Loading...

Follow Momentum Wealth | Property Investment Consultan.. on Feedspot

Continue with Google
Continue with Facebook
or

Valid

Our Managing Director, Damian Collins, joins the team leader of our buyer’s agency division to answer your key questions about Labor’s proposed changes to negative gearing and capital gains tax:

  • What are the details of Labor’s proposal?
  • How will the removal of negative gearing benefits on established properties impact the wider property market?
  • What strategies should investors be considering both before and after the changes?

Ask the Expert - How will negative gearing changes impact investors? - YouTube

The post Ask the Expert – How will negative gearing changes impact investors? appeared first on Momentum Wealth.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

As the Federal Election approaches, the possibility of a change in government has many investors considering the potential impact legislative changes, and taxation changes in particular, could have on their investment portfolio. Amongst other things, Labor’s election promises include a change to current negative gearing policies and a reduction in the Capital Gains Discount – both of which will hold implications for both the individual investor and the wider property market. In this article, we look at current capital gains rules, when these apply, and how this will change under Labor’s proposal.

What is a capital gain?

A capital gain occurs when you make a profit from the sale of an asset such as an investment property or shares, and is calculated by the value for which you sell the asset minus its cost base (i.e. the initial price you paid for the asset, plus additional costs such as stamp duty, purchase-related costs and disposal costs). Should you sell a property for less than you acquire it, this is known as a capital loss, and could be used to reduce your tax obligations on the gain you make from other investment assets.

What is Capital Gains Tax (CGT)?

When you make a capital gain on an investment property or asset, the profit you make from the sale will be classified as part of your income for that financial year, and will be subject to capital gains tax (note: this is still part of your income tax). For instance, if you earned $115,000 in salary income during the financial year and then sold your investment property at a $100,000 profit after deducting your cost base and weren’t eligible for a CGT discount, your total taxable income for that financial year would increase to $215,000, which would also place you in a higher tax bracket.

This tax applies to any asset you’ve acquired since 20 September 1985. However, there are also a number of instances in which your property may quality for a CGT discount or exemption. It’s also important to note that if you have made a capital loss elsewhere in the same financial year, you can use this loss to reduce your capital gain. Alternatively, if you make a loss but no capital gain, you will generally be able to carry this forward and deduct it against future capital gains.

What is the current CGT legislation?

The amount of CGT you pay depends on a number of different factors, including how long you have owned the asset, how you use it and your marginal tax rate. Under current legislation, if you have owned an investment property for longer than 12 months, you will typically be entitled to a 50% discount on any capital gain you make from the sale. Taking the same example as above, this means that you would only be taxed on $50,000 of the gain from the sale, meaning your total taxable income would reduce to $165,000 and you would remain in the same tax bracket.

However, if the property is nominated as your principal place of residence, you may be exempt from CGT altogether. Only one property can be nominated as your PPOR at one given time (unless you are selling your main residence to purchase another), meaning this typically won’t apply to investors selling an investment property. However, if the property was previously used as a principal place of residence before it was rented out, you may still be partially exempt from CGT. In this instance, the tax will be calculated based on the time for which the property was used for income-producing purposes.

What are the proposed changes?

Should they be successful in the May 2019 election, Labor intend to halve the capital gains discount for all assets purchased on or after January 1 2020. This will reduce the CGT discount for assets that are held longer than 12 months from 50 per cent to 25 per cent, meaning investors will be liable to pay tax on 75 per cent of the capital gain they make from the sale of a property. If we take our previous example, this means that as opposed to a taxable income of $165,000, you would now face a total taxable income of $190,000, which would again set you in the higher tax bracket. However, it’s important to note these changes only apply to properties bought on or after January 1 2020, and any assets purchased before this date will be fully grandfathered.

Find out how these changes will impact your investment strategy

If you would like insights into how changes to capital gains might impact your investment strategy, our Perth buyer’s agents would be happy to discuss your concerns in an obligation-free consultation. However, for tax advice relating to your specific situation, we strongly recommend seeking the assistance of a qualified tax professional.

Momentum Wealth and its affiliated entities are not Accountants or Financial Planners. While all information is provided in good faith, you should seek your own independent advice in relation to all tax matters.

The post Everything you need to know about Capital Gains Tax appeared first on Momentum Wealth.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

Momentum Wealth is delighted to announce our finance broking team have been named state finalists in five different award categories at this year’s MFAA’s Excellence Awards.

  • Customer Service Award
  • Diversified Business Award
  • Residential Finance Broker Award – Ashleigh Patterson
  • Young Professional Award – Ashleigh Patterson
  • Loan Administrator Award – Emma Gray

Hosted by the Mortgage and Finance Association of Australia, the Excellence Awards recognise brokers, broker businesses and staff who have demonstrated exceptional customer service, professionalism, ethics and innovation across the mortgage and finance industry.

The latest nominations follow earlier success for our finance broking division after one of our brokers took home the Editor’s Choice Award at the Better Business Awards in March 2019.

In a year that has presented a significant number of challenges and change for the finance broking industry, we are extremely proud to have been recognised for our commitment to our clients and our dedication to delivering better customer outcomes.

We would like to take this opportunity to thank our clients, referral partners and team members who have helped contribute to this success, and wish our team the best of luck at the awards ceremony in May.

The post Momentum broking team nominated for five MFAA awards appeared first on Momentum Wealth.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

Momentum Wealth is delighted to announce we have settled on the acquisition of 331 West Coast Drive in Trigg following the successful raising for our newest property development syndicate.

Currently occupied by the iconic Yelo Café, the 684sqm site is zoned ‘Local Centre’, with plans underway for a mixed-use development incorporating a commercial tenancy on the ground floor and a limited number of luxury apartments above.

The high level of investor interest received during the raising has served as an indication of growing demand for premium boutique projects in key locations across Perth, as investors continue looking for high-quality projects and investment opportunities that stand out and align with the appeal of the local market.

We have also observed increasing interest in residential property development syndicates amongst investors as they continue to be attracted by the benefits of being able to access high-potential projects and reduce risk.

The recent acquisition plays a key role in our strategy to address rising demand for more diverse housing choice in highly sought-after locations, in particularly boutique apartment products targeting downsizer markets where such housing options are in sparse supply.

A strong holding income from the existing tenancy and the prime coastal location of the site also served as key points of interest during the acquisition process.

News of the development has  already resulted in a number of early enquiries from potential buyers, continuing to reinforce the appeal and viability of such projects from both a buyer and development perspective.

The post Momentum Wealth successfully settles iconic Trigg site in latest syndicate appeared first on Momentum Wealth.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

With Australia’s lending environment undergoing a significant shift off the back of APRA changes and the Banking Royal Commission, Caylum Merrick and Ashleigh Patterson from our finance broking team share their on-the-ground insights on the trends they’re seeing in the wider lending environment, how these changes are impacting buyers, and how borrowers can better prepare to navigate the complexities of the modern market.

Ask the expert - Navigating the lending environment in 2019 - YouTube

The post Ask the Expert – Navigating the lending environment in 2019 appeared first on Momentum Wealth.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

Australia’s lending market has once again found itself at the centre of conversation in recent months, with the release of the final report from the Banking Royal Commission raising new uncertainties as to what the future of the lending environment might look like. Amongst other things, the report brought into question the role of the broking industry – an event which has since sparked overwhelming support for brokers on the part of both consumers and industry professionals, in turn triggering a revision of the report’s initial recommendations. In light of these events, we reflect on the fundamental role of mortgage brokers and why they are more important than ever in today’s lending environment.

Access to more products in a challenging environment

In a lending environment characterised by change and uncertainty, understanding the different options available has become critical for investors. Whilst lenders are typically limited to their own range of loan solutions, established brokers will generally have access to products from multiple different lenders (in some cases, as much as fifty), and will be able to compare these different products to identify the rates and features best suited to an investor’s unique situation and investment strategy. At a time when loan choice has been somewhat limited due to changing lending criteria and tighter serviceability metrics, this tailored approach can be crucial not only in ensuring investors have access to different options and are receiving the best lending solution for their current situation, but equally importantly in ensuring they have the flexibility they need to progress with their investment goals.

Loan structuring that supports your long-term needs

Whilst using a broker can impact the number of products available to you, who you choose to secure a loan can also hold key implications on the way in which your lending portfolio is structured. Whilst lenders will typically look to structure loans in a manner that mitigates risk for them, a good broker will look towards structures that minimise risk for the borrower. This can be crucial in helping investors avoid potentially restrictive and high-risk loan structuring models such as cross-collateralisation, ensuring they have maximum borrowing capacity to support the expansion of their portfolio in future.

With many buyers already facing reduced borrowing capacity due to tighter serviceability metrics, having the right loan structures in place and being able to access credit has become critical in helping investors progress with their investment goals. However, it’s important to note that even brokers can structure loans unfavourably if they don’t have the right knowledge and expertise to understand and support their clients’ needs. Engaging a specialist broker with a strong knowledge in investment finance can therefore be crucial in helping investors establish the right foundation to build a successful property portfolio.

Important advice when it helps

As an investor, how you interpret your financial capacity (i.e. your ability to afford repayments) won’t always align with the lender’s assessment of your financial situation. Lenders take into account a multitude of different factors when assessing a borrower’s eligibility for a loan, with income and living expenses really only scratching the surface. With banks undertaking significant reviews of their lending criteria in the aftermath of APRA changes and in the run-up to the Banking Royal commission, keeping up with market fluctuations and understanding how these changes impact borrowing capacity has become increasingly difficult for investors.

However, brokers work with specialist software on a daily basis that provides them with access to the latest information from lenders. These market insights enable them to provide support not just during the lending process, but also in the lead up to submitting a loan application. Whilst these insights themselves can prove invaluable in helping borrowers prepare for a loan, most brokers will also be able to carry out a pre-approval process to assess the likelihood of a loan submission being accepted, in turn preventing multiple loan rejections which could leave a bad mark on an investor’s credit record.

Ongoing support to navigate the changing lending market

Whilst the support brokers provide prior to loan applications has become incredibly important to many investors in today’s changing lending environment, it’s the ongoing guidance and advice provided by brokers during and after the lending process that has become pivotal in helping borrowers navigate the complexities of the modern lending market. From researching the market for the appropriate lending solution to following up with lenders and addressing issues throughout the submission process, brokers have come to play an incredibly important role in guiding borrowers through what has become an increasingly complex and hands-on process.

This support will often extend far beyond the transaction itself, with brokers in many cases playing a fundamental part in the ongoing optimisation of an investor’s property portfolio through regular loan reviews, cash flow strategies and proactive advice on market changes. This guidance can prove crucial not only in helping investors navigate the market, but in putting them in a better position to achieve their property wider investment goals in future

As specialists in property finance, Momentum Wealth’s finance division are dedicated to providing our clients with the advice, support and knowledge they need to progress with their investment goals. If you would like to discuss your property needs with one of our consultants or want further advice on the changes impacting the lending environment, our mortgage brokers would be happy to discuss your needs in an obligation-free consultation.

The post 4 critical reasons why using a mortgage broker is more important than ever appeared first on Momentum Wealth.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

With Perth’s rental vacancy rate reaching its lowest level in nearly six years and competition picking up amongst prospective tenants, we’re seeing increasingly optimistic signs for Perth’s rental market. Whilst these initial improvements are yet to translate into rental price movements across the board, these transitioning markets can be a crucial period for investors looking to better position themselves to leverage future market opportunities. With this in mind, here are some essential tips on how to maximise rental yields during a dynamic market.

Understand what’s driving tenant demand

It’s one of the fundamental principles of property investment that demand drives growth, and the rental market is no different. In order to achieve the best rental yields in any market conditions, it’s important to firstly understand the factors driving tenant demand. Target markets will often vary from area to area, so researching comparable properties in the local market is a good starting point when identifying potential features to boost your property’s own rental appeal. For instance, is there a premium on rental properties with built-in storage space or air conditioning units? Your property manager can be a great source of information when it comes to understanding tenant expectations, and a proactive property manager should be able to advise you on cost-effective strategies and value-add recommendations to enhance your property’s rental performance.

Keep up the appeal

In a transitioning market, not all property investors will be realising rental growth at the same time. However, in order to put yourself in the best position to leverage market opportunities, it’s important to look for ways to improve the immediate rentability of your property, while also enhancing its long-term appeal and performance. Making these changes proactively rather than holding off until your property is worse for wear could not only improve the appeal of your property to new tenants, but also maximise tenant retention by attracting renters that are more likely to view your property as a long-term solution rather than interim accommodation. Given the costs of replacing tenants and re-marketing properties on a regular basis, retaining good tenants can be just as important as achieving strong rental rates when it comes to maximising cash flow and achieving the best possible rental returns.

Set the right rental rate

It’s a common misconception in the real estate industry that maximising rental yields is synonymous with increasing rental rates. In reality, however, achieving the best results for your rental property often comes down to setting the right rental rate in the first place. Whilst increasing rents, when the market allows for it, is a great strategy for improving cash flow, doing so outside of market movements (or similarly not adjusting expectations in line with the market) can prove more costly for owners in the long run if it means facing lengthy vacancy periods as a result.

Consider including additional clauses in the rental contract

If you’re anticipating future improvements within the rental market but are yet to see a significant uplift in market rents in the area surrounding your investment property, your property manager might recommend including additional clauses in the leasing contract that will allow you to review or increase your rental rates further down the line. This is a great strategy to ensure your property continues to align with wider market movements, but it’s important to be cautious of excessive rent rises and the impact these might have on your relationship with tenants.

Proactively manage leases with seasonal influences in mind

Much like the wider sales market, rental demand will often fluctuate based on factors such as time of year and seasonality, with some seasons lending themselves to higher levels of tenant demand than others. As an owner, this may mean reducing your rental expectations in low-demand periods (such as during the winter months) to ensure your property is leased as quickly as possible and avoid costly vacancies. Whilst one or two-year leases are often considered the industry norm, timing lease renewals to fall in higher demand periods can help owners achieve higher rental yields and avoid untimely reductions that set their property below market rents.

Speak to a value-add property manager

As an investor, it’s important not to underestimate the crucial role property managers can play in maximising the performance of your property portfolio. A good property manager won’t just manage the day-to-day maintenance of your properties and handle tenant relationships, they will be able to make strategic recommendations to proactively enhance the performance of your properties. The right property manager can be an invaluable asset when it comes to identifying value-adding opportunities, understanding the local market, and recommending clauses to ensure your property remains aligned with market demand.

Momentum Wealth is a full-service property investment consultancy dedicated to assisting investors in all aspects of their property investment journey, from financing through to property acquisition and property management. Visit our website for more information on our property management services.

The post Six key strategies to maximise your rental yields appeared first on Momentum Wealth.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

As one of the most popular investment asset classes in Australia, property is an incredibly exciting industry to be a part of. However, the real estate sector can also be subject to a lot of misinformation. With such an abundance of advice and market news out there from different sources, deciphering useful advice from misleading information can often seem like an impossible feat, especially if you’re entering the market for the first time or investing in an unfamiliar location. In this article, we address five of the biggest misconceptions about investing in residential real estate.

Australia only has one property market

A lot of people will already be familiar with the concept of the property clock, but one of the most common mistakes buyers and market commentators make in the real estate industry is applying property market statistics to Australia as a single property market. This generalisation is something we often see in the media and news reports, but Australia is in reality home to a vast number of property markets, all of which are at different stages of their cycle and subject to different market drivers. Take Sydney and Melbourne as an example – whilst these capital city markets are both experiencing significant levels of decline after coming off the peak of their property cycles and entering their downswing phase, we’re actually seeing the opposite scenarios in Perth and Brisbane, with these markets at the bottom of their cycle and showing early indicators of recovery following a period of decline.

Whilst often impacted by the same national regulations (something which is in itself a subject of dispute amongst many property experts), it’s important to note that each of these markets and economies are also influenced and driven by different industries. For instance, whilst Perth and Brisbane are largely driven by the resources industry, which means their property markets tend to perform better when the resources sector is performing strongly, Sydney and Melbourne are largely founded on the financial industries. As such, the latter tend to be more influenced by movements in the financial sector, as was seen with the Global Financial Crisis and the negative impact this had on these capital city markets.

All properties move in the same direction as the market

In a similar vein to the property cycle, another frequent misperception in real estate is that when a market is growing (or indeed declining), all properties within that market will be behaving in the same way. However, whilst statistics such as median house price can be integral in providing an indication of the overall performance of a city and the direction in which a market is headed, they don’t necessarily reflect the performance of every single property and suburb within that location. Even within separate markets, individual sub-sections will be at different stages in their property cycle and experiencing growth at different rates.

Perth has been a prime example of this in recent times with the emergence of its two-speed market. Despite the overall perception that the market is in a state of decline (which is true of the median house price and oversupplied outer suburbs), areas of the city’s sub-regions have been recording price growth for over a year, due largely to rising demand from trade-up buyers. For this reason, it’s vital that buyers conduct in-depth research not just of a wider area, but also of individual suburbs and properties when looking to leverage market opportunities and (equally importantly) minimise their investment risk.

Sticking to what you know is always best  

It’s often natural instinct to look towards areas you’re already familiar when investing in real estate. This can understandably be somewhat of a comfort zone for buyers as it will often feel like the safer approach given they already have a strong knowledge of these markets and their features. However, limiting property research to such a small radius can often lead buyers to miss out on better investment opportunities elsewhere. In fact, by the time investors have narrowed down their search to properties that align with their budget, expectations and wider investment strategy, they may be left with a significantly lower number of properties that actually meet their criteria. As tempting as it may be for buyers to stick to what’s familiar, expanding this search radius could help investors identify areas and markets with higher growth potential, and potentially find more lucrative investment opportunities as a result.

Property is a set and forget investment

Whilst it would be great to be able to purchase a property and sit back whilst that asset increases in value, this also isn’t a realistic approach for investors looking to achieve the best possible outcome from their portfolio. Realising the full potential of a property isn’t just about selecting the right asset in the first place (although this is incredibly important), it’s also about effectively managing and monitoring that asset to enhance the property’s performance and ensure it remains aligned with market demand.

Proactively monitoring the market for value-adding opportunities, managing tenant relationships effectively and identifying strategies to maximise a property’s rental yields are all crucial in optimising an investor’s portfolio and enabling them to make the most of market opportunities. However, this approach also requires time, in-depth market knowledge and detailed research – something which often isn’t achievable for buyers with other full-time commitments. Finding a property manager who understands and actively supports these needs can therefore be crucial in helping investors maximise the long-term value of their property and enhancing the performance of their overall portfolio.

Buying cheap is always a good way to enter the market

Purchasing a cheap property to enter the market can be a very tempting strategy for first-time buyers or novice investors. However, whilst budget is a crucial factor to consider, purchasing a cheap property to get into a “better” suburb or enter the property market sooner can also be a risky approach, and one that won’t necessarily pay off in the long run. These “bargain” deals may seem great on the surface, but it’s important to remember that in most cases, a cheap property is cheap for a reason – because that’s what buyers are willing to pay for it. In many cases, this lower price point can also signify a wider problem with a property – perhaps noise pollution and traffic from a nearby highway, or lack of demand from buyers and tenants.  Whilst purchasing a property within one’s means is incredibly important, it’s vital buyers also consider factors such as local supply, rental demand and nearby growth drivers to ensure they’re selecting a property that also supports their wider investment strategy.

Identifying the right advice amongst all the information that surrounds the property industry can be challenging for buyers. However, surrounding yourself by the right professionals and engaging a team with an in-depth knowledge of the local market can help you navigate these complexities and ensure you’re making informed investment decisions that support your long-term goals.

If you would like some expert advice on your next property investment or  would like more insights on the topics discussed above, contact our team to organise an obligation-free consultation with one of our property investment specialists.

The post The big misconceptions about investing in real estate appeared first on Momentum Wealth.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

In light of the recent release of our Property Investor Survey Report, the team leaders of our buyer’s agency and finance broking division discuss some of the key findings of the survey, including the new investment hotspots, the impact of changes in the lending environment, and emerging investment trends. To download the key findings report, visit: http://bit.ly/investorsurveykeyfindings

Ask the Expert - Property Investor Survey Key Findings - YouTube

The post Ask the Expert: Property Investor Survey Key Findings appeared first on Momentum Wealth.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

The latest Momentum Wealth Annual Property Investor Survey has shown that investor interest is continuing to shift away from the Sydney and Melbourne markets, with Perth and Brisbane emerging as the top investor preferences.

The survey, which interviewed 483 investors across Australia, showed that 36% and 33% of respondents highlighted Perth and Brisbane as the best places to invest respectively.

A combination of affordability and potential growth opportunities likely contributed to higher levels of investor interest in the capital city markets, with both markets offering strong levels of affordability compared to Sydney and Melbourne.

Both markets have also been showing positive indicators that long-term growth could be on the horizon, with Brisbane already experiencing overall price growth and areas of Perth performing strongly as the Western market enters its long-awaited recovery.

Hometown confidence hits a high in WA

Whilst Perth was considered the best place to buy amongst respondents, the survey also highlighted a considerable rise in home confidence, with an overwhelming 70% of WA investors selecting Perth as the most appealing capital city to invest in.

This marks a further 4.5% increase from last year’s survey, when the proportion of WA respondents preferring Perth spiked a staggering 29% from the year prior.

This renewed confidence is already leading to price growth in some areas, with increased activity from trade-up buyers resulting in significant price growth in Perth’s central sub-region across the past 18 months.

Lending restrictions still a barrier

Whilst investors are recognising the potential benefits of entering the market, the survey showed that lending restrictions continue to pose a barrier for entry for some, with a number of investors finding increasing difficulty in securing finance in light of recent APRA changes and the Banking Royal Commission.

The survey showed that 67% of respondents had reviewed their loans in the 12 months to November 2018, up 8% on the previous year’s results – a likely response to the challenging lending environment.

Although Australia has seen record low interest rates in recent years, many investors have been impacted by changing lending restrictions. And with many banks now raising their interest rates outside of the RBA cycle, a growing number of buyers are considering the potential benefits of fixing their loans.

Negative gearing set to impact majority

The potential changes to negative gearing proposed by the Labor government pose a further source of uncertainty for some investors, with 61% of survey respondents revealing they have a negative cash flow portfolio.

Whilst those who rely heavily on the tax benefit will need to be mindful of the impact of such changes in future, investors are urged remain to focused on the fundamentals during the property selection process, remembering that these changes are not retrospective and tax offsets only form a small portion of a property’s overall returns.

Those who are unsure of the potential impact of recent or prospective changes should seek the support of a professional and independent advisor to understand how best to capture market opportunities and mitigate investment risk.

The findings were observed from Momentum Wealth’s Annual Property Investor Survey, which captures the latest trends impacting the sentiment of Australian investors. If you would like to discuss the findings in more detail, contact a member of our team to organise an obligation-free consultation. Alternatively, download a copy of the report’s key findings to read the report in more detail.

The post Perth and Brisbane emerge as top choices for property investors appeared first on Momentum Wealth.

Read Full Article

Read for later

Articles marked as Favorite are saved for later viewing.
close
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

Separate tags by commas
To access this feature, please upgrade your account.
Start your free month
Free Preview