Beacon Buyers Agency

03/04/2024

-Are you a Sydneysider earning 70-100K and think you can't afford to buy a house in Sydney? You might be missing out on golden opportunities interstate.

-With 15K suburbs in Australia, there are at least 10 suburbs that may suit your requirements. For example, a few months ago, it was possible to buy a 3-2-1 property around Perth, but now it is getting harder due to limited supply and interstate demand.

-However, outside Perth, there are still affordable properties below $500k with growth potential in South Australia or regional Queensland. A buyer's agent can educate you on how to get into the property by rentvesting.
-Take action and contact me on 0433 186 057 for a free consultation on how to buy a property that you can afford. Remember, always buy a property now if you can afford it.

09/03/2024

BIG Tips to repay your mortgage ($600K) 2 TIMES faster!!
This article is an experience sharing.
The recent interest rate hike has added extra burden to homeowners. The average home loan size is $600K at 6.2%. Total interest payable will be 724K, more than two times of what you borrowed.
1) Refinance to other bank with a lower rate with cash rebate-Banks are willing to offer lower rates and cash rebates to new customers, there will be regular promotion to attract new clients regularly, consult with a good mortgage broker to refinance and get the rebate every few years can save around 40K (5.97%). Interest payable=724K-32K-4K (rebate)=688K
*Consult with an experienced mortgage broker as bank staff cannot help you to get the best offer and rebate.They cannot see the offers of other banks and compare.
*Cut your expenditure or even high limit credit card.
2) Refinance your property structure-Pay interest only on investment properties, as investment properties interest is tax deductible. Consult an experienced broker to move your PPOR mortgage to investment property.
3) If you have investment properties (IP), try to increase the cash flow by reviewing the leasing agent regarding their fees, is your rent is too low, how long they need to replace a tenant etc.
Let's say the rent is $600 weekly, a 20% difference in cash flow (rent+commission+vacancy rate+expenditure) will result in a $173K cash flow difference. Interest payable=688K-173K=515K.
4)Utilize offset account-Let say you have $100K cash put in a saving account,you will get $4.8K and $3.1K after tax (35%), if you put it in offset account, your saving on interest will be 116K and tax saving =1.7x30=51K, altogether will be=$167K. Interest payable remaining=515K-167K=348K
5) Link all your salary and rental income into the offset account, if you put $1K into offset every month will result in 321K reduce in interest payable. You will say you have expenditure to pay and the money staying in the offset account may last only for a few days.
6) Use the credit card with a 40-55 day interest rate free credit card to pay your bills or daily expenditure.
*Make sure there is no surcharge for credit card.
Let's say you have $5K wages deposit into your offset account on the 1st December, as your money outflow is from the credit card but not the offset account, assume you have to pay your monthly mortgage payment of $2K on Jan 1, same day as you will get $5K wages,balance at offset account will increase from $5K to 8K=5+5-2K, you can set a saving goal of $1K every month, that mean you can spend 2K per month/500 per week Then if you will pay your credit card statement ($2K) at Jan 23, your offset balance at 24 Jan will be $6K, still $1K more than the December balance. This is called the Fast Repayment and Saving Strategy (FRASS). You are paying more to repay the principal as you have more money in the offset account every month.
Not only you can repay your mortgage much quicker (>10 years faster), and you can save some money for another investment property and go one step closer to financial freedom.
*Consult a professional for specific advice, I can refer one to assist you to achieve your goal.

02/03/2024

Australian auctions hit a record high last week with 2044 auctions compared to 1846 last year. This year's clearance rate in the last 3 weeks was >75%, a significant increase from last year's >67%. Are buyers fearing missing out or trying to buy before the mid-year interest rate drop becomes a reality? If rates drop, one may have an extra advantage. What will the auction clearance rate and price respond to if interest rates drop twice at the end of this year? Let's keep an eye on the market and see how it unfolds.

11/02/2024

11/02/2024

Myth busted! Recent data shows that affordable areas are outperforming expensive suburbs near CBD. In Sydney and some eastern suburbs, traditionally 'good' suburbs are dropping, while suburbs further away from CBD in Queensland and Adelaide are growing. Interestingly, no suburbs dropped in Perth. With distressed sales increasing, borrower relief may not come until 2024 due to the buffer rate remaining at 3%.

Considering high interest rates, investing in affordable properties in traditionally average performing suburbs may lead to quicker portfolio expansion, higher yield and return, and passive income.

Contact Beacon Buyers for a strategy consultation that will create financial freedom for you.

Remember, this is not advice and may not suit every investor. There are pros and cons for every strategy.

Contact Beacon Buyers at 0433186057 for a strategy consultation that will create financial freedom for you.

Remember, this is not advice and may not suit every investor. There are pros and cons for every strategy.

26/01/2024

5 Myths in real estate market

1.A higher population increases demand for property-Agents and developers always say things like 'Suburb ### stands out as a compelling investment destination, primarily due to its rapid population growth, from 424 residents in 2011, to 2,282 in 2016, and about 14,200 in 2022.'

'This which correlates with increased demand for housing and other community amenities, making it a vibrant and evolving area for potential investors,”

-It is the opposite.The population grew already in the past, these people must reside in some new properties in that suburb, it reflects that there is still a lot of vacant land and supply in future. Also, we have to check what is the percentage of the population who are not even earning any income. Without any other factors that stimulate the demand in future, e.g. infrastructure development or jobs creation, growth may not continue.

2. Past growth does not represent future growth. Developers always use this as a selling point for their off the plan apartments. However, regardless of which suburbs, the growth will never be at the same pace in future. If there is no demand to match the increased supply in future, price is likely going to drop and adjust.

3. Being too honest and showing too much interest to the agent during the inspection-You may be overly emotional when you really like a property, you already imagine how you put your sofa in the lounge during inspection. It is easy for you to miss the flaw of the property, e.g you probably cannot see the cracks on the roof where there is a sign of water leak. Agent will spot your emotion and make you overpay. Hence, tell the agent that you are interested in the property, but there may be some small aspects that you do not like.

4. Agent will tell you that they already received a few offers when you want to make an offer. It may be real, but it can be their tactic to increase competition if they know you fear to miss out. To reverse it, you can tell the agents that you just inspected a similar property which is cheaper, I just like this one a bit more, and tell the agent to ask the seller whether they will accept the offer, you will make the seller fear to miss out if they do not have other offers.

5. Make an offer and secure the property before the auction-It is unlikely if not impossible that the agent will accept a pre-auction offer. Agents always underquote in auction to attract more potential buyers, get their names into their database, and when the property is sold a few thousands above the reserve price, landlords in the neighborhoods may want to sell their properties as well. That is the agent's goal. Sellers may have a high expectation going into the auction and agents can manage the seller's expectations and make them worried if there was no offer received (by law, agents have to present all offers to the vendor though).
VISIT https://lnkd.in/gjT9Uxsm for more information and BOOK a free 15-minute discovery call to find out how we can help you in your property purchasing journey.

08/01/2024

Always said property price is affected by demand and supply. Demand is always > supply. Demand is higher because of all those grants/schemes from the government which push some people who would not buy if without the grants to buy. Supply is always low because land is limited, building approval process takes long time and government seems to have no effective strategy other than building more high-rise apartment to meet the target.
VISIT https://lnkd.in/gjT9Uxsm for more information and BOOK a free 15-minute discovery call to find out how to take advantage of this imbalance and buy underpriced properties.

11/11/2023

Why can property investment protect your future wealth despite the interest rate rise?
-Interest rate rise recently gave another punch to potential home buyers or mortgagors. Inflation is just a cycle created by the government and the banks. There may always be 'inflation', it is the result of government overspending and banks 'overprinting' the money. The media and government reverse the cause and results to confuse the public. How does that relate to property?
-You may be worrying that your borrowing power may reduce and pay more mortgage. But rent also increases with 'inflation', some people may pay less if they pay a mortgage than the paying rent.
-Put it simply, if demand is bigger than supply, price will increase.
-On the supply side, building approvals continued to drop since 2021 to the new low in September 2023, which also fell short of the government 's target. Land is limited, we already see land size is getting smaller compared to 20 years ago, the collapse of many building companies also makes the problem worse, it will get more expensive as labour cost and material cost rise. The recent rate rise may push 20-30% estimated builders to the brink of collapse.
-On the demand side, population continues to grow and will keep going faster than ever. 630K people migrated to Australia last year, the government already changed rules to make it easier for migrations.
-Residential vacancy rates followed the same trend like building approvals and dropped to 1.2%.
-Because of such fierce competition in the rental market, same demand and supply rules, rent will continue to increase in future.
-Rent also goes with inflation as we can see rent already rose by 7% since 2021, it is not uncommon that rents face 20% rent increase in some suburbs.
Yes, it may be difficult to buy property now, but it will get even harder in future. With careful planning and strategy, it is possible, you can still buy what you can afford, it can be anywhere in Australia as long as it will grow in value and bring you equity, or you can rentvest a property that you can afford in different states to just get your foot in this hot property market now first.

11/11/2023

Offset V Redraw ?
-Staff from two different banks have told me that redraw and offset are the same when I told them I only want an offset account. They said I can use redraw and can achieve the same purpose while offset will cost me annual fees. I knew that I would not deal with them from that point after I asked them how they were the same and they could not answer me.
-They are totally different. I think offset is what I need and it suited me.If you understand the difference between them, it may help you to avoid long term loss, shorten repayment time, enjoy tax advantage and even save you when you need money.
-E.g Let say you buy an investment property of $500K, borrow $400K, $100K cash, if you use an offset account, you will get a debit card link to that offset account, you can deposit $100k into that account, your interest calculated will be 300K(400-100),no interest will be charged for the amount in the offset account. You can withdraw the $100K cash any time you want.
-If you are using a redraw facility, you will not have another account, it is like you just repay $100K into the loan to reduce the principal balance, interest also calculated based on $300K, you can withdraw that $100K but you will not have a debit card most likely. You may need to use online banking to transfer to a different account first.
-They look similar at this stage. They are right, I need to pay fees for the offset account and redraw is likely free. Some banks may even offer you some offers with lower rates if you do not want an offset account, which makes it feel like there is no need to have an offset account.
-Now you want to use $100K to buy a car for personal use, for offset, you can just withdraw from your offset account easily, just that the interest will be calculated based on $400K principal. As we have not repaid the loan, the purpose of the loan is still for investment, hence no change in tax purpose, all interest in $400K is tax-deductible.
-For redraw, although you can redraw $100K from the loan, but since you have already repaid it to the bank before, it belonged to the bank, not you. It is like you asked the bank to have a line of credit and increase your borrowing capacity or have another $100K refinance. The purpose of the loan changed already. As the car is for personal use, from taxation purpose, your tax-deductible interest will only be $300K (=400K-100K)
-It is already a simplified example, it will be more complicated if you use redraw to buy grocery, pay bills or for other daily uses, you or your account will have massive headaches.
-ATO is actually very clear about what is tax-deductible and what is not. It is when the PURPOSE is for investment.
-In the long run, for me, the tax I save in offset still outweighs the fees I need to pay for the offset account. It may or may not suit you but it is important to know the difference.

*Contact a mortgage broker or accountant if you want more professional advice in borrowing or tax advice.

04/11/2023

How to pay LESS on your mortgage?
-Interest rates had been nearly tripled since Covid and lots of people found it harder to keep up with mortgage payment.
-Banks or lending institutions want to increase market shares in this competitive environment, they try to retain their current clients and offer good rates, cash back or other incentives to new customers.
What you need to do:
-1-call the bank or your lending institutions and tell them that you have found another bank which is willing to offer you at a lower rate and you will move the loan to there.
-2-Tell them you need a discharge authority form as it is a routine process when customers request to transfer fund.
-3-May be they will tell you to wait and transfer you to other department or need to ask their managers, they may not be asking but it is just a negotiation tactics.
-4. If they tell them they can give you a 0.2% discount, you tell them the other bank already agreed on 0.8% drop and ask them whether they can do the same or not.
-5. You have nothing to lose as they cannot do anything without you signing the form.
-Note:1-you need to be familiar with other products in the market.
2-there is a 50-60% that they will give it to you, but it worth a try to spend 30 minutes to pay around 92k less for a 1million 30 years mortgage. (0.4% drop)
-VISIT https://beaconbuyersagency.com.au/ for more information and BOOK a free 15-minute discovery call to find out more.