1st Street Newsletter SEPTEMBER 2007

Contents

Property Investment Mistakes
How Secure Is Your Home?

Jeremy Fisher
Director

518b Old South Head Rd
Rose Bay NSW 2029

Tel:	1300 880 109
Fax:	02 9371 1990
Mob:	0411 33 9998

E-mail:	Click Here
Website:	Click Here

Welcome to 1st Street Home Loans. We are an Australian-owned mortgage advisory company with a difference. Due to our strong relationships with the banks, industry leading technology, honest approach and only the highest level of service, we were recently awarded as the number 1 independant mortgage broker in Australia.

With an increasing number of people today turning to mortgage brokers for professional and unbiased service, 1st Street Home Loans is fast becoming their broker of choice. We offer a free and impartial service that provides access to over 30 residential and commercial lenders and more than 500 loan products from across Australia.

The Mortgage and Finance Association of Australia (MFAA) is the peak body for the Australian mortgage industry. Members include banks, mortgage managers, credit unions, mortgage brokers, wholesale funding institutions, real estate agents, valuers, solicitors and conveyancers.

All MFAA members belong to an independent dispute resolution scheme such as the Credit Ombudsman Service Limited.

Loan writing members are also required to become Accredited Mortgage Consultants (AMC). An AMC is covered by professional indemnity insurance, has passed probity checks, and has met education and experience requirements set out by the MFAA.

Hello,

Welcome to 1st Street's monthly newsletter. If you require any assistance in obtaining the right loan for you, or if you have any questions in regards to an existing loan, please do not hesitate to contact me personally on 1300 88 01 09 or 0411 33 9998.

Kind regards,

Jeremy Fisher

Property Investment Mistakes

Investment Everybody makes mistakes, even property investors. And they can be expensive.

Here we explore the five biggest mistakes property investors make – and more importantly, how to avoid them.

Here is a list of five common mistakes that property investors can make - that can easily be avoided.

1. Not being objective

If you inspect a property and care what the curtains look like, whether the kitchen has stainless steel appliances and what the colour scheme is, you’re probably making this mistake.

Many investors forget that purchasing an investment property is for someone else to live in – a tenant. They review the property with their own expectations in mind.

Investors would be better advised to speak to property managers about what features are desirable for tenants in a given area, rather than thinking about what’s desirable for them. For example, in a family-oriented area then a well-fenced backyard would be important.

2. Not seeking expert advice

Investors who sign on the dotted line without consulting their accountants, solicitors or finance brokers are risking the success of their investment.

Many people don’t use these experts so as to avoid the cost. But there is a much greater cost to not using them. How many of us can be experts in tax, financial planning, or give ourselves some objective advice?

It is worth checking whether the experts invest in property themselves, to ensure that their advice is backed up by hard, practical experience.

3. Not having a “risk mitigation” strategy

Many investors fail to ask themselves some basic questions that would help them to reduce their risks.

For example what happens if:

The property can’t be tenanted for a period of time
The property burns down or is damaged by flood or storm
Interest rates go up by another one per cent or more
Circumstances change, for example they lose their job.

Investors need to have a back-up plan for when things go wrong. For example they should consider:

insurance not only for building and contents, but also landlord insurance to protect against rental loss or damage. Further, perhaps income protection insurance would provide added peace of mind in case of job-loss.
the type of home loan that they use to purchase the property. Would a fixed rate be better, or perhaps a flexible line of credit.
having access to extra funds, either their own savings or an easily accessed loan.

4. Not doing the research

Doing enough research prior to making the purchase will help the investor work out whether the property is a good buy or not.

The selling agent, whilst useful, should not be the only source of information. After all, they are working for the seller.

Nothing beats doing your own research:

How far away are facilities such as schools, shops, transport and medical facilities?
What is the history of capital growth in the area?
What is the demand for rental properties like? Are there many vacant properties for lease – why?

5. Not crunching the numbers

Most investors rely on rough estimates rather than sitting down and doing the hard numbers related to their purchases. Particularly when looking at negatively gearing a property, investors need to know how much they will need to spend each month and work out whether thay can afford it.

For those investors who can’t do the calculations on paper, investors should consider the purchase of inexpensive property analysis software that helps do the sums.

How Secure Is Your Home?

padlock Having your home broken into is one of the most depressing of incidents.

Taking some sensible precautions will lessen the chances of it happening to you.

Property crime includes such offences as unlawful entry with intent to commit a crime, auto theft, arson and vandalism. Unlawful entry crimes make up a significant 24% of all crime in Australia, with over 308,000 incidents per annum reported by the Australian Bureau of Statistics.

With such a high level of “break and enter”, it is worth taking some sensible precautions to reduce the risks.

Electronic Security

At the more sophisticated level of precautions is an electronic security system.

The two main types are wireless and cabled:

Wireless systems are useful to install in an existing home. However, it is important to check that the wireless signals can work in all parts of the home, as concrete walls or high amounts of radio frequency signals can reduce its effectiveness.

Cabled systems don’t suffer from these drawbacks, but installing these systems to an existing home can be expensive and impractical where walls and floors can get in the way.

There are also hybrid systems on the market, utilising both cables and wireless where most appropriate.

The main components of a security system include:

Movement sensors that can detect if an unwanted intruder is moving inside the home.
Sirens and strobe lights. The lights are more of a deterrent factor, whilst the siren can be so loud and piercing that it can force the intruder to leave the building, and will certainly alert the neighbours.
Control panels and keypads, which control the system.
Closed circuit television can show live pictures of who is knocking at the door, and an intercom allows you to speak to them to find out their reason for calling.
Base station monitoring. When an alarm is triggered, the monitoring organisation will despatch a security patrol to your home.

These systems can be purchased outright, or paid for via a monthly contracted service.

Manual Security

Of course, there are also lots of simple yet effective precautions that can be taken.

Start by taking an objective look around the outside of your home. How would you break in? According to a research study completed by Artog, 54% of Australians revealed that they could easily break into their home without a key.

Here are some simple tips to help you secure your home:

Doors. Whilst the front door is normally pretty secure, what about the side and back doors. How solid are the doors and the surrounding jambs – many doors are simply “kicked in”. Are the locks good-quality mortise or deadlocks? Are there locks fitted to sliding or patio doors, and would they prevent the doors being forced out of their tracks – a favourite trick of the determined burglar.
Windows. Over half of all forced entries are through windows because they’re often hidden from public view and are usually weaker than doors. But even the most unusual or traditional windows – including double hung sashes, casement, sliding and louvre style - can be secured by a wide choice of lockable systems.
Leave your car parked outside, or ask a neighbour to park their second car in your driveway.
Set some automatic timers to make lights go on and off at different times during the night.
Where do you hide the spare key? Is it under the mat, under a plant pot or an obvious rock? Burglars will look in obvious places.

Insurance

As well as taking some sensible precautions, it is important to insure against burglary and damage. Leaving your home and its contents unprotected against theft and damage is a risk you don’t need to take.

And yet a recent survey conducted by GIO and Reed Construction Data estimated that around 70% of Australians have insufficient house and contents insurance cover.

Do you have sufficient cover?

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