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Real Estate

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by

Jonah Lorenzo

on 3 November 2014

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Transcript of Real Estate

By: Jonah Lorenzo
Drummoyne unit
+
-It is in the front of the complex
-Right next to the water and prime park
-Walk to ferry
-Storage e.g. kayaks
-Near city transport
-Close to new/ newly renovated
-Close to a boat ramp for those who deliberately live their for the sea
-Great for those who work near/in the city
-For those who want a modern lifestyle





-
-Not in any school catchments
-Will be noisy during weekends and holidays

+
- The property is a newly renovated house
-It is situated on a lot of land compared to other houses especially in an area which is heavily populated and has high socio-economic status
-Willoughby girls high school catchment
-Underfloor heating
-Only one story which is good for families that have (a) young child/ren
-A traditonal house
-Good environment as it's located in leafy surroundings


-
-It's not near any public transport such as trains or bus stops


Drummoyne Unit $900,000
Chatswood House $1,781,000
Real Estate
Office Property:
- High Operating cost - Returns vary depending on market - Largest & highest profile property type - Operate well because of high demand - Most popular investment type
Retail Property:
- Wide variety of sizes - Some have an 'anchor', a re-known retailer is used to draw in customers - Perform the best in economies with high retail sales - Most stable returns
Industrial Property:
Less average investment, management and operating cost - A 'necessary' investment for real estate investors - Many factors to consider when investing. i.e. location, covered space and specialization etc.
Family Residential Property:
- Returns are the most stable out of the four - Occupancy of investment is high & market will not be affected by the loss of one - Some operating costs are passed on to tenants but this rarely happens so investor(owner) can control the pricing of operation costs
Types of Real Estate Investments
Different types of Real Estate Investment
+:
-
consistent total returns;
(capital growth and income)
-Diversification value; positive effects on asset allocation in portfolio
-
Yield enhancement;
higher returns for portfolio risk(achievements). Real estate being added to your portfolio can decrease risk while upholding the same returns.
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Inflation hedge
; Real estate income increases faster in inflationary environments and helps the investor sustain real returns
*
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Ability to influence performance;
investors can add or fix things in the investment that will help increase its value in the market and it is relatively easy as an investment in real estate can be easily controlled

Real returns:
The annual percentage return realized on an investment, which is adjusted for changes in prices due to inflation or other external effects. This method expresses the nominal rate of return in real terms, which keeps the purchasing power of a given level of capital constant over time. (investopedia.com)
Features
-
-costly to buy, sell, maintain
-requires property and strategic management
-more 'hands on'
-most real estate investments (REITS) grow at a slower rate compared to that of e.g. Wall Street.
-dividend payments not guaranteed
-real estate market prone to periodic decline
-legal and financial exposure
-your cash will not be easily accessible
There are other Real Estate Investment such as hotels, mini storage, parking lots and seniors care housing. But these types of investments are less common compared to retail property, family residential property, industrial property and retail property investments.
Definition
Chatswood house
Real Estate:

Property consisting of land or buildings
-Oxford Dictionary
Real Estate is an investment option as it generates more income. This means buying a house for the sole purpose of renting it out to other people to generate more income.
Features:
NOTE:
Blacktown Unit $420,000
Blacktown unit
+
-Close to Blacktown Train Station
-Near Westpoint shopping centre and Blacktown CBD
-10 minute drive to Wet'n'Wild water theme park
-Great for those
-Near Blacktown Boys & Girls High School
-Large Aboriginal, Indian, Filipino,English and Irish community
-Affordable living


-
-High crime rate (Assault and theft)
-Not as safe compared to other suburbs


Why do houses and units vary from area to area?
The values of these houses and units vary from area to area depending on how populated the area is and generally how close it is to the city, airports and even beaches. Location is one of the most important factors as to why houses and units vary in pricing in different areas. Houses and units in richer areas such as Chatswood, Hurstville and Marrickville tend to have better facilities such as leisure centers, schools, area and are more populated compared to other areas that have lower pricing for houses and units. Areas such as Ingleburn, Cabramatta and Blacktown have cheaper houses because these areas are further from Sydney(city), airports and beaches. Also because these areas may not be as populated as richer areas because of that real estates sell/rent houses and units at a cheaper price as an attempt to attract individuals, couples and families into the area in hopes of populating that area, increasing the value of the houses and units. Once these areas are more populated the pricing of these houses will eventually increase to only attract those who are willing to pay a high price for houses or units. Houses tend to be more expensive as these houses usually occupy a certain amount of land and units share facilities such as gym and pool with each other and they also have no land and therefore more cheaper. The Chatswood house for example is $1.781 million because of its location being close to the city, quiet environment in a populated area, large land it occupies, newly renovated and it being a traditional house. The Ingleburn house even though seemingly bigger is sold at only $585,000, $1,196,000 less to the Chatswood house. Not only is this house bigger but it has more land that goes with it. It's also cheaper because it's not close, leisure centers, train stations, facilities are not as good and not as new. As with the houses the Drummoyne Unit is expensive because of its location, being right next to the beach, shopping centre, city and airport, which increases the value of the unit. Because of the increasing 'modern lifestyle', individuals and families are now opting to live in units/apartments because it's cheaper, easier to clean and because of the increasing population. Whereas units in areas like Blacktown are cheaper because the area is known to have a high crime rate, not as safe as other suburbs, not close to the city, airport and beaches.

- Min. & max. of 3 bedrooms
- Min. & max of 2 bathrooms


EXPENSES

Initial Costs (Payment(s) done with the purchase of the property)

Once off payments

- Deposit: 10% of asking price should be paid. Mortgage insurance is to be payed for borrowing over 80% of the property value.
-Loan Estalishment fees: to cover costs of setting uo your loan various business intistutions will charge an 'establishment fee'.
-Mortgage Insurance: Some banks will require you to pay 'mortgage insurance' if a deposit less than 20% of the property was deposited.
-Connections: For services and utilities needed for the new tenants at your new property.
-Stamp Duty: Stamp duty costs vary from state to state as well as purcahse property. This fee is generally more expensive for investment properties rather than a principal home.
-Legals: This fee is for the transfer of ownership. This will cost usually $600-$800 and is generally done by solicitor or conveyancer.


Ongoing Costs (Payments made even after purchase of property
)

Annual payments

-Insurance: Insurance such as 'Building & Landlord' insurance will include unexpected accidents that will involve repairs and tenant problems. (i.e. damage to property or contract violations like not paying rent).
-Mortgage fees: Loan for your property may need to be required to pay a loan account fee.
-Land tax: A tax collected from owners of land. This tax varies from country to country and from state to state.
-Council rates/government text: This cost varies for different places and owner of the property(landlord) wil generally be responsible for this cost.

Quarterly payments

-Body corporate fees: Only applies to landlords with properties on shared land such as townhouses and blocks. Maintenance of common area will be included.

Monthly payments

-Mortgage repayments: As landlord, responsibility of filling up shortfall of tenant fees to pay off any repayments needed.
-Utilities: Cost of utilities and services, that have different metering systems
-Property Management: Incase a professional has been hired to manage and sort out our daughters, their fees should be consideren
,

Varies

Repairs: Cost of maintaning property





http://advice.realestateview.com.au/buying-investing/beginner-guide-to-investing/2/

Ingleburn House $585,000
200m Radius
-Birkenhead Point Shopping Centre
-King Georges Park, Bridgewater Park & Brett Park
-Drummoyne Swimming Centre
-The University of Sydney - Rozelle Campus
-Sydney Secondary College Balmain Campus
-Snapper Island

200m Radius
-Bales Park & Beauchamp Park
-Bus stops
-Atarmon Train Station
-Chatswood Train Station
-Westfield Chatswood
-Chatswood Oval


200m Radius
-Ingleburn High School
-Treelands Walk
-Ingleburn Diners
-Digger Black Reserve
-Passfield Park
-Sackville St Public School

-Blacktown Train Station
-Blacktown Officeworks
-Blacktown RSL Club
-Blacktown Girls High School
-Blacktown Showgrounds
-Francis Park
-Westpoint Shopping Centre
-Blacktown City Council Libraries
-Blacktown Boys High School
200m Radius
Ingleburn House
+
-Large land (722 square metres)
-Good environment, situated in a quiet area
-Space that can be turned into a 4th and 5th room, study or rumpus
-Ideal for families with small children
-Affordable houses
-Affordable standard of living
-Crime rate has dropped within the last 10 years
-Spacious area/suburb
-Good sporting grounds

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-Schools don't perform as well, kids of families may want to consider going to another suburb for better schooling.
-Not near any bus stations or Ingleburn train Station
Full transcript