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Increase Rental Income and Deductions

Australia’s renovations industry appears to be profiting from weaker economic conditions and tighter lending standards, with alterations and additions to residential buildings hitting a historic high recently.

Australian Bureau of Statistics December Building Activity data showed a 6.6 per cent increase in alterations and additions in 2018, with renovation spending reaching $2.27 billion in the December quarter.

This indicates homeowners and investors seeking to improve capital values and increase rental income have been renovating their properties, rather than purchasing anew.

It’s expected this boom will continue, as Master Builders Australia has forecast homeowners and investors will spend $8.8 billion annually on renovations over the next five years.

Renovations can significantly increase rental income. According to the first CoreLogic Quarterly Rental Review for 2019, gross rental yields are currently around 4 per cent. However, in some scenarios, renovators can achieve a 13 per cent return on their renovation investment.

Renovation case study to increase rental income

Let’s look at a case study where an investor completed a $60,000 renovation.

Here is the investor’s scenario before and after completing the renovation.

  • Original purchase price (before renovation) = $410,000
  • Rental income per annum prior to renovation = $18,720
  • Total renovation spend (completed in 2018) = $60,000
  • Property value on completion = $565,000
  • Rental income per annum after renovation = $26,520

In 2018 kitchen, bathroom and other cosmetic renovations were made. Newly installed plant and equipment assets included an oven, cooktop, dishwasher, rangehood, carpet, blinds, lights and a split-system air conditioner. The investor also installed fixed and structural items such as kitchen cabinets, benchtops, a bath, toilet and tiles.

A post-renovation valuation found the property was now worth $565,000. A property manager’s rental appraisal also found the owner could earn $510 per week.

Below is the investor’s tax scenario before and after the renovation.

Depreciation scenario before and after $60,000 renovation Graph

Source: https://www.bmtqs.com.au/maverick/mav-46-renovations-increase-rental-income-and-deductions

Prior to the renovation, the investor was experiencing an annual cash loss of $1,207.

However, after renovations their weekly rental income increased by $150, achieving 13 per cent yield on the renovation cost. They also turned their annual cash loss into a positive cash flow of $4,054, an additional $5,261.

Renovation tips and traps

While this example shows the great results possible, it’s important to be aware of some tips and traps before committing to a renovation project.

Scrapping can increase deductions when renovating

As part of any renovation, old assets will be discarded and new assets will be installed. When removing structures or assets from an investment property, existing assets may have a residual depreciable value. A process known as scrapping should be applied to ensure undeducted entitlements are claimed.

Asset selection when renovating affects depreciation deductions

Choosing which assets to install can also make a difference to what can be claimed once a renovation has been completed.

Items that serve similar purposes, such as flooring, depreciate at different rates. Carpet installation with a $2,000 cost will result in $500 in depreciation deductions in the first full year compared with floating floorboards and tiles of the same cost, which result in $267 and $50 in deductions respectively.

Avoid overcapitalising when renovating

Investors should stick to a budget when selecting items as it’s easy to overcapitalise. This is particularly relevant in today’s property market, where according to CoreLogic dwelling values fell by 7.4 per cent from their peak in October 2017 to the end of March 2019.

As many capital cities have experienced price declines, investors need to be wary of recouping the dollars spent during a renovation, particularly if they are planning the work to help sell their property at a higher value or raise the cost of rent to increase rental income. Sticking to a budget is crucial.

Seek advice prior to starting work, particularly if living in the property while renovating

A specialist Quantity Surveyor can provide advice on potential deductions available including whether depreciation legislation changes passed in November 2017 have any impact on your personal situation.

If you’re living in a residential property whilst completing a renovation, work completed can impact future deductions should you rent the property later. Newly installed plant and equipment will be considered previously used if items are added to a residential property while living there. BMT data shows one in four people lived in their property before renting it out in FY 2018/19.

There are exceptions. Substantially renovated properties and capital improvements to fixed and structural items aren’t affected. Even if fixed and structural improvements were completed by a previous owner, a new owner can still claim these items in the future.

Source: https://www.bmtqs.com.au/maverick/mav-46-renovations-increase-rental-income-and-deductions

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New Year Annual Home Maintenance Checklist

Monthly

  • Inspect, and possibly change out home vacuum filters. Many experts will say to change the filters monthly, but that’s not always necessary. For smaller families without pets or allergies, you’ll likely be okay changing the filters every 2-3 months. If the filter is dirty, change it out, otherwise inspect it again next month.
  • Clean kitchen sink disposal. There are a number of ways to do this, but the handiest and best all-around solution seems to be vinegar ice cubes. Put some vinegar in an ice tray and let it freeze, then run the ice cubes through the disposal. It freshens it, but as a bonus, ice sharpens the blades. You’re welcome.
  • Clean range hood filters. If you’ve never thought of doing this, you’re in for a real “treat” when you get that filter off the hood to clean it for the first time. Simply use hot soapy water, let the filter sit for a few minutes, rinse it off, and you’re good to go.
  • Inspect your fire extinguisher(s). We’ll assume you have and know how to use an extinguisher. This inspection doesn’t require much: ensure it has easy access (not being blocked by a garbage can or anything else), that the gauge shows adequate pressure, and that it has no visible signs of wear and tear.
  • Pool cleaning and maintenance. Pools can be costly if not cared for properly. Please ensure cleaning is done regularly and water tests are conducted to ensure the PH levels are correct. Stay on top of your pool checks to enjoy your pool year round!

Quarterly

  • Test smoke detectors. Another simple task; your detectors should have a “test” button. If the alarm sounds, you’re good to go. If not, replace batteries immediately and test again. If it still doesn’t sound, it’s possible there’s simply corrosion on the battery terminal, and it won’t detect new batteries. Please contact our office immediately.
  • Test garage door auto-reverse feature. Test every month by placing a 2×4 on the ground where the door would close. It should reverse after a second or so when the door hits the wood. Also test the photo-electric sensors if you have them by placing something in front of them (not your body). If the door doesn’t immediately go back up, you have a problem.
  • Run water and flush toilets in unused spaces. This mostly applies to guest bathrooms, or any other sinks/water sources you don’t use on a regular basis. The idea is to prevent grime or any other kind of build up. Regularly running a little bit of water through will prevent this.

Biannually

  • Give your house a deep clean. Take one Saturday every six months with your whole family, and give the whole house a proper deep clean. Appliances, windows, dusting every nook and cranny etc. Keeping things clean and not letting dirt/grime/dust build up over years and years will help keep your home in tip-top shape.
  • Vacuum your refrigerator coils. The fridge can use up to 15 percent of your home’s total power, so you want it running as efficiently as possible. Over time, the coils get dirty and your fridge requires more juice. You can save up to $100 a year by doing this, and it’s not at all a difficult task.

This information was sourced from: https://www.artofmanliness.com/articles/keep-your-house-in-tip-top-shape-an-incredibly-handy-home-maintenance-checklist/

Visit their site for more handy tips!

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Spring Sales Season! Are You Ready?

It’s spring. The sun is shining, the flowers are in bloom, the birds are chirping, the grass is green, and you are feeling considerably more cheerful as the cold months have come to an end. With the bloom of the jacarandas comes a reinvigoration in the property market for those on a house hunt. Not only does spring give you a great excuse to declutter and commence a spring clean, but it also provides the perfect environment for an open home.

If you are considering selling your property this spring and wondering how you should prepare your home to sell in the property sales boom, we’ve compiled some useful tips to ensure you’re ready!

Bedside table due for decluttering

Declutter

Probably the easiest and cheapest alteration you could make to your home is to declutter it.
Reducing the number of personal items filling your home not only allows for a cleaner feel but it also allows visitors to envisage themselves living in the property, not to mention the wonders it does for your closet and cupboard space!

 

 

Image of owner cleaning kitchen floor with mop

Embrace the spring clean

Ensure your windows and mirrors are sparkling, wash the curtains and blinds, have your carpets professionally cleaned, polish tap fittings, hardwood floors and door knobs, rake the lawn and trim the bushes. Attention to detail is vital in making your home look its best (and only requires a bit of one-on-one time with the dustpan and brush)!

Image of flower on the bed side table

Set your home apart from the rest

The finer details might not be glaringly obvious to a buyer; however, these small touches are a cost-effective way of setting your home above other options on the market.

Set out fresh flowers or freshly clipped lilac branches, integrate towels, throws and pillows in complementary colours throughout your house, offer an outside mat for guests to clean their shoes, fill the sink with ice to chill bottled water for visitors or set out individually wrapped treats in cellophane or ribbon. Each of these small gestures are not only cost-effective but will ensure your guests feel at ease in your home.

Use a Real Estate Agent

 

As buyers and sellers spring into action, the property sales race is likely to be very tight. Utilising a real estate agent will help you to be at the front of the pack. At Arrive we have an amazing team of professionals ready to value your house, suggest a niche method of marketing tailored to perfectly suit you and you home, and to offer you a suite of services to mold your house into an irresistible property.

If you are interested in finding out more on how to sell your home this spring, please feel free to contact us at Arrive. We have a number of professionals with a wealth of skills and knowledge, ready to help you in your sales journey!

Contact

Arrive Team: 3374 3737

Trent Ray – Sales Agent: trent@arrivehome.com.au

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How to Paint over a Patched Wall

Painting over a wall patch so it looks invisible isn’t easy—ask anyone who’s tried it. It needs to be done carefully in order to look good.

As a property manager or landlords, we have all seen this too often:

    1. Paint ripped off when tenants are trying to remove double sided tape wall hooks
    2. Doorknob smashing hole in the wall.
    3. Cracked Walls
    4. Nail Holes

Can you repair this by just painting over the spot? Well, it depends. Will anyone ever looks at it? Sorry, but it will be painfully obvious what you did. So this depends on how critical the observer is. If I was your landlord and I saw a poorly done patch when you were moving out, I’d mutter a few obscenities under my breath, then quietly mention to you about how you just forfeited your bond unless you have it fixed.

The problem is that paint won’t match that well. The colour difference will be obvious. Plus, due to the hole in the surface, there will be small shadows that will be quite obvious, so you will need to fill in the surface so it is smooth, BEFORE painting. Anyway, if you tried to paint in just that small area with a brush, one would easily see the texture differences from painting with a brush compared to what was an original roller applied paint surface.

However, maintaining the rich colour and smooth finish of your home’s interior doesn’t mean you have to repaint the whole room to fix the dents, dings, scratches and marks that can, over time, mar your walls’ surfaces.

By using the proper technique and the right colour, you can touch up select spots of your wall paint, and keep your walls looking flawless and freshly painted again.  however, in most cases, it’s easier just to repaint the entire wall.

How Nice Would it Be to Work With Us?

Paul De Groot
Project Manager
Premiere Painters & Contractors Group
M:0438 783 739
www.premierepainters.com.au
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Storm Season Is Approaching… Is Your Home Storm Ready?

With Storm Season approaching, we have compiled some tips to ensure you and your home stay safe
this summer.

Gutters

During storm season in Brisbane, clogged gutters are some of the most common culprits of damage to
property. Ensuring your gutters are clear of debris is a key factor in safeguarding your house.

  • Full gutters can cause drainage problems resulting in an overflow of water escaping onto your property; and eventually can cause the gutter to fall off due to the weight of the water.
  • Full gutters can also cause the water to become stagnant creating the perfect breeding ground
    for mosquito larvae to hatch. Stagnant water can also cause an unwanted odor.
  • Water pooling can also cause your gutters to prematurely rust.

If you believe that your gutters might be blocked, please email : repairs@arrivehome.com.au so that
we can potentially arrange for this to be attended to.PLEASE NOTE: Please do not climb on ladders to assess the gutters

Overhanging Trees

If you have any trees on your property (even ones that don’t directly hang over your home), ask yourself these questions:

  • Does it appear that the branches need to be pruned?
  • Is there a large amount of deadwood on these trees?
  • Do any trees appear to be unstable?

OR

  •  Are there any trees/branches growing into POWER LINES?
    If you answered yes to any of these questions, please CONTACT repairs@arrivehome.com.au so that
    we can have a professional address the issues, ensuring you and your family stay safe this summer.

Important Updates and Contact Numbers

It is very useful to keep a list of emergency contacts, including the SES and Energex, in the case of a
fallen powerline or power outage. The Bureau of Meteorology also has great updates on any weather
patterns that could affect you, visit bom.com.au

SES: 132 500
Energex: 13 62 62

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Options for Financing A Granny Flat

Whether it be to provide housing for your family, or as an investment to earn rental income, granny flats are growing in popularity.

If you are considering this as an option, there are two common ways to arrange the money you need: accessing the equity in your property or taking out a construction loan.

Using Equity

The simplest way to secure funds for your new granny flat is using equity in your current home. It’s relatively easy to arrange a home loan to build a granny flat if you have enough equity in your existing property and you have sufficient income to support the new loan.

Using a Construction Loan

If you don’t have enough equity in your property, another option is to take out a construction loan. Construction loans are usually approved based on the value of the existing property plus the value of the granny flat build contract.

Before you begin it’s important to check with your local council to make sure you are working within the right parameters and regulations, including the rules around using a granny flat as an investment.

As the cost of a granny flat could range from $50,000 to more than $250,000, your first step should be to arrange an obligation free consultation to go through your finance options.

 

-Victor Larder, Astute Financial
Astute Financial Management Pty Ltd | ABN 59 093 587 010 | Australian Credit Licence Number 364253. AIW Dealer Services Pty Ltd | ABN 59 153 322 420 | Australian Financial Services Licence Number 414256

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Tips for Keeping Your Home Secure During The Christmas Holiday

It doesn’t just happen in the movies (remember the Christmas movie, “Home Alone”?). Burglars getting busy during the holiday season is true and it can happen to you. It’s the perfect opportunity for them to ransack homes, especially those whose owners are away on holiday.

But this shouldn’t stop you and your family from taking that much needed time to enjoy, relax and have fun. Making sure your home is safe and secure while you’re away is not that difficult, but it will need a bit of planning on your part.

For your peace of mind, here are a few tips to keep your home secure, regardless of how long you’d be away on holiday:

Don’t overshare on social media

Social media has made it easy for people to share thoughts, a few happy photos and the exotic location where you are having a grand time. But this is not always a good thing as this might alert thieves that you’re away and your home is an easy target.

Making your account private, even temporarily, doesn’t help either because people don’t know personally the majority of their “connections” in their social network.

Don’t announce on social media that you’re going away and refrain from sharing photos until you’re back home. It’s easy to compile data about you, including where you live and if you will be away, through your social media posts.

Check your home security

Make sure your security is up to date. A faulty deadlock or loose window frame will make it easy for burglars to get into your home.

Ensure your alarm system is working, your sensor lights have new light bulbs, and your smoke alarms have new batteries.

It’s not a good idea to hide your keys under the welcome mat or in one of your potted plants-ever. Be careful in letting tradespeople or acquaintances borrow your keys because it’s easy to make a duplicate, and for burglars to get into your home without any obstacle.

Ask the help of a trusted neighbour

It pays to be friendly to your neighbours. Ask a neighbour you trust to look out for your home and collect mail, leaflets or newspaper while you’re away. Uncollected mail or newspapers is an obvious sign that nobody is home.

Another sign of an empty house is an empty driveway. Your neighbour parking in your driveway will signal that someone is home.

These are just a few of the things you can do to make it look like you’re home.

In addition, install lights that automatically turn on during the evenings. Hang some laundry on the line. Or, have a friend mow your lawn to prevent it from getting overgrown, if you won’t be returning for weeks.

Keep your valuables in a safe

Hide valuables like money, jewellery and watches in hard to find places like a safe or small vault. But remember that burglars know that the family safe will likely be in the bedroom, so considered hiding your safe in an unlikely place in your home.

One final tip, make sure everything is locked before leaving. This includes doors, windows, side fates, outdoor sheds, garages, and even the doggy door. In the chaos of leaving for the airport, or beginning a long road trip, people can forget things. You don’t want your holiday to be ruined by constantly thinking and worrying if you had everything locked before leaving.

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How to Screen Potential Tenants For Your Rental Property

One of the important factors that influence the success of a rental property is finding the right occupant. With the right tenant, it is guaranteed that rent will be paid on time every time and the property will remain reasonably intact, save for normal wear and tear. With a bad tenant, the condition of the investment property is always uncertain.

With more and more people moving in and out of different Brisbane suburbs, if a property is well-marketed and presented, there’s no doubt it will attract various types of tenants. However, for self-managed landlords, finding the right tenant for their property can be tricky and challenging.

Any prospective tenant will put their best foot forward during the initial walk-through of the apartment. This makes it difficult to make an informed assessment during this brief interaction. There are no hard and fast rules when it comes to finding the best tenant. You can, however, do a thorough screening of each applicant before allowing them to sign a lease.

Here are some tips to help you sort the good from the bad, and give you a pleasant and profitable investment experience:

Get Relevant Information

The rental application is a series of questions that allows the landlord to know about the prospective tenant. To get the best results, the questions should cover financial, employment and personal information.

It is also important to gather lifestyle information. Is the applicant a pet owner? Do they work odd hours or away from home? Do they often get visitors that would stay in the property?

The information they provide in their rental application should give you an idea of whether or not they are the kind of tenant that you are willing to trust your property with.

Ask For References

Do at least three reference checks from past landlords when possible. Ask the landlords how long the applicant stayed at previous properties and their reason for leaving. Good tenants live in one property much longer, usually at least a year, and their property manager or landlord reference will be available or easily obtainable. Any discrepancy in the information provided implies that something is being kept secret by the applicant and would usually raise a flag.

Check a Tenancy Database

You can check if the applicant is included in any tenancy database, a record of personal information about tenants who have had issues with their tenancies. The database tells landlords or managers whether prospective tenants had a previous record of not paying rent or damaging the property.

Here are tenancy databases that landlords or managers can contact:

  • Tenancy Information Centre Australasia
  • National Tenancy Database
  • Trading Reference Australia

Interview the Applicant

Conduct an informal interview of applicants that have passed the initial background screening. You can do this either by phone or face to face during a walk-through of the property.

When showing the property, pay equal attention to “selling the property” and evaluating the prospective tenant. Ask questions that will help you determine if they meet your requirements for a tenant. Do they conduct themselves in the right manner? Do they look neat or unkempt? Do they smoke?

Consider Hiring a Property Manager

A property manager will take a lot of load off your back as a landlord. They will take over many responsibilities, including screening prospective tenants and managing the operations of your investment property. Unlike self-managed landlords, they have access to tenancy databases, individual public records, identity verification and credit history.

At the outset, make sure your property is properly presented and marketed in order to attract as many prospective tenants as possible. Having a large pool of applicants increases your chances of finding a long-term tenant.

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First-Time Home Buyers: The Most Affordable Suburbs for You

Domain has released its First Home Buyers Report which reveals the Australian suburbs that are the most affordable for first home buyers.

The report, which covers all eight of Australia’s capital cities, takes grants and initiatives for first home buyers into consideration, and looks at the average median price that can considered to be affordable for first home buyers.

The most affordable area overall, according to Domain, is Greater Hobart which has the most affordable suburbs that are closest to a CBD.

The Greater Hobart area has the lowest entry price point for houses, with a median at $130,000 in Herdsman Cove, 22 kilometres away from the closest CBD, while the Greater Adelaide area has the best median price point for units.

“While Greater Adelaide is the most affordable region for first home buyers looking for units, with the median price in Rosewater – the most affordable suburb in Greater Adelaide – at $154,000,” Domain’s chief data scientist Nicola Powell said.

The report considers a suburb to be affordable if it is below the average home loan size over the same period per state or territory plus a 20 per cent deposit and additional grants.

The cheapest suburb for each capital city, as determined by Domain, are:

Greater Sydney

  • Houses – Gosford ($412,5000, 65km to nearest CBD)
  • Units – Ettalong Beach ($301,500, 51km to nearest CBD)

First home buyers in Sydney have access to the First Home – New Home scheme and a $10,000 First Home Owner Grant.

Under the First Home – New Home scheme, a new home valued at $550,000 or under are exempt from stamp duty. There are also concessions available for homes valued between $550,000 and $600,000.

The First Home Owner Grant is also available for purchases made on or after January 1 2016.

Greater Melbourne

  • Houses – Millgrove ($295,000, 70km to nearest CBD)
  • Units – Albion ($225,000, 15km to nearest CBD)

First home buyers in Victoria have access to the First Home Owner Grant and stamp duty concessions.

The First Home Owner Grant is worth $10,000 for new homes valued under $750,000, with another $10,000 available for homes in regional Victoria, from 1 July 2017 to 30 June 2020.

Stamp duty concessions are eligible for both new and established homes valued at $600,000 or less up to a potential 50 per cent.

Greater Brisbane

  • Houses – Brendale ($259,750, 20km to nearest CBD)
  • Units – Mount Warren Park ($183,500, 39km to nearest CBD)

First home buyers in Queensland have access to the First Home Buyers Grant and transfer duty concessions.

The First Home Owners’ Grant is valued at $20,000 for new and substantially renovated properties at $750,000 and below, but it is only available until 30 June 2017.

Transfer concessions are on a sliding scale, determined by the total amount of duty payable by the value of the purchased home and the concession rate minus the first buyer concession.

Greater Canberra

  • Houses – Not considered to be affordable.
  • Units – Hawker ($277,500, 11km to nearest CBD)

First home buyers in the ACT have access to the First Home Owner Grant, and stamp duty charges at concessional rates.

The First Home Owner Grant is valued at $7,000 for the purchase of new or substantially renovated homes priced below $750,000.

Stamp duty is also charged at a concessional rate for new or substantially renovated homes priced below $590,000. For homes priced below $590,000 and above $468,000, stamp duty is valued at $14.70 per $100 or part of $100 where the dutiable value exceeds $468,000. Homes priced at or below $468,000 have a $20 duty payment.

Greater Perth

  • Homes – Medina ($250,000, 39km to nearest CBD)
  • Units – Orelia ($165,000, 39km to nearest CBD)

First home buyers in Western Australia have access to various grants, special rates for stamp duty and the Shared Home Ownership Scheme.

Concessions are available in the form of a $10,000 grant and a payment of an additional $5,000, the latter of which is only available until 30 June 2017. Eligibility for the grant is determined by the value and geographical location of the home.

Stamp duty is also charged at a special rate for first home buyers for homes valued below $530,000. Homes, both new and established, above $430,000 and below $530,000 will have duty imposed at the rate of $19.19 for every $100 or part of $100 with the dutiable value exceeding $430,000.

New and off-the-plan homes offered by Western Australia’s Housing Authority are also available to be purchased through the Shared Home Ownership Scheme, which gives first home buyers a SharedStart loan through government lending agent Keystart. This allows for just a $2,000 or a 2 per cent deposit, whichever is greater.

Greater Adelaide

  • Houses – Elizabeth North ($176,500, 29km from CBD)
  • Units – Rosewater ($154,000, 12km from CBD)

First home buyers in South Australia have access to the First Home Owner Grant and off-the-plan concessions.

The First Home Owner Grant is currently valued at $15,000 for new and substantially renovated homes under $575,000.

First home buyers buying off-the-plan can also be potentially eligible for concessions on new apartments at or below $500,000.

Greater Hobart

  • Houses – Herdsmans Cove ($130,000, 22km from CBD)
  • Units – Claremont ($174,000, 14km from CBD)

First home buyers in Tasmania have access to the First Home Owner Grant, valued at $20,000 until 1 July 2017 for the construction or purchase of new homes, including off-the-plan. After 1 July, the First Home Owner Grant will be valued at $10,000.

Greater Darwin

  • Houses – Not considered to be affordable
  • Units – Millner ($331,500, 10km from CBD)

First home buyers in the Northern Territory have access to the First Home Owner Grant, First Home Owner Discount and the Household Goods Grant Scheme.

The First Home Owner Grant can be claimed for both new and established homes, valued at $26,000 for a new home and can be potentially available for established homes.

First home buyers purchasing established homes can access the First Home Owner Discount, removing stamp duty for homes below $500,000. Additionally, a $10,000 grant is available for first home buyers to renovate the home.

Also available for first home buyers purchasing or constructing a new home is the Household Goods Grant Scheme, which allows up to $2,000 claimable for new household goods.

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