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DHA: How to find a secure option in a property downturn

By DHA

Promoted by DHA

Australia’s obsession with property has become a national sport. It dominates conversations in the playground and pub. It fills TV broadcasting schedules and the glossy pages of newspaper lift-outs. And has thousands upon thousands of us spending our Saturdays at open houses, auctions and in front of our phones, looking for our next investment, forever home, flip project, or sea/tree change.

Yet some commentators are growing increasingly concerned about the state of the national property market. In an episode of Four Corners, aired on the ABC in August 2017, a number of financial analysts and property advisors cautioned viewers that Australian households are highly leveraged and overexposed to a property downturn. But for those looking for certainty in property investment there are still options.

Martin North, a digital finance analyst, said “I’ve been studying the market here for a good number of years and I have never seen this perfect storm of issues coming together. We’ve got very high household debt. We’ve got very high house prices. We’ve got households in some degree of difficulty already now and so it doesn’t take much to see the tipping point, such that then we get this downward spiral, and boy if it goes it could be as bad as Ireland or the US.” Not saying that this will happen, but property investors should be aware of past trends to be prepared to cope with fluctuations in the future market.

The impact of the mining downturn on property prices in PerthPerth, TAS Perth, WA is an example of what can happen in a highly leveraged economy. Homes are selling for fractions of the price they sold for only a few years ago.

A property downturn however doesn’t mean that investors have to sit and wait it out, but they do need to protect themselves against the impacts of a property downturn.

Don’t overextend yourself; protect your cashflow

Some banks, with the support of the mortgage broker industry, have been accused of over-lending. Be diligent with your research and make sure you can cover any mortgage on the property you intend to buy. Do the sums on interest rate changes and falls in rental income so you’re aware how your cashflow could be impacted.

Consider your likely tenant

Investigate which properties are in demand in which areas, and consider the calibre of tenant that the property is likely to attract. Investment properties require good tenants who will pay on time and look after the property, and preferably stay for a long time.

Look for security

Investors lose money when their properties are vacant. Finding an affordable property in a high demand area is key to long-term success. Some property investment strategies offer long-term leases that can provide additional security against loss of income due to vacancy.

Defence Housing Australia is one such option, offering leases of up to 12 years on investment properties. For investors, this provides the ability to forecast a reliable rental income for the term of the lease.

In fact, because the lease itself is with DHA (who then offer the property as residential accommodation to Defence members), investors are earning rental income regardless of whether the property is occupied or not. This rent is guaranteed never to fall below the initial agreed upon amount—and for an investor this provides a level of certainty that is unmatched in the regular residential real estate market.

DHA properties also come with DHA Property Care, a property maintenance service, at a fixed price, that takes care of the day-to-day maintenance issues common with investment properties. What’s more, at the end of the lease, DHA will refresh the property, often with new paint and carpet, ready for the next lease or for the owner to move into. This kind of hands-off investment means reduced hassles and minimal out-of-pocket expenses.   

For investors looking for greater certainty against a possible downturn in the market, DHA can offer a solid alternative. With a range of high-quality properties under $500k in desirable locations around Australia, with long-term lease and guaranteed rent arrangements, DHA is a property strategy well worth considering.

 

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  ["title"]=>
  string(72) "Mortgages in a tighter lending economy and why Brisbane is a good option"
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  string(72) "mortgages-in-a-tighter-lending-economy-and-why-brisbane-is-a-good-option"
  ["introtext"]=>
  string(255) "

Tune in to the latest episode of Property Showcase, the podcast with the inside track on the products and businesses that will help turbocharge your portfolio, maximise returns and make your overall investment experience seamless and stress-free!

" ["fulltext"]=> string(818) "

To hear more about these services, make sure to tune in to this episode of Property Showcase!

 Make sure you never miss an episode by subscribing to us now on iTunes!

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Son Pham is the accredited Head of Mortgages at Rethink Financing\/Rethink Investing. He has over 6 years\u2019 experience writing loans, over 12 years in the wealth management industry working for the likes of CBA, AMP and private practice and he is also a licenced financial planner (AFSL 326450). He has multiple investment properties that are cash flow positive which help pay his mortgage on his home and fund his lifestyle.<\/p>\r\n

Son is able to write all types of residential and commercial property loans.<\/p>\r\n

In this episode of Property Showcase, head of mortgages at Rethink investing Son Pham joins host Tim Neary to unpack how an investor should approach getting a mortgage in place with banks tightening down on serviceability.<\/p>\r\n

Hear from\u00a0Son\u00a0about:\u00a0<\/p>\r\n

    \r\n
  • The pitfalls that he has seen people get into<\/li>\r\n
  • Interest only loans and if that is the way to go<\/li>\r\n
  • How the mortgage division supports the overall business of Rethink Investing<\/li>\r\n<\/ul>","clientImage1":"images\/podcasts\/Son-Pham.jpg","clientUrl1":"https:\/\/rethinkinvesting.com.au\/","clientName2":"OpenCorp","clientDesc2":"

    Whether it\u2019s building a successful property portfolio or investing in one of their Development Funds, Open Corp can help you through every stage of your investment journey. The team has 40 property specialists who collectively have been involved in over $4 billion worth of property transactions and the acquisition of more than 8000 homes and investment properties.<\/p>\r\n

    In this episode of Property Showcase, director of investment services for Open Corp Michael Beresford,\u00a0joins\u00a0editor of Real Estate, Tim Neary to share why he disagrees that the cooling market means that the best times are behind us.<\/p>\r\n

    In this episode, hear from\u00a0Michael\u00a0about:\u00a0<\/p>\r\n

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    • Why Brisbane is a good investment option right now<\/li>\r\n
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Mortgages in a tighter lending economy and why Brisbane is a good option
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Will Magee has had ambitions to enter into the Australian property market for quite some time, but it has been more than just finances holding him back.  Having been granted permanent residency just two weeks ago, Will is wasting no time and is now in the process of signing papers and finding his first investment property.

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In this episode of the Smart Property Investment Show, Will joins host Phil Tarrant to share why he is purchasing his first property in partnership with his brother, discuss the complications that can arise from such a strategy, and unpack the ongoing plan for building a joint property portfolio with his brother.

Will will also share how they approached saving for their first property, why he is taking out the mortgage in his name exclusively, and share their savings plan for the year ahead.

If you like this episode, show your support by rating us or leaving a review on iTunes (The Smart Property Investment Show) and by following Smart Property Investment on social media: FacebookTwitter and LinkedIn.

If you have any questions about what you heard today, any topics of interest you have in mind, or if you’d like to lend your voice to the show, email [email protected] for more insights!

RELATED AREAS OF INTEREST:

From property in Australia to a ski lodge in Japan
Mortgage Trusts, an alternative first step for property investors
Should a real estate title be in one person’s name only?

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A property investment plan years in the making
object(stdClass)#1185 (52) {
  ["id"]=>
  string(5) "18287"
  ["title"]=>
  string(75) "Regional Victoria showing up Melbourne in price performance, new data finds"
  ["alias"]=>
  string(74) "regional-victoria-showing-up-melbourne-in-price-performance-new-data-finds"
  ["introtext"]=>
  string(139) "

Median house prices in regional Victoria outperformed that of Melbourne in the June quarter, the latest REIV figures reveal. 

" ["fulltext"]=> string(2323) "

Median house prices in the regions rose 4.0 per cent to $419,500 but in Melbourne they dipped by 0.6 of a percentage point to $840,000.

The result in Melbourne was due to a 0.8 of a percentage point fall in prices achieved at auction; this was despite a lift of 2.3 per cent in private sales.

Inner Melbourne suffered due to auction prices, where median prices fell by 4.9 per cent to $1,459,000 but it was middle Melbourne that was hardest hit, with a 5.4 per cent drop to $974,500.

Outer Melbourne had a good quarter with the median rising by 0.5 of a percentage point to $681,000.

Apartment prices in regional Victoria grew by 3.7 per cent to $304,500 while the metro media was up by 0.5 of a percentage point to $604,000.

REIV President Richard Simpson said that despite fewer sales, many sectors of the market were performing well.

“2017 was a bumper year and while the trendline has flattened, despite the fall in median house prices in the June quarter, median prices are still up this calendar year for both houses and units, in Melbourne and in the regions,” Mr Simpson said. 

In particular there was been strong growth in regional centres which is probably due to the first-home buyers’ concessions said Mr Simpsons.

“The first-home buyers’ concession has been a boon for regional areas. A new entrant to the property market buying a house at the regional median will pay no stamp duty, while a first home buyer of an apartment in Melbourne at the median price would pay stamp duty of nearly $25,000,” he said.

Mr Simpson said that more prospective buyers are looking towards regional Victoria which is also having an effect in Melbourne.

“Melbourne’s outer perimeter continues to grow. Small increases in the June quarter mean that the median prices for both houses and units have risen over 10.5 per cent from a year ago.

Mr Simpson said moving forward that vendors need more realistic expectations as the highs of 2017 are now over.

“Negative chatter about the future of the sector coupled with stronger lending controls by financial institutions has created some uncertainty and vendors need to be realistic with their price expectations,” Mr Simpson said.

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Regional Victoria showing up Melbourne in price performance, new data finds

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