2007 is off with a running start. At the end of last year there were strong feelings that there would be another interest rate rise in the first quarter of this year.

However last month figures were produced that showed an unexpected 0.1 per cent fall in prices in the last three months of last year. This has resulted in a lower inflation rate of 3.3% dropping from September's high of 3.9%. The Reserve Bank is still targeting inflation between 2-3% so there is some way to go but 4 rate rises since the last election and the dropping prices have helped ease the possibility of another rise soon.

So what does all this mean? Essentially cheaper bananas and petrol may mean that the expected rate rise will not come as soon as expected... if at all.

Maybe the major lenders could see this coming. In the last few months there have been a number of short lived limited offerings of 3 and even 5 yr fixed interest rates below 7%. So there should be some further discounted offerings in the next few months. It is shaping up to be an interesting year.

This month we look at information sources available to investors. The first article covers some of the recognised sources and links to their thoughts on the next hotspots and the types of properties you may consider investing in. There is also a very simple checklist to review before you buy anything. Finding quality, unbiased information can be dificult. The second article looks at online property forums for the fertile resource of information that they are. The benefit of forums is that you get to ask the question that is bothering you and gain the benefit from many who have done it before.

As always I hope you find the information in this newsletter relevant and useful.

Jane

 

InvestKit As a Newsletter Member you also have access to the InvestKit containing easy to use spreadsheets for researching and locating the right property. Copy this link has been removed as you are reading this newsletter from the internet site.

2007 Where and What to buy In recent months there have been numerous reports on where and what you should be purchasing if you’re considering a property investment in 2007. The tremendous amount of contradictory information is enough to confuse all but the savviest of readers. However there are a number of quality resources that are covering the same topic this month. So put these sites on your post-Christmas must read list and have browse at your leisure. Money Magazine Dec issue looks at the apartment market around Australia and what 2007 holds for it. http://www.money.ninemsn.com.au/article.aspx?id=171124 Residex Best Rent Report This shows the past and predicted performance for the top 100 suburbs by rental return and capital growth. Although you do have to purchase this resource, the information provided is gold. http://www.residex.com.au Reno Kings hot spot tips and picks as profiled on the Today show in January. http://www.renos.com.au/news/48 The State of Property Markets 2007 provided by Michael Yardney of Metropole. Whilst browsing his website, register for the newsletter. This has one of the highest readerships in Australia and you can find out more about his upcoming seminar tour looking at where to buy in 2007. http://www.propertyupdate.com.au Recommended Reads If you would rather pickup a book I have provided what I think are some an investors must haves. http://www.investorschoice.com.au/reads.htm How 2007 plays out is anyone guess. However being able to see what the experts think and how they came up with their thoughts will help you to come up with your own hot spots. Happy hunting. A quick checklist when looking for property At the end of the day, when buying an investment property you’d be well advised to keep in mind these few simple rules: 1. Know what you want before you start looking.. property type, suburb, long term investment, short term capital gain etc etc. 2. Work out beforehand what you believe you can afford… this is not your borrowing capacity, but what you’d be comfortable paying off. 3. Understand your personal risk profile or simply put "your sleep at night factor". 4. Know the market; research, research, research. 5. Let the numbers speak for themselves and keep a tight rein on your emotions. 6. Spend the money and get all the inspections you need, including pest and building reports. 7. Don't sign anything until everything has been checked very, very carefully; this includes the bank’s valuation; and only then when you are comfortable that you’re ready to proceed. 8. Don't let agents, developers or brokers rush you into signing before you’ve done your research, Surprisingly - the bargain of the century can come by every week. 9. If in doubt, find someone (such as your solicitor, a trusted friend or even your broker or lender) who is happy to sit down with you and work through any questions or concerns you may have. 10. And last but not least, remember to enjoy the challenge. Take a camera, your notes and plenty of water and snacks for those long days of searching, and most of all be patient; if it were easy, everyone would be doing it.

Where can I find some more answers? Most people cannot afford to attend $4000 property investment seminars and even the $49 seminars can be unfeasible if you live in a remote or rural area. There are only so many “property investment” books you can read before you experience more angst than relief from your unanswered questions (or contradictory advice). So what do you do when you want specific answers to your property investment questions from a range of people who’ve been there, done that and survived? More than seven years ago I joined an online property forum. For the first three years I did not post at all. However I spent lots of time reading the posts of others and following those threads I thought might answer my questions. If you are reading this and wondering what the heck a ‘post’ and a ‘thread’ are, and why you should even consider joining an online forum, then let me tell you that I found the members to be amazing people who were generous with their time, knowledge and experience, and always happy to answer questions and discuss various property investment strategies. A word of warning you do need to do your own validation of information. So before taking action work with your financial planner, accountant etc for what is right for your specific circumstances. If you’re new to property investing and would like some more information there are several great online forums around. Don’t worry if you don't post for a while, just sit back and absorb the information…I have no doubt you will find some answers. Online forums are also a great place for recommendations and advice whether you’re a novice or a master. For example whilst renovating in New Zealand over Christmas I was undecided on which paint gun to purchase for making my painting tasks quicker, so I logged onto one of my favourite forums, Somersoft (www.somersoft.com.au) and found plenty of opinions and advice. And all those forum members who said ‘using a paint gun is harder than it looks and may not save you time’ were right. I got the job done but needed to spend a lot of time to master the technique. Some worthwhile forums you may wish to consider: www.propertyinvesting.com Steve McKnight is well known for his books and seminars. This well organised forum is full of useful information www.somersoft.com.au Jan Somers has written many books on simple investing techniques. This forum has years of tips tricks and one of the most thorough sites around www.invested.com.au This forum has not been going as long as the others but has been a collaboration of some of the more well known and experienced investors. www.propertywomen.com This is a relatively new forum, and as the name suggests a great starting point for the girls wanting to have a go. A final word of advice; if you’re new to this and have never participated in a property investment forum, don't make your first post something like "Hi I’m a newbie and I want to make a fortune buying property. Please help me”. Forum members will immediately direct you to old posts and when you search under "newbie’’ you’ll find that question asked hundreds of times each year. I mentioned members were generous (and I might add, very tolerant) but sometimes their patience is tested answering the same questions time after time, so have a look around first. Get online today and discover the untapped wealth of information available.

Super Duper Changes Just a quick word about the planned Superannuation changes. The media is awash with the property market being vacated by those close to the retirement age selling up their investment properties. The changes announced last year in the Federal budget allow super investors to contribute up to $1 million to their super fund before the end of June. For investors over 60, this contribution is essentially tax free. After June the annual contribution drops to $150,000 pa or $450,000 over 3 years. If you fall into this age group make an appointment to talk to your adviser about your circumstances, you may be able to make a considerable difference to your long term retirement income. As a result of this new money from Super Funds the share market is rising. Amanda Cook, an advisor at Macquarie Bank commented in the Australian that “The market seems to have a lot of money. I don’t think anyone was expecting this kind of move. A premium is being built in-that has to be what is driving the move.” So what does this mean to us? According to the doom and gloom reports - the property markets will fall as all these people leave the market. Only time will tell if those close to retirement will sell up, incur capital gains tax and associated costs for this current benefit. So for those who are taking advantage of this windfall and putting their property profits in their Super they have till the end of June to sell up. For investors and home buyers I think we might find that closer to the date there may be some isolated bargains on the market - with settlements usually being 6 weeks I would expect that between now and April we will see a number of sales where the buyer will have the upper hand in the negotiations. Just my thoughts...