Remaining informed is the key to success.
A New Year is here and with it comes new opportunities.
As we look towards the year ahead, it’s safe to say that the landscape for property investing in 2018 will be a little different to what we have experienced in the past.
One of the key changes is an investor’s ability to secure a loan. In recent years, the Australian Prudential Regulation Authority (APRA) have implemented measures to slow investor lending. In some cases, this has resulted in investors requiring larger deposits to meet loan requirements, interest only loans are more difficult to obtain and investors are currently being hit with higher interest rates.
The latest Housing Finance Statistics from the Australian Bureau of Statistics released in December 2017 indicates that investment housing commitments continue to fall. A 0.5 per cent drop occurred in October 2017 when compared with September 2017. This downward trend appears to be influenced by a slowdown in investment in metropolitan areas rather than regional areas.
Combined regional areas had a slight median value increase to just over $355,000 in the December Home Value Index. This entry level price point and the continued growth in dwelling values could make regional areas worth considering for those looking to invest in 2018.
Given the changes occurring in the property market, it is essential for investors to be as prepared as they can before making their next purchase.
One key factor that can’t be undervalued is research. There is a substantial amount of resources available on property investing that investors should make themselves familiar with.
At BMT we provides a range of valuable tools to assist property investors in crunching their numbers when making investment decisions. One of these tools is our new online platform, MyBMT. MyBMT users can research and monitor key property metrics in any area, they can also access PropCalc powered by homesales.com.au. This calculator allows users to calculate the after-tax cash flow required to hold any property. PropCalc also has the ability to compare the cash flow of multiple properties, save properties and monitor the real after-tax cash flow of your property portfolio.
MyBMT will keep users aware of any new infrastructure or planned developments giving investors a good indication of the growth potential of the area and the expected future return on investment.
Data sourced from MyBMT suggests the average purchase price of a property in Australia is $584,000 with Loan to Value Ratios averaging 78 per cent. An investor looking to purchase a property in this price range will require a deposit of around $128,000. If successful in obtaining a loan, the median interest rates available from a bank or lender that an investor would be looking at is 4.37 per cent.
MyBMT data also suggests that the average rental return for a property in this price range is $450 per week, or an annual income of $23,400 showing an average yield of 4 per cent.
My BMT also allows investors to view, update and download depreciation schedules, and share their live updated schedules with members of their investment team such as an Accountant or Property Manager all in one handy location.
Discovering what deductions are available has become increasingly important following changes to depreciation legislation by the federal government towards the end of 2017. The changes restrict owners of second-hand residential properties from claiming depreciation on previously used plant and equipment assets.
Despite these changes, there are still thousands of dollars in deductions available for investors to claim and obtaining a depreciation estimate from BMT can help investors to bridge the gap in determining a property’s cash flow potential.
The team at BMT Tax Depreciation are here to help with any questions you may have.
or view our full range of complimentary tools at bmtqs.com.au.
We value your continued support and wish you all the best for a successful year ahead.