» Brad Beer

The New Year’s resolutions of a property investor

Bradley Beer — Fri, 16 Jan 2015 00:10:40 +0000

Those who decided to invest in the Australian property market in the past few years are probably feeling pretty good about that decision right now. According to CoreLogic RP Data, home values across the combined capital cities achieved a year-on-year increase of 8.5% by the conclusion of 2014. This was just down from the 9.8% achieved during 2013. However, the market can sometimes move in unexpected ways, so here are my 2015 New Year’s resolutions as a property investor. I will: think outside the box I see it time and time again – investors looking to purchase in the area they grew up in, or one they are familiar with. In doing so, they may potentially be overlooking other areas with much higher growth potential in favour of the comfort of familiarity. This is a mistake I was guilty of making in my earlier years as a property investor. I bought in a town I had lived in for a long time, rather than relying on performance indicators or other such metrics to guide my purchasing decision. This may have resulted in a sub-optimal investment decision. Investors who follow the herd and rush to purchase in the more predictable investor locations can often be guilty of overlooking other possibilities. The lesson learnt this year with the increased activity in rural and regional locations, not traditionally considered typical investor markets, was that it can pay off to consider all possibilities. I will: be ready to act I witnessed many prospective home owners sitting on the fence throughout 2014, undecided as to whether it was a good time to enter the market. Some of these people are sure to be feeling disappointed now, after witnessing the capital gains realised by many others. The naysayers of doom and gloom will always be out there, warning of property market crashes or plummeting property prices. But those who followed the advice of these negative commentators last year are likely regretting doing so. Buying a property can be a big decision, and no one should ever rush to purchase without thinking through their options. But remember, indecision may keep you from what could potentially be a rewarding investment decision. Once you are mentally prepared to act, it’s just as important to be financially prepared. This includes having considered your budget and price range in great detail and seeking pre-approval from your finance provider. That way you will be ready to take advantage of any opportunities which come your way, and avoid the regret of what could have been. I will: get real about my budget Sometimes budgeting can slip off the radar. With the current extended period of historically low interest rates, it can be easy to get comfortable in thinking that extra bit of cash will always be around. However, there are few guarantees in life and it can never hurt to have a bit of money saved up on the side. One way to better understand your true expenditure is to track your spending for one month. By committing to recording every expense for an extended period, you’re sure to uncover any mindless or wasteful spending you may have otherwise been unaware of. This will help you create a budget that is accurate, achievable and useful, as well as assisting you to drop bad spending habits along the way. I will: take advantage of cheap money Speaking of interest rates, it’s fair to say that they’re unlikely to remain at historic lows for long. Though the Reserve Bank has not yet given any indication of an impending rate rise, I would still suggest investors take advantage of the current situation and consider locking in rates where possible. Money is cheap now, but it can’t last forever. I will: enjoy the ride Finally, none of us really know what 2015 will bring. We can’t actually say for sure whether interest rates will rise, fall or stay the same. Nor can we predict with complete certainty the locations or property types which will provide the greatest capital gains or the highest rental yields. My main resolution as a property investor is to simply be ready for whatever comes along in 2015. Enjoy the ride that is property investment. Adaptability and flexibility, with mental and financial readiness to purchase, will be key in the Australian property market heading into the New Year. Happy 2015 to all. Here’s to a prosperous and fulfilling new year. This article was first published here: www.realestate.com.au/blog/new-years-resolutions-property-investor/

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Investor story: Quantity surveyor and tax depreciation specialist Bradley Beer

Bradley Beer — Fri, 11 Jul 2014 06:00:45 +0000

BMT’s Managing Director, Bradley Beer recently sat down with Property Observer author Jessie Richardson to discuss the lessons he’s learned over the past thirteen years as a property investor. Throughout this interesting insight into his strategy Brad details some of the trials and tribulations he’s faced as a property investor including some invaluable tips for new investors. Below is the full transcript of his interview. THE BEGINNING I bought the first property in 2001. It was an old, very rough, four bedroom house in the Newcastle area, with a big shed out the back, which I still own. Then I went straight into a serious amount of renovation. I’ve done a number of renovations over the years, and that was the first one. I was up at whatever hour of the night, after work, whenever possible on the weekends. It was pretty ugly to start with. I did that on the first one, and I did that on the second one. Then I bought some land. At that time in my life I didn’t have much equity. So I bought, I renovated, I revalued. I pulled the equity back out so I could go again. There was a lot of buying and renovating; manufacturing more equity out of the properties by going, “This is a two bedder but I can do this, this and this to make it a three bedder”. The fact is I just didn’t have equity at the time; I didn’t have any money. Hindsight is a wonderful eye-opener, and one thing I might have done differently was to use Lenders Mortgage Insurance on my first property instead of saving 20%, allowing me to buy two properties at the same time. It would have been beneficial in this instance as there was a lot of growth in the New South Wales market in those first couple of years, and in hindsight I realised I missed a chunk of it because I was trying to do things the “right way”. But you learn from these things. On any renovation you budget a certain amount to do works, and even as a Quantity Surveyor, you live in a dream land. There have been mistakes along the way, but did I make any major mistakes and completely ruin anything? The answer’s “no”. Did I find bigger problems than I expected once I pulled the walls off? Yes. You’ve just got to allow for those sorts of things. There are properties I own now that I wouldn’t have bought if I had my time again. That’s because I know more about investing properties now than I did back then. I bought land at a time when I shouldn’t have. We had the GFC a couple of years later, around the time that I settled. It wasn’t the right time in my portfolio to buy land, based on the cash flow (or lack thereof) it was going to generate. I was speculating and purchased the property on its growth potential, and I had to settle when the GFC hit, which I was financially able to do at the time, but it did tie up equity in something I shouldn’t have bought. Fundamentally, a lot of things I believe about investment haven’t changed. I would probably buy a lot of similar properties to what I have bought, even though hindsight can change things considerably, of course. I don’t have the physical time or the want to go and renovate at the moment, especially not personally. So that changes the cost of things considerably. My position is more comfortable now from an equity perspective and from an available cash perspective. The fact is, one of the keys to investing in property is learning to manage financing properly and having control of cash. I have control of more cash now through my property investing. RENOVATION: A CASE STUDY Property in Newcastle area Purchased in 2006 for $262,500 Two bedrooms One bathroom Spent $25,000 on renovations Bank valuation after renovations $360,000 Rent after renovations $310 per week Current rent $430 per week Current valuation $460,000 I’m not a “put it all on everything” kind of guy. I haven’t really got any properties in mining towns. There’s a risk associated with that. I have the kind of portfolio where I could take some risk now, but I’ve just been too busy to find one. And I think properties in mining towns should not be an early part of your investing, they should be part of your portfolio when you have the ability to take some risk. They certainly have risk attached, but then they have high returns attached as well. You need to learn a lot of things about investing in property before you invest in property. You need to learn how to structure your finance in a way which provides flexibility with cash, as well as control of your own journey or property investing “destiny”. One of my main mistakes was not investing in property earlier, based on my risk profile at the time, due to lack of knowledge. It’s all about gaining as much knowledge as possible as early as possible, learning how to manage financing, understanding what type of property, based on your risk profile, you should be buying and also what you can reasonably afford. I also did a bit of research into property markets, tax and that sort of thing during my university studies. So I understood that is a part of it too. I learned by hanging around the property industry, going to property events to talk about depreciation, reading books and actually learning about the fundamentals. I’ve continued to do that over time. LONG-TERM INVESTMENT Unfortunately Australia, like any other country, can sometimes assume a herd mentality – especially with property investment. Buying in areas that have hot growth but which lack fundamental reasons for that growth to continue is not something that you should do. But we do it in Australia. It’s why we have cycles in property […]

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Depreciation frequently asked questions

Bradley Beer — Fri, 16 May 2014 03:47:16 +0000

80% of investors are missing out on thousands of dollars in cash flow from their investment properties. Watch this short educational video for an understanding of: What property depreciation is What a Quantity Surveyor does and How BMT help ensure that all depreciation deductions an investor is entitled to are claimed. In this video we also cover some of the questions we are commonly asked and how depreciation can benefit you and your clients. Send this link out via email to your property investor clients to help them ensure they are maximising the cash return from their investment properties. You can also see below why we are regarded as Australia’s preferred supplier of tax depreciation schedules.

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