ensure any decision made is based on facts and made with a clear, business mind because that is what property investment is all about … it is a business from which you would someday like to make money, or retire on to better your long-term financial outcome. It should NEVER be an EMOTIONAL decision. It should tick all the boxes for INVESTMENT, and not the boxes for WHAT YOU WOULD LIKE FOR YOUR OWN HOME. Don’t worry, this is harder than it looks but I know you can do it.

When seeking to invest, many will turn to building brand new homes because this is the most tax effective way to negative gear. Everything is brand new so depreciation is at a premium for claiming on your tax. Each year thereafter it will decrease until there is very little or no depreciation component left to claim.

Try to buy where there is a big demand for quality new homes and in a high growth area. It stands to reason there will be a high demand for rental properties in this area.

Also, where there are lifestyle attributes such a transport, a good road system, latest technology, employment and shopping centres – these are all needed by families who traditionally lease properties.

I currently have a 3 bedroom townhouse to sell. I actually sold it when it was new about 3.5 to 4 years ago to an investor who has now asked me to sell it for them as they have built a brand new family home and want to start consolidating. The townhouse is smack dab in the middle or the Gold Coast suburb of Nerang. It ticks all the boxes above for locality … that is, it is close to transport, the M1 motorway (north to Brisbane and south to Coolangatta/Tweed Heads), oodles of shops, banks, clubs, and about a 15 minutes drive to the beach at Broadbeach, Jupiters Casino, Pacific Fair, restaurants etc etc.
It ticks all the boxes for investors. I hope that answers some questions for some of you who were asking.

I was asked the other day about NEGATIVE GEARING in regard to property. They were new to property investment and weren’t too sure about all the terminology and what it all meant.

Negative Gearing of investment properties was introduced in Australia as an initiative to encourage income earners to purchase investment properties to enhance the availability of rental property for people who are not in a position to purchase their own home.

The term negative gearing …. Is the capacity to CLAIM losses as Tax Deductions when there is an expectation that in the future PROFITS Will be made!

The shortfall between the rental income and the loan repayment, rates/insurance/maintenance and letting fees are 100 per cent tax deductible in that year.

Deductions in Purchasing Costs include: Valuation Fees, Stamp Duty on mortgage, Bank application Fees and Consultancy Fees.

Depreciation costs including Building Costs (2.5% over 40 years), Fixtures and fittings (20%pa), Inspection Costs (100% write-off annually) and other acceptable costs (as per the tax schedule).

New investors don’t always understand why the government offers these incentives.
However, the obvious advantage to the governments is they do not have to supply housing to meet the total population growth so they are saving millions of dollars in funding plus mammoth administration and infrastructure costs.

To encourage the private sector to invest in property for rental, government have made available extremely viable tax incentives for the investor. It is through these available tax incentives that investors are able to purchase property at very little cost to themselves taking into account what the tenant pays plus the tax incentives. It means even average earners can become wealthy through property investment. According to a pie-chart I saw recently the tenant pays approx 45%, tax office about 41% leaving you with about 14% to contribute to paying off the home. That just gives you a bit of an idea.

I read the other day that a fall in population growth in Queensland has led to a general slowdown in market activity, especially in South East Queensland and particularly during the past 12 months.

Many real estate offices on the Gold Coast were adversely affected by the global financial crisis (GFC) – related trend and I know from talking with my colleagues, many offices struggled to keep the doors open. Some didn’t win that struggle. However, the ones who did get through it, are now benefitting with an increased traffic level although still rather subdued.

Real Estate Institute of Queensland president Dan Molloy said there has been a reduction in sale numbers, an increase in properties on the market, and the days taken to sell a property have increased. I would venture to agree but the buyers and sellers are out there and sales transactions are definitely taking place.

Interesting to note too that Mr Molloy believes investors are waiting for the Brisbane market to hit the bottom of the cycle – if, indeed, it hasn’t already done so.

“I think we shouldn’t be under any illusions that there will be substantial growth in 2011, however, it will present good opportunities for buyers and cashed-up investors in the right place,’’ Mr Molloy said.

While 2011 may not break any property sales records, I’ve heard many say 2012 and 2013 are looking much bright. No doubt this will be buoyed by burgeoning resource activity throughout Queensland which is set to create many new jobs and boost the population once again.

Like Mr Molloy I feel optimistic about the next few years for property. Might be time to look for a good deal while they are around to ensure if the market picks up in 2012/2013 investors will be in a good seat to reap any rewards that may be in the offering. Always do your homework though and talk to the experts in each area of property investment, including the financial side, to ensure it is the right thing for you. Everyone’s situation is uniquely different.

WELCOME to my first EVER Blog. Yes, it is time to join the internet revolution at last! Funny, but I just never quite knew where to start and would you believe I am STILL yet to join up with social networks such as Facebook and Twitter. Not long away now, however!

When someone from the `computer-savvy’ generation explained to me about the way people used blogs to network ideas and information on a daily basis, I pricked my ears up and thought: `This could be something I would enjoy’. A journalist for many years, I have always enjoyed the written word and, as such, believed if I could combine that with my real estate business SB Realty Pty Ltd on the Queensland Gold Coast which specialises in investment properties, then blogging would be something I may really enjoy.

As part of my business, I love to talk about the various attributes of property investing and often come into contact with industry people who offer some really interesting insights into the real estate investment mindset. I would love to share some of this information with fellow bloggers. You never know, it just may help along the way.

I’ve often been told that knowledge is a key to success. For this reason, I just keep on listening and learning and then make more-informed decisions about my future – both personally and when investing. And, there is so much to learn.

I am a great one for setting GOALS, not only with property investing but my entire life. I am practical so firstly set out to succeed with easily achievable goals but I do this with my ultimate goals in mind. I think it is important in the big picture.

Hence, my first goal … is to start `BLOGGING’. Yay, my first big SUCCESS!

Stay tuned for my next blog… it won’t be long, I feel like I am on a roll!