InvestKit

As a Newsletter member you also have access to the InvestKit containing easy to use spreadsheets for researching and locating the right property.

If you haven't yet looked inside the Invest Kit to see what's on offer, don't delay because you could be missing out on something that will make a difference to your investment strategy.

This month we have added the following:
- A presentation on one way to access equity in your home

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First Home Buyers Affordability Fund

Regardless of whether you think it is time to buy your first home or not, you might consider starting a savings plan so that you have a deposit ready when you do choose to purchase. To help first home buyers save the Government has introduced the Affordability Fund. This has been established to assist First Home Buyers to save a deposit through a combination of government contribution and low taxes.

The most notable aspects are:-

* You need to be between 18 and 65 years

* You can not have owned a primary residence previously, but you may have owned an investment property, or your partner may own a home (primary residence).

* Super funds and some lenders will establish products that will allow you to choose a range of investment options for your savings that they hold in trust. Some institutions may require a minimum contribution each year. You need to find a fund or financial institution who has such a product for you to make your contribution. CBA and ANZ recently launched products allowing first home buyers to use this Affordability Fund. CBA is offering 6.5% and ANZ is offering a 7% interest rate on these special savings products.

* the Government will contribute 17 per cent on the first $5,000 (indexed) of individual contributions made each year ($850). This essentially means that if you already have $20,000 in savings you would receive a higher benefit if you drip feed $5000 into the fund over 4 years (ie the Government will contribute a maximum of $850 per year or $3400 over the fours years). Mind you this strategy rules first home buyers looking to buy anytime soon, out of achieving the maximum benefit.

* an overall account balance cap of $75,000 has been introduced; and the upfront contribution of $1,000 has been removed.

The Government has maintained the taxation incentives.

* Investment earnings (or interest) that accrue in the accounts will be taxed at 15 per cent.

*Withdrawals will be tax free where they are used to purchase a first home to be the primary place of residence.

* Once you withdraw the funds you have 6 months to use them or you are required to reopen an account.

*The only requirement is that the home you spend the money on must be your main residence for at least six months, starting within 12 months of you becoming the owner of the home, or, if you're building, within 12 months of construction being completed.

* The funds can be used for legals, costs, a deposit etc but it must be associated with the purchase of the home.

Although this incentive is a great initiative to encourage those to save who would not normally. The reality is that depending on where you buy, if the capital growth of the area is growing then the small savings this allows may not allow you to buy your own home as the price keeps increasing. It may be best to jump in now with a smaller deposit. Make sure you look at all options before signing up.

For information check out the following link.

Affordability Fund Website

Shake up your perspective on renovating

It's no surprise that many have decided to jump on the proverbial fence and sit out the next few months while they see what unfolds with interest rates, lending policies, property prices and any fallout from the US market. However by the time the newspapers start telling you that the market is moving again, astute investors will have already been buying for six months.

With uncertainty around interest rates and overall 'volatility' in the domestic property market – now is an ideal time to consider adding value through renovation to your property.

Many have used renovation as an opportunity to add equity and consequently leverage their portfolio into additional purchases.

Renovation however is not just for investors. For many the home need not just be your greatest asset but also the greatest opportunity for a more comfortable retirement. Let me explain.

Let's assume you are 55 years old, have a home in Sydney valued at the median Sydney market of $570,000. Let's say you complete a $50,000 renovation adding an additional $50,000 worth of value, taking it's value to $670,000 post-renovation. You need not use your savings for this renovation, you could use existing equity in your home. See the presentation in the InvestKit on one way to do this.

Now if your suburb is predicted to grow at 7% pa over the next 10 years, we know from the Rule of 72, (for more info click on the link below) your home should double in value in roughly 10 years, taking it's value to $1.34 million. However if you didn't renovate, your home's value would be $1.14 million.

The $50,000 renovation adds an additional $200,000 worth of value to your home. In 10 years time if you decided to sell your home you would have an additional $200,000 for retirement, minus costs. This would support you for a few years extra in retirement. This is merely a general example but the message is powerful. Renovation can be an opportunity to increase equity in either your own home or investment properties.

I have personally renovated six properties and know that creating equity gives you the opportunity for choice - be that to buy additional properties, retire more comfortably or take the family on holiday.

If you'd like to review Jane's tips on renovating please visit the InvestKit and download the Renovation Survival Guide.

Renovating for Profit Courses

Last year I was featured in a the 'Money Magazine' article about making money from property and in particular renovation. Due to my experience as an investor, renovator and finance broker over the years I have been invited to share my experience across a range of investment areas at various property and finance forums and conferences.

I believe that education is crucial to making the right decision, as you might of guessed from having over 100 pages of information on my website. I also believe that quality information should not - nor need it - come at a premium price. In recent months I have run a number of renovating for profit courses doing just this. Before the end of the year I will be running these courses and a course specifically for First Home Buyers in Sydney, Brisbane and Melbourne. I am committed to providing all my experience, knowledge, checklists, resources for less than $100. So that it is affordable for everyone.

Here are some comments from recent course participants:-

I have been to quite a number of course over the past year, with most being a lot more expensive and none have provided me with the practical information I can use to find and renovate my next investment property. (DE, Sydney)

Far more was covered than I expected! I wish I had done this course years ago! (MT, Sydney)

Jane covered all the bits and pieces in 'layman's' terms with real experiences. Understanding the little things that can save money and make a difference. (NH, Sydney)

Great value for money. (SJ, Sydney)

Great information - tips and tricks, areas to maximise profit, common mistakes, things to be careful of. (BB, Sydney)

The course was fantastic. I learnt a great deal. (SM, Sydney)