Australian Property Investment Blog by Micah Keall-Grant

A tempting way for many people to try and get rich is to buy a lotto ticket each week, hoping to strike a lucky jackpot and catapult themselves to financial freedom. This is a poor approach and there is a much better alternative with which you can guarantee a win!  The chances of  winning lotto in Australia are 1 in 29 million!! (averaged across the top 5 weekly lotteries). Needless to say this is highly unlikely…. Let’s assume a 25 year old decides to buy a lotto ticket every week until they retire at 65. If they spent $20 a week, after 40 years they will have spent $41,600 in total (not taking inflation into account).  Despite buying over 2,000 tickets in this time, their chances of winning anything significant are still incredibly small.  As an alternative, let’s assume they invest $20 per week in a low-fee index fund or dividend paying share portfolio, returning 7% per annum (compounded monthly).  After 40 years, their shares would be worth $22...

The Brisbane property market has underperformed other capital city markets in recent years. Dragged down by the floods in 2011, a mining slowdown and an oversupply of apartments, it has struggled to gain traction. However in 2019 and 2020, with interstate migration picking up, a large number of big budget infrastructure projects commencing and (as always!) a fabulous and affordable lifestyle, it may soon be Brisbane’s time to shine. According to the Australian Bureau of Statistics (ABS) , strong population growth is forecast for Brisbane, with the city expected to grow from the current 2.4 million residents to over 3 million by 2027. Additionally it is well located as the closest major city to the growing tourist and consumer markets of Asia and the South Pacific. There are 5 main reasons why I believe Brisbane is a great place to purchase property in 2019: 1) Infrastructure Projects and Economy   - The Brisbane economy is expected to strengthen significantly over the next 5...

If you own any property, either your own home or an investment (or both), it is a good idea to conduct regular mortgage health checks on your portfolio. This allows you to determine whether it is worth re-financing - either to access equity, or to save money and improve cashflow by getting a better interest rate on your loan.                                                                                              Take the following steps:  Conduct property market research  - to determine the estimated value of each property in your portfolio. Subtract the current value from the total outstanding loan amount to determine the current equity you have in the property.                    ...

This is a common question for property investors, and one where the choice is becoming increasingly difficult! First let’s quickly define these two terms: Interest-Only Loan (I/O):  You only have to make interest payments on the outstanding mortgage amount (for a certain period of time, typically 5 years, after which the loan will be converted back to P+I, or refinanced for another I/O term). Principal and Interest Loan (P+I):  You have to make payments off the principal loan amount, in addition to the interest payments. As the loan progresses, you pay proportionally higher principal, and less interest. As an example, if you have a 30 year, $500k loan at 4% p.a. interest : Amount payable with I/O - $20,000 per year Amount payable with P+I - $28,650 per year Repayments are obviously higher with P+I, however this does mean you are paying off your balance and therefore your total interest payment over the life of the loan will be lower. Interest-only loans have be...

A very popular question amongst property investors is: “Should I invest in regional areas or capital cities, or both?”. There is great debate on this topic, with many property experts weighing in with a wide range of opinions. I have outlined my personal thoughts below:

Making a property purchase is a big decision and often one of the largest financial transactions you will make in your lifetime. Therefore it pays to avoid costly mistakes! I have compiled a list of short tips and general advice for your next property search. As mentioned in my previous blog post, houses are generally my preferred investment option in Brisbane at this time, however this is not always the case and apartments can make for good quality investments at the right time or in the right location.  Tips for purchasing an apartment (in any location): - AVOID large blocks - In large towers of 100+ apartments, there will always be 5-10 other apartments for sale and rent at the same time as yours so the competition is fierce and you will have no point of differentiation > not a good recipe for capital growth! - AVOID brand new/off-the plan purchases. You are often paying a hefty developer premium and often a referral fee which is built into the purchase price...

This is a common question asked by property investors throughout Australia, and is the subject of great debate amongst property experts. Apartments as Investments Traditionally, property owners, particularly in the baby boomer generation, aimed to buy a house on a good sized block of land with a decent backyard – “the great quarter acre Australian dream”. This is changing somewhat as the demographics of our major cities are shifting and more and more and buyers are favouring smaller dwellings in central locations which are handy to places of work, with strong public transport and close proximity to trendy cafes, bars and restaurants. Young professionals, couples, overseas immigrants and down-sizers are the most common types of buyer in this market segment. Even without considering the usual location benefits that they offer, the other reasons that apartments and townhouses are now a popular option are: 1) Increased security 2) Lower maintenance 3) More modern la...

1. Read books This is a great way to get started as books can teach you some of the important fundamentals of property investment, or simply refresh your existing knowledge and provide renewed motivation. Focus on books/authors that you can relate to (as every author is different). You will naturally find that you gravitate towards some styles of writing more than others. Recommended Reading: - Rich Dad, Poor Dad – Robert Kiyosaki This book is often referenced by many people as the source from which they first learned about investing. It is not directly about property but focuses on the mindset required to build wealth over time. - Get A Financial Grip – Pete Wargent Great insights into taking control of your finances and learning how to start investing and begin your journey towards financial freedom. Pete also has a number of other good books that follow on from this. - Building Wealth, Story by Story – Jan Somers This is an oldie but a goodie – the principles discuss...

This article follows on from my previous article: Should You Invest for Positive Cashflow or Capital Growth? Question from a reader: Playing devils advocate here what are your thoughts if both properties were sold at the 20 year mark and capital gains taxes applied? Also one advantage of the positive cashflow property is that the extra revenue it generates can be re-invested - if this is figured into the analysis then perhaps the overall difference between the two strategies is closer? Thoughts? Good question. The initial example was relatively simple however these calculations can get very complicated, very quickly! Answer: I believe you still come out significantly ahead with the capital growth strategy. Let's make some further assumptions and do some additional calculations, while also taking re-investment into account: Let’s call the positive cashflow “Strategy A” and capital growth “Strategy B”. -    Assume a more realistic scenario of a $200k deposit and an ...

This is a question that many property investors ask themselves when considering their investment strategy. Countless articles and books have been written on the subject, each with a slightly different perspective. There are a couple of factors to consider but first let’s take a look at the differences between the two approaches: Positive Cashflow Strategy: A lot of people don’t realise that there are significant costs associated with purchasing and maintaining an investment property; mortgage payments, building and landlord insurance, repairs and maintenance, leasing and advertising fees, property management fees, utility charges, council rates, additional tax return fees and sometimes you also have company/trust fees and land taxes. In most cases, especially in the initial stages of ownership, the vast majority (if not all!) of your rental income will go towards covering these costs. The main goal of a positive cashflow strategy is to ensure that the income from your p...

There are 3 key habits you need to begin your investment journey and grow your personal wealth. They are an important first step to get started in property or other investments and to monitor your progress. I have adopted these habits over a number of years and continue to regularly review my own personal financial situation. 1) Spend Less Than You Earn Unfortunately you can’t invest if you don’t have any money! You will need to save up and there is really only one way to do this – you need to earn more money than you spend on a regular basis.   Once you have excess funds available, you can allocate these to your chosen investments. 2) Track Your Monthly Expenses If you are struggling with Step 1), then Step 2) is the best way to take control of your finances and see where your money is going each month. Categorize your spending into simple groups (e.g. rent/mortgage, supermarket, eating and drinking out, entertainment, holidays, sport and fitness, other person...

When purchasing a property, it is very important to conduct proper due diligence to ensure you don’t get caught out by any unexpected issues. During the property search Whilst you will engage professionals to conduct a large part of the due dilligence, there are a number of   basic things you can check yourself before inspecting or offering. This will save you a lot of time and hassle! Online (before you attend the inspection) : -        Size and shape of the block of land -        Proximity to main roads/train lines -        Proximity to airports/flight paths -        Proximity to shops/schools/transport -        Google Maps – Satellite and Street View (to get a feel for the area) -        Flood checks – free online council resources available -     ...