Investment & Development Advice

As you set your sights on your dream property, it’s only natural to feel a sense of anticipation and enthusiasm. These emotions, however, should be tempered with a dose of practicality. Have you got all the right information to make a smart decision?

If you’re serious about buying a property, you need to ask the right questions – and lots of them. Why? By the time settlement day arrives, it’s too late to address any issues with the property, and they become your responsibility. 

As the eyes and ears of the real estate market, an experienced buyer’s advocate knows Melbourne and can address all your questions and concerns. A buyer’s advocate is a licensed real estate professional who works exclusively for you, the buyer. They are legally obligated to protect your interests and deliver expert guidance to facilitate the best possible deal on your behalf.  

So, before you sign the dotted line, start by asking your buyer’s advocate these 10 essential questions: 

1. Who owns the property and why are they selling?

As a buyer, you need to understand the identity of the property owner and the reasons behind their decision to sell. This knowledge can also impact the negotiation process in a significant way. 

Here’s a quick example: If the seller has already secured another property and is in a hurry to sell, there may be more opportunity to negotiate a lower price. Whatever the motivation, whether it’s downsizing or a divorce settlement, assessing the seller’s intentions can give you a strategic advantage. 

2. What are your thoughts on the location?

The surrounding area of a property is as important as the property itself. Looking at the area’s demographics, as well as the suburb profiles (amenities, access to transport, parks, schools and so on), is very important. How come? You’re not just buying a house – you’re also buying into an area.

A good buyer’s advocate in Melbourne can provide a treasure trove of information and insights about the locality, the neighbourhood, and more. They can equip you with data on demographics, property pricing, local population statistics, growth rates, and prevailing market trends. This additional knowledge and insight allow you to make a more informed assessment of whether a particular price for a specific street or location within a suburb is reasonable.

Want to know if the area is full of young professionals, families, students, or seniors? Or if the area has grown recently in popularity with one of these groups? As seasoned buyer’s advocates in Melbourne, you can chat with Property Analytics about these details. 

3. What are the neighbours like?

Applicable to both residents and businesses, friendly and respectful neighbours can significantly contribute to the overall ambience and experience of your chosen locality. This is both relevant to those buying for themselves, as well as anyone buying for the purposes of investment.

While visiting the area at different times of the day can provide some insights, a buyer’s advocate in Melbourne can offer valuable information about the neighbours and the community you otherwise wouldn’t easily uncover on your own. 

4. Have there been any recent renovations?

Understanding the property’s renovation history is crucial for assessing its true value. If significant renovations have been carried out recently, you need to take this into account when comparing the property’s current market price with its last sale price. Verifying that these renovations received council approval and met the necessary quality standards is equally as important.

You should also get to know any existing warranties or any local development applications that might have implications for the property’s future. Once you have a grasp of the property’s renovation history, you’ll be better equipped to evaluate its potential risks and advantages, as well as an accurate assessment of its true market value. 

5. Have there been similar sales in the past year?

This question is invaluable as it allows you to gain real insights into the demand for properties comparable to the one you’re interested in, and the price range to anticipate. It also allows you to gauge the realism of the seller’s asking price and empowers you to make a fair offer. Another general recommendation is to enquire about the number of properties sold in the area recently, pricing trends, and any seasonal fluctuations in the market. 

Property Analytics keeps a close eye on insights and studies of the Melbourne property market. To get in touch with a top buyer’s advocate in Bulleen and surrounding areas, reach out today. 

6. Can you show me a recent property sales report to show what the house is worth?

This is an important but often overlooked question with three parts:

1) Enquire why the property is listed at its current price; 

2) request a recent sales report; 

3) and ask for a showcase of similar properties and their sale prices. 

These reports make sure that you’re not overpaying and that the property is fairly priced compared to the local market. 

7. How long has the property been on the market?

The duration a property has spent on the market tells a real story. If a property lingers for more than six weeks, it might be overpriced or have underlying issues. In Australia, the average time for a home to sell is approximately one month, so significant deviations warrant scrutiny. Here, you should ask whether the property went to auction and failed to sell, and if so, enquire about the specifics surrounding the auction, including the pass-in price.

8. Are there any known issues with the property, land or neighbours’ properties?

Sometimes, unforeseen issues  impact a property’s value, so it’s quite important to question the agent. While your building inspector and conveyancer are poised to identify most potential concerns, consulting with the agent before signing the contract can uncover additional insights. Buyer’s advocates in Melbourne often operate in good faith and may disclose any issues that could affect your decision.

What questions should you be asking? Start with any  known issues regarding the property, land or neighbouring properties. For example, if there was a past dispute between neighbours that could result in future issues, this should be discussed. Another issue could be a neighbour’s construction project that may have an impact on your views or privacy. The agent may also know of any zoning regulations that are likely to affect your future plans. 

9. Are the sellers open to negotiating on the price?

If you want to secure a property at a favourable price but the  listing exceeds your budget, it’s important to gauge the seller’s willingness to negotiate. Understanding the minimum amount at which the seller would consider a sale enables you to assess your affordability and whether further pursuit is warranted. Of course, this also depends on the current demand and number of interested parties.

When negotiating the price of a property, there are several questions you should ask your buyer’s advocate in Melbourne to set you up for success. Get in touch with Property Analytics for valuable market insights. 

10.  And what’s the sales history of houses in this area?

Researching the sales history in the area is always advisable. This data provides a  comprehensive outline of recent property values, their evolution over time, and potential return on investment,  Engage with a buyer’s advocate for insights on the number of properties sold in recent years, prevailing market trends, sale prices, peak selling seasons, and other relevant information. The more thorough the investigation, the more you’re equipped with valuable market knowledge to negotiate the best price. 

The Importance of a Buyer’s Advocate to Facilitate Your Property Purchase

When you are in the process of purchasing a property, there is no better resource to have on your side than a buyer’s advocate.

However, the effectiveness of their role hinges largely on your ability to ask the right questions. These questions will not only give you a clear understanding of the property market and the potential of your chosen property, but also allow you to evaluate your agent’s expertise and commitment to your cause.

Remember, it’s not just about the property; it’s about the context surrounding all aspects of the transaction – so make sure you ask. There’s no harm in taking the time to gain more clarity and take full advantage of the advocate’s wealth of knowledge. 

Looking for a Buyer’s Advocate in Melbourne? Let’s Talk 

By now, you should have some burning questions for your buyer’s advocate. As a proactive and inquisitive buyer, you’ll be rewarded with deeper insights into the property, the seller’s motivations, and various other considerations that will help you manage your budget effectively. 

If you are a prospective buyer, reach out to Property Analytics, your trusted buyer’s advocate in Bulleen and surrounding areas of Melbourne. 

From blueprint to building, a successful property developer relies on the collective efforts and expertise of their team members. Without a competent team to support them, the entire project is at stake.  

Meet Alex, an ambitious property developer with his sights set on a mammoth future project. Looking to cut corners (and costs), Alex sacrifices valuable positions and skill sets in his property development team. Because of this decision, Alex’s property development venture is eventually plagued with obstacles and risks.

The absence of a draftsman leads to design and regulatory issues; the lack of a competent construction team results in delays and shoddy workmanship; an inexperienced strategist brings financial mismanagement; and without a property manager, operations and maintenance suffer. 

Sounds rough, right? With so many preliminary costs already involved, it can be tempting for property developers like Alex to bypass hiring all the recommended professionals. As experienced property development consultants in Melbourne, all we can say is “trust the process” and keep a checklist handy of the ten key players essential to your success story: 

☐ Buyer’s Advocate can provide market insights to make informed decisions about demand and property trends.

☐ Property Accountants understand the industry and help with taxes, financing, and asset protection.

☐ Property Lawyers set up investment structures, handle legal requirements, and make sure contracts are in order.

☐ Mortgage Advisor/Brokers find specialised lenders and secure the right loan for your project.

☐ Land Surveyors/Arborists ensure compliance with environmental regulations. 

☐ Town Planner Consultants navigate local regulations and help you gain approval efficiently.

☐ Draftsmen understand town planning regulations and complete drawings for a successful property development. 

☐ Property Development Managers oversee the project, manage timelines, and stay within budget.

☐ Construction Contractors transform plans into reality with quality workmanship.

☐ Real Estate Agents assist in site selection and facilitate property sales.

Successful property development requires teamwork under decisive leadership. As the developer, you’re responsible for every single decision – this complete level of accountability can be daunting, especially given the breadth and depth of challenges involved. That’s why it’s so important to assemble a team of experienced professionals who you can rely on for expert advice.

Assembling Your A-Team: The Key to Property Development Success

When it comes to property development, two heads are definitely better than one – or in this case, ten heads. However, the success of your development projects heavily relies on the calibre of your team. Without the right combination of industry professionals, you increase your investment risk from the start and are likely to encounter costly mistakes along the way. 

One question that property developers often ask is, ‘Do I really need all these experts?’ To put it simply, yes. Each team member brings a unique set of skills, knowledge, and experience to the table, and they all play a vital role in ensuring the project’s success. 

For instance, your finance strategist will provide invaluable advice on managing expenses and potential profits, while your architect and engineers will work together to create a code-compliant design. 

Another aspect to consider is the constantly evolving nature of the property market. Working with a team of professionals who are up-to-date with the latest market trends, regulations, and technologies can help you stay ahead of the curve and make smart decisions about your project. 

Building the dream team takes effort. Choose wisely, considering qualifications, experience, and a solid track record. As with any team effort, foster collaboration and communication from the beginning for a smooth ride.

From a resourceful property accountant to a market-savvy real estate agent, let’s get to know the ten experts you need to boost that all-important profit margin.

1. Buyer’s Advocate:

When I say that the first person you should appoint is a buyer’s advocate, I genuinely mean it. Why? Because purchasing well is the single most important determinant of success, and the primary job of a buyer’s advocate is to ensure that you purchase a quality site. A good buy doesn’t simply mean a good price. 

A buyer’s advocate in Melbourne can provide valuable insights into local property market trends and demographics, helping you make informed decisions about property development and features. They study historical and current market trends, assess data like property prices and buyer preferences, and analyse demographics such as population growth and income levels to guide your development decisions.

You want to purchase in a neighbourhood that’s likely to see above-market future median $ price growth – I’ve overseen developments where as much as half of the profits were attributed to price increases in just two years.

You’ll need to effectively determine the development potential of sites, and ensure the design scenarios match with end-buyer demand (e.g. why build ten one-bedroom apartments where nobody wants to buy them?).

You must build an accurate project feasibility study that accounts for all costs – purchase, planning, holding, construction, etc. – and for likely resale values, based on in-depth analyses of the area’s sales and trends.

All of this time-consuming work needs to be done prior to purchase and requires considerable experience and intellectual property to do properly.

Lastly, and most obviously, a buyer’s advocate should be able to source off-market properties for you and negotiate purchases effectively at auction or via private sale. I strongly recommend considering a licensed professional who can help you minimise the risks of development and maximise your return on investment.

As licensed buyer’s advocates in Melbourne, we look after all aspects of property negotiations, from research to settlement.

2. Property Accountant:

As a master of numbers, a property accountant is an invaluable team member who manages the financial intricacies of your project. A property accountant with industry experience is essential for your property development squad, and here’s why: 

Understanding tax claims: A property accountant wears many hats, but their primary focus is on maximising tax benefits and streamlining financial processes. You may encounter tax claims that are unique to the industry. By working closely with a property accountant who’s well-versed in these nuances, you can capitalise on every available tax incentive, saving you money in the long run.

Preparing financial documents: A property accountant will play a key role in preparing financial documentation for loans. In a property development project, securing financing can be challenging and may require specialist lenders. With the help of a mortgage advisor or broker, your property accountant will prepare the necessary paperwork to strengthen your loan application, increasing your chances of approval.

Protecting your assets: Another responsibility of a property accountant is working alongside your property lawyer to protect your assets. This includes setting up appropriate investment structures, ensuring legal compliance, and managing risk. As a property developer, your assets are your most valuable resource, and a property accountant will help safeguard them against potential pitfalls.

3. Property Lawyer:

The next key player is a property lawyer, who works hard to safeguard your investment. A knowledgeable property lawyer plays a critical role in helping you navigate the legal complexities of the industry, making sure your investment is protected every step of the way.

Set up investment structures. First and foremost, your property lawyer will assist in setting up the appropriate investment structures for your property development project. Collaborating closely with your property accountant (team member #1), they’ll determine the best structure for your specific circumstances, such as a company, trust, or partnership.

Ensure legal compliance: Legal compliance is another area where a property lawyer is worth their weight in gold. They’ll confirm your development project adheres to all relevant legislation, regulations, and bylaws. This includes obtaining necessary permits and approvals, adhering to zoning and land use restrictions, and addressing any environmental concerns. Staying on the right side of the law is crucial for avoiding costly fines, delays, and even the potential failure of your project.

Handle conveyancing: When it comes to conveyancing and contracts, your property lawyer will be your go-to expert. They’ll review, draft, and negotiate contracts, making sure the terms and conditions are favourable for you. This includes contracts with your architect and engineers (#5), town planner consultant (#6), construction contractors (#9), and real estate agents (#10). With a skilled property lawyer on your team, you can rest assured that your contracts are watertight and your interests are protected.

Assist with asset protection: Asset protection is another critical aspect of property development that your property lawyer will address. They’ll work to safeguard your personal and business assets from potential risks, such as litigation or bankruptcy. By implementing strategies like holding assets in separate legal entities, your property lawyer can help minimise the impact of any unforeseen circumstances on your overall investment portfolio.

4. Mortgage Advisor/Broker:

A mortgage advisor or broker is a financial expert who specialises in sourcing property development loans. They have extensive knowledge of the lending market, including specialist lenders who cater specifically to property developers. By working with a mortgage advisor, you gain access to their industry expertise and valuable network, allowing you to find the most suitable and competitive loan products for your project.

Negotiating power: One of the most significant advantages of partnering with a mortgage advisor is their ability to negotiate better loan terms on your behalf. They can leverage their relationships with lenders to secure lower interest rates, flexible repayment schedules, and other favourable conditions that may not be available to you if you approach lenders directly. This can ultimately save you thousands of dollars over the course of your loan and contribute to the overall success of your property development project.

Industry Insights: In addition to securing the right financing, your mortgage advisor can also offer valuable insights into other aspects of your property development project. For example, they may work closely with your finance strategist (#3) to help you create a financially sound strategy that keeps your project afloat even in the face of challenges. They can also collaborate with your property accountant (#1) and property lawyer (#2) to ensure your loan structure is tax-efficient and legally compliant.

5. Land Surveyor/Arborist:

Before any serious design work can be done, you need a land survey and an arborist report – getting these done is a top priority once a contract of sale is signed. 

Land Surveyors: Laying the Groundwork for Success

Land surveyors play a vital role in the early stages of property development by accurately measuring and mapping out the site. They assess the topography, boundaries, and any potential constraints, ensuring your project complies with regulations and minimises the risk of disputes with neighbours. This information is essential for architects as they consider the  layout and positioning of your development, therefore maximising its potential and appeal to prospective buyers.

Arborists: Analyising Tree Impact on Development 

An Arborist uses the survey report, and identifies the species, heights, diameters, and health of all vegetation on the block. They provide a full report, complete with retention values of each tree, and structural root and protection zones. This report is critically important to the development design, as it identifies which trees will likely need to stay, and how close you can build to them. If there are significant trees on the site, it’s absolutely worthwhile seeking informal advice from an Arborist prior to purchase – particularly if overlays exist that will restrict tree removal.

6. Town Planner Consultant:

A town planner will help you navigate local council requirements so your development fits seamlessly within the local area and infrastructure.

One of the most important aspects of a town planner consultant’s role is to help you simplify the often complicated world of local council requirements. These requirements can vary significantly between different regions, and having a professional on your team who is well-versed in the specific regulations of your project’s location is invaluable. The town planner will assist you with obtaining necessary permits, submitting development applications, and ensuring that your project complies with zoning and land-use regulations.

Seamless Integration with the Local Area and Infrastructure

Aside from adhering to the local council requirements, a town planner consultant also ensures that your development project fits harmoniously within the existing local area and infrastructure. They will consider factors such as the existing streetscape, nearby amenities, and public transport options, as well as the overall character of the neighbourhood. By taking these factors into account, the town planner can help you design a development that not only meets the needs of its future occupants but also contributes positively to the local community.

Working in Tandem with Other Team Members

A town planner consultant doesn’t work in isolation – their expertise is most effective when combined with the skills of other essential team members, such as architects, engineers, and market analysts. For example, the town planner’s understanding of local council requirements will complement the architect’s vision for a visually appealing and compliant design. Similarly, the insights provided by market analysts will help the town planner to make sure the development caters to the needs and preferences of the target demographic.


7. Draftsman: 

For a number of reasons, I choose to work with a draftman instead of an architect; mainly, it’s about fees, incentives, and creative license. 

A draftsman specialises in translating your ideas and vision into practical and functional designs. With their in-depth knowledge of architectural principles and building codes, they can create designs that meet both your aesthetic preferences and regulatory requirements. Their creative problem-solving skills enable them to optimise space, enhance functionality, and deliver innovative design solutions. 

Your initial efforts with the draftsman should focus mainly on the orientation of each dwelling: which ways they face, where their driveways and garages are located, how the finished floor levels sit in relation to ground levels outside, where the secluded private open spaces go in relation to indoor living areas, how close to trees, neighbors, and streets you will build, etc.

From there, you’ll progress to internal layouts (e.g. location and sizes of bedrooms, bathrooms, kitchen, etc.). Then, onto window placements, external materials and colors, and landscape design.

Ensure that the draftsman you use has a lot of experience in multi-townhouse design, so that they understand key aspects like site coverage, garden space requirements, setbacks, etc. A good draftsman should be clear about the parameters you need to design within, as well as the boundaries you can reasonably push to maximise the development potential of the site.

8. Property Development Manager:

Acting as a liaison between your design team and construction crew, a property development manager ensures your project is completed on time and within budget. But what exactly does a property development manager do, and why are they so critical to your project’s success?

To better understand the importance of a property development manager, let’s first consider the potential challenges and pitfalls that may arise during the development process. For example, delays in construction can lead to increased costs, missed deadlines, and even potential legal disputes. Poor communication between team members can result in design flaws, budget overruns, and ultimately, a compromised final product.

A property development manager is an indispensable asset for any property development project. By providing effective communication, coordination, and proactive problem-solving, they can help ensure your project is completed on time, within budget, and to the highest possible standard.

One of the key advantages of working with a property development manager is their ability to foresee potential issues and proactively address them before they escalate. This proactive approach can save you time, money, and stress in the long run. For example, by closely monitoring the construction timeline, a property development manager can identify potential bottlenecks and work to mitigate them before they impact the project’s overall progress.

9. Construction Contractors:

Experienced and reputable construction contractors are responsible for bringing your vision to life (within the confines of local regulatory requirements). Their expertise covers a wide range of areas, from laying the foundation to installing essential services such as plumbing and electricity.

Make sure your chosen contractor has the necessary expertise will save you time and money in the long run, as they will be better equipped to navigate any challenges that may arise during the construction process. Here are some tips to help you make the right choice:

1. Interview Multiple Builders: Meet with three to four builders in your area and review their past work. Consider their knowledge in construction as well as their familiarity with the local area and community. Ask for references and try to speak with past clients to get their feedback on the builder’s performance.
   
2. Contact References: Just like a job interview, ask the construction company for a list of references. Reach out to these references, especially those who had similar projects to yours. Inquire about their experience with the builder, including their satisfaction with the build process, adherence to timelines, accuracy of the budget, and overall communication. This will give you insights into what to expect from the construction company.
   
3. Get Estimates: A good construction company will provide an estimate that is clear, easy to understand, and itemised. You should have a clear understanding of the materials that will be used and the specific costs associated with each item.

10. Real Estate Agents:

 Real estate agents are often the unsung heroes of property development projects. Their expertise in the buying and selling stages can be invaluable for developers looking to maximise their profits and manage cash flow effectively.

Real estate agents possess in-depth knowledge of local market trends, which allows them to provide developers with accurate data on property values, buyer preferences, and demographic information. This knowledge enables developers to make informed decisions on the types of properties to develop and the features to include, ensuring a higher return on investment.

One of the primary roles of real estate agents is to secure the best possible prices for both the purchase of development sites and the sale of completed properties. By leveraging their extensive networks and negotiation skills, real estate agents can help developers acquire land at competitive prices and sell finished properties at a premium.

Tips for Successful Collaboration with Real Estate Agents

Clearly define your project goals and expectations: Communicate your vision, budget, and timeline to confirm the agent understands your objectives and can provide accurate advice.

Establish open lines of communication: Regular updates and meetings are essential for maintaining a strong working relationship and staying informed about the progress of your project.

Get in early: Real estate agents can also assist in securing pre-sales or off-the-plan sales, which generate early revenue and can be used to finance ongoing construction costs. These early sales can be particularly beneficial in situations where traditional financing options may be limited or unavailable.

Teamwork Makes the Dream Work: Work with a Property Development Team You Can Trust 

In the high-stakes game of property development, a successful project is the result of a well-coordinated team effort. No single developer possesses all the necessary skills to tackle it alone. Therefore, having the right team by your side can save you from falling into the costly pitfalls that often trap other developers. 

By understanding the roles and responsibilities of each team member, you can create a well-rounded team that will work together to achieve the best results for your project. Don’t be afraid to ask questions and seek expert advice, as this will only contribute to the success of your property development journey.

Property Development Consultants in Melbourne 

I firmly believe that property development is less risky than property investment. As your property investment advisor and buyer’s advocate serving Kew East and all of Melbourne, I can help you find high-value investment properties and development sites that supercharge equity growth and stimulate your investment portfolio.

Interested in speaking to a buyer’s advocate in Melbourne? Ask me how I can help.

A few years ago, some family friends were looking to buy a home. They were savvy enough to understand how important it was to buy in the right area > suburb > neighbourhood in order to achieve the greatest financial benefits from capital growth.

But boy were they picky.

They were initially unwilling to compromise on any of their parameters: 600 square metres, flat block, 3-bed, 2-bath, single story, brick veneer, within 500m of train stations and shops, within a specific school zone, etc, etc.

On top of that, they were really indecisive when suitable properties came on the market and often talked themselves out of purchasing… Is it the right month to buy, that property down the road sold for less last year, and if we buy now then what does that mean for our holiday plans in 2 months?

Lastly, they were constantly dipping in and out of the market – attending 17 opens one month, then zero the next two months, then 5 the next.

The result? After over 2 years of “looking”, they were forced to increase their budget by 35% due to median price growth. And they got priced out of the area they originally wanted to purchase in, then the next area, and then the next!

As the market moved onwards and upwards, their purchasing power went backwards, dramatically.

This is a prime example of what not to do when buying a house, whether as an investment property or a family home. So, what are some other mistakes to avoid, and what steps should you be taking as a buyer?

Here’s some advice from our property investment advisors in Melbourne.

Dos and Don’ts When Purchasing a Property

DO Consider at Least 2-3 Different Areas

As with most things in real estate, it’s about supply and demand.

If you restrict your search to one specific suburb or neighbourhood, you’re limiting your choices unnecessarily, and a few things will likely happen:

• you’ll suffer emotionally from continually missing out on properties;
• you’ll end up having to increase your budget substantially over time to keep up with other buyers;
• you’ll end up overspending due to frustration; or
• you’ll eventually get priced out of the area and will have to look elsewhere.

The lesson? Maximise your options from the get-go. Don’t just look where you live, where you grew up, or in other familiar areas. And don’t just choose one so-called hotspot. Widen your net to at least 2 or 3 key areas and consider them equally.

DON’T Get too Emotional (or at least try not to)

Buying property is a huge decision, whether it’s your family home or your big investment. There are always going to be emotions involved, but if you let them override you it could be an expensive mistake.

Be as analytical and objective as you can when considering properties and negotiating purchases. Remember that auctions are popular in Melbourne because they make potential buyers emotional, and don’t fall into the same trap.

Don’t be the sap that pays $100k more than your budget because you got lost in the moment or didn’t do your homework. Moves like that can quickly turn a solid investment into a very shaky one.

DO Crunch the Numbers

Whether you’re a homebuyer or a property investor, you need to determine your budget and stick to it. Get to know the upfront costs (20% deposit, stamp duty, legal & financial costs, etc.) as well as all the holding costs (maintenance costs, loan repayments, insurance, etc).

If you are pursuing a negative gearing strategy, ensure you have the funds to cover the losses, and don’t expect tax offsets to fully reimburse you (because they won’t).

DON’T Shy Away from Negotiations

There are plenty of moments in the residential property-buying process when you may get the chance to negotiate. When a property has been passed in after an auction, when a house is up for private sale, or during an open home if the vendor and the real estate agent are willing to play ball.

Sometimes you’ll be in a position of power (like when you’ve been handed a particularly concerning pest inspection or building inspection report) and sometimes the playing field will be neutral.

To get a great deal, you will need to become a master of making offers and negotiating. Quote numbers that are fair, justify your position with facts and be firm with your offers. Know when you have the leverage and act accordingly and you’ll be sure to get a great deal.

Remember that as well as discounted sale prices, you can negotiate for certain repairs to be carried out or for the vendor to pay extra closing costs.

DO Your Research and Understand Your Buying Goals

Most buyers (and, because we’re in property-mad Melbourne, a lot of non-buyers) regularly read property sections in newspapers and track sales results. Absolutely do this, but it’s equally important that you actively inspect properties, talk to local agents about trends and transactions, and walk the streets to get an intimate feel of different neighbourhoods. I’m a Data Analyst, so I appreciate the importance of statistics, etc, but there is no substitute for on-the-ground knowledge and contacts.

The research you do should be informed by your property-buying goals, so make sure you understand exactly what you want out of this process.

The first and most obvious distinction is home buying vs investing, but beyond that, you may need to consider:

• your financial and lifestyle goals
• positive gearing vs negative gearing
• capital growth or rental yield (there is a correct balance); and
• your appetite for future development or renovation, to name a few!

DON’T Be Overly Choosy

With all this talk about target areas, budgets, goal setting, and research, it’s easy to think that you’ll end up like my family friends, never finding the right property.

At times like this, an old saying comes to mind. “Don’t let the perfect get in the way of the good!”

It’s rare to find a property that ticks absolutely all of your boxes, and if one is found, chances are you’ll have to pay a considerable premium due to strong demand from other purchasers. Be realistic with your expectations, rank your priorities, and be willing to compromise. The beautiful thing about real estate is that you can make the improvements needed over time.

DO Consider Value-Add Opportunities

The most successful property people I know are enthusiastic about renovating, extending and developing. They recognise that rundown properties can be bought at a discount, whereas you pay a premium for turnkey dream homes. Importantly, it’s about recognising and investigating options to change floor plans, renovate, extend or develop prior to purchase.

Updating an outdated kitchen or maximising a big but underutilised backyard is a gift for owner-occupiers looking to stay in their home or investors hoping to maximise value.

If you’re interested in going a step further and completely redeveloping a block, our property development consultants in Melbourne can find a site with development potential and help you close the deal and put all the plans and permits in place.

Don’t be the buyer that outgrows your house and has to move in a few years due to lack of space. And don’t be the investor who relies solely on the property market for capital growth, with no thoughts for active value-adding.

Look at a property’s full potential and purchase with an eye to the future.

DON’T Overlook Bad Bones

In real estate, you make or lose your money when you buy, not when you sell.

What this means is that you should look for quality properties in carefully selected areas. What this doesn’t mean is getting obsessed with finding a “bargain” to the point where you overlook serious structural issues that become a time and money sink.

A kitchen or bathroom reno is one thing, but bad foundations or an incredibly poor structure and layout can be incredibly costly whether you’re hoping to live in a property or make serious money from it.

Always have properties professionally inspected and tick every other box on your due diligence list along the way. And remember that a carefully considered $900k purchase will almost always be more of a deal than the $500k “bargain” you’ve rushed into.

DO Talk to a Professional

We provide a lot of free professional advice and insights, partly because we love real estate and we’re passionate about sharing our work.

But let’s be serious, we hope that by sharing our stories and research, people will recognise that we know how to succeed in real estate.

If you don’t know where the best suburbs in Melbourne are, what type of property to look for, how to achieve great profits and/or long-term wealth, or what strategies to deploy in negotiation or auction bidding, then reach out to us.

At Property Analytics, we are your buyers agents/buyers advocates across Kew, Doncaster, Thornbury, and Melbourne. But our team doesn’t just find, negotiate, and secure investment properties. We offer a proven process for pursuing high-value investments, including off-market investment and development opportunities, all based on your goals.

Some other professionals you might need on your journey that we can connect you with include mortgage brokers, solicitors, property managers, and accountants, as well as town planners, engineers, architects, and quantity surveyors for development projects.

DON’T Listen to So-Called Experts

Your mate or your cousin might have bought a successful investment property 5 years ago, but that doesn’t mean they can guide you to the same success, let alone point you in the right direction.

Property marketers will spruik the dream until you sign on the bottom line, but they are all about selling properties and earning commission, not giving you good advice.

And real estate agents… Well, you can’t avoid them. And the idea that they’re also on the buyer’s side remains an all too common misconception. Just because you need to network with them, it doesn’t mean you need to take anything they say at face value. 

DO Get into the Market

Every week, month and year that goes by without purchasing a property, your options become narrower. As much as we recommend being smart, objective, strategic and professional, the reality is that you need to eventually take the plunge to succeed in real estate. Indecision is a lot like procrastination – it keeps you occupied, but it doesn’t get you anywhere.

So, don’t dip in and out of the market or spend all your time looking at properties or price brackets that are purely aspirational. With our advice and proprietary research to back you up, you can enter the property investment market sooner.

DON’T Get Drawn in By Apartments 

This is something we will never stop banging on about. Oversupply and lack of demand result in less property price growth, restricted finance options, and risky business for investors.

Successful property investors stay away from apartments, and you should too.

I’ve Seen a Lot of Property Buyers Make the Same Mistakes

One of the sad realities of property ownership in Australia is that Wage Growth is nowhere near keeping up with House Price growth.

For this simple reason, problems like procrastination and pickiness can be just as costly as emotional or uninformed purchases. You either lose money and opportunities by purchasing a pit or you do nothing and get priced out of good investment opportunities.

But there is another way.

When you have a clear strategy, independent data, and a proven shortlisting, feasibility, and negotiation process, you can enter the market smartly, and sooner than expected. And when this is the way you enter the market, meeting your investment and development goals is easier.

That’s what’s possible when you choose Property Analytics as your buyers agent in Ivanhoe, Templestowe, Brunswick, and the surrounds.

Find out more about our Melbourne Property Services.

We’ve all heard of the pot of gold at the end of the rainbow.

Optimists will tell you that it’s real and that you can realise all your biggest hopes and dreams.

Pessimists will tell you that the pot of gold is the ideal that you will probably never achieve, and that chasing it will only bring you misery.

And property investors will tell you that the pot of gold comes in the form of long-term capital growth.

The average appreciation of houses in Melbourne sits at around 8% annually, and a well-chosen property will appreciate over time.

The problem isn’t whether or not the pot of gold exists. It’s retaining your asset long enough to get to the end of the rainbow.

Sometimes your investment property might be generating profits through rental returns, and at other times, you might be losing money simply by holding an asset. The returns from capital growth may be worth it in the long term, but what do you do while you wait for your property to appreciate?

This is where negative gearing comes in.

What Is Negative Gearing?

If the costs of owning your investment property are higher than the money it is generating, you can use these losses to lower your personal income tax and save money at tax time. 

This is called negative gearing, and it’s a strategy that many investors pursue – even deliberately – to achieve tax deductions and soften the financial burden of retaining a property that’s losing money.

Why Would Anyone Want To Pursue Negative Gearing On Purpose?

Holding onto an investment property that costs more money than it makes sounds precarious and doing it deliberately just for some tax benefits seems downright reckless.

But like we said, many property investors deliberately pursue this strategy, and it’s often recommended by property investment advisors in Melbourne – including Property Analytics.

I’ve already given you the number one reason – capital growth! Investors aim to retain their investments for longer and eventually sell when house prices rise. The theory is that the capital gains will generate enough wealth to offset the purchase price and any losses that were made along the way, resulting in a tidy profit.

A general principle of property investment in Melbourne is this: negatively geared properties (e.g. properties with lower rental yields) tend to appreciate more in value over time than cashflow neutral/positive properties (e.g. properties with high rental yields). Houses tend to return less rental yield than apartments – the below graph compares house price growth to apartment price growth over the last 20 years.

Negative gearing also takes some of the stress out of rental returns. Investors can offer lower rental prices to attract more stable long-term tenants and attract a higher pool of potential renters to replace an outgoing tenant.

Of course, not everyone deliberately pursues negative gearing. You might unexpectedly end up in a loss position due to lower returns or higher expenses than forecasted, allowing you to take advantage of negative gearing.

So, How Much Money Will I Get Back at Tax Time When Negative Gearing?

Negative gearing comes into play when your eligible investment property expenses outstrip your rental income. The difference in these two numbers can then be taken off your income tax for the financial year. Eligible expenses include management fees, maintenance expenses, and mortgage interest payments.

For example, if your property generates $15,000 in rental income but your costs total $20,000, you can reduce your taxable income by $5,000 – that turns $100k in taxable income into $95k.

However, this doesn’t mean you get $5,000 more in tax savings. Rather, you’re saving 32.5% of $5,000, as the marginal tax rate for a $95,000 income is 32.5 cents in the dollar for every dollar over $45,000.

So really, you reduce your tax by $1625 and you still need to cover the other $3375 in property losses yourself.

The savings associated with negative gearing can be compounded if your reduced income pushes you into a lower tax bracket. For example, property losses of $5,000 will reduce a taxable income of $122k down to $117k. This puts you in a lower tax bracket, meaning your entire taxable income is subject to a marginal tax rate of 32.5% rather than the higher bracket of 37%. 

As you can see, negative gearing is not a silver bullet that eliminates property losses. It’s important to consider all your taxable income and chat with tax and investment professionals before jumping into a negative gearing strategy. 

Our buyers advocates serving Kew East, Brunswick, and the surrounds can help you understand how negative gearing will apply to you.

What About Positive Gearing and Neutral Gearing?

Positive gearing is the opposite of negative gearing. In this case, your rental returns outstrip your combined property expenses. Neutral gearing occurs when your rental income and property expenses more or less cancel each other out, resulting in no significant positive gearing or negative gearing benefits.

The clear benefit of positive gearing is that you are making profits that you can use to continually strengthen your financial position, whether that’s through saving for your next investment property or chipping away at the principal on your investment property loan.

However, positive gearing also increases your taxable income in the same way that negative gearing reduces it. Increases in taxable income could even push you into a higher tax bracket.

Things You Will Need If You Want To Negatively Gear Your Investment

For negative gearing to be successful, you will need:

• A comprehensive understanding of all your property expenses, from the council taxes to repairs and maintenance.
• To expect the unexpected, including additional costs to cover major damage and interest rate rises.
• The cash flow to cover all these expenses until the end of the financial year.
• Extra funds to absorb costs you can’t claim, like principal loan repayments and the 55%+ of eligible expenses you don’t get back.
• To choose your investment property carefully to maximise the likelihood of stable long-term growth and maximum return on investment.

It is essential to consider the worst-case scenario and ask yourself if you are financially equipped to handle the situation if disaster does strike.

What if you go from relying on reduced rental income to not being able to fill your rental property at all? 

What happens if you lose your job or you have to sell your investment property before it has the chance to appreciate further?

Are you really in a position where you can afford to retain a money-losing asset for 10, 20, or even 30+ years?

Of course, there are ways to minimise the risks associated with negative gearing.

The most important negative gearing risk management strategy is buying the right investment property. Select a rental property with wide-ranging appeal, such as property close to major amenities and high-income producing activities centres (e.g. hospitals, universities). It’s wise to buy in capital cities and inner suburbs, and you should consider active value-adding opportunities when selecting your asset.

This is the sort of due diligence and consideration that I will apply as your buyers advocate in Northcote and nearby target areas. Property Analytics will test these criteria not just when considering negative gearing possibilities, but your overarching investment goals and the overall viability of each short-listed property.

Other ways to reduce negative gearing risks include careful management of your income, taking out appropriate investment property insurance, and maintaining a balanced portfolio that contains both positively geared and negatively geared assets.

Capital Gains Tax​ and Other Tax Considerations

As well as negative gearing, the other major tax consideration comes when you sell your property investment.

Capital Gains Tax (CGT) applies to any profits you earn from selling your asset. A 50% CGT tax discount applies for investment properties that are retained for 12 months or more.

Also remember that the tax benefits associated with your property investment apply regardless of whether your property is positively geared or negatively geared. A positively geared property will always result in higher taxable income but claiming eligible expenses will reduce the amount of money that’s added. 

Expenses you can claim to reduce your tax liability include:

• Interest payments on your investment loan
• Maintenance and repair costs
• Certain travel expenses, where eligible
• Depreciation costs, where eligible 
• Strata and council rates
• Land tax
• Insurance costs
• Other deductible expenses, such as water rates and property management fees

Can I Negatively Gear My Own Home?

As an owner-occupier, your home is not classed as an income-generating asset. This means it cannot be negatively geared, household expenses are not tax-deductible, and you are exempt from capital gains tax when selling.

However, if you no longer intend to live in your home, it can be turned into an investment property. It may also be possible to rent out part of your home and claim tax deductions proportional to the amount of space you are renting out. However, some Capital Gains Tax will also apply when selling.

You will need to talk to your lender to discuss your options, and you should also chat with a property investment consultant and your accountant before making the switch.

The Controversy of Negative Gearing: Is It Set To Be Phased Out?

There are some topics that will always be discussed in the Australian housing market, from housing supply problems to soaring property prices.

And when either of these topics comes up, negative gearing is sure to follow.

While investors can lower their rental prices for negative gearing purposes, a property may also remain vacant. An investment cannot be left vacant by choice if you want to claim negative gearing benefits, but if you genuinely can’t find a tenant, all your expenses will go towards a tax deduction.

In the eyes of some, negative gearing is a property investment strategy that contributes to a much larger problem. Investors are protected if they can’t find a tenant, but vacant properties still result in less supply, which may result in higher house prices for buyers and greater rental expenses for tenants. 

Detractors believe negative gearing is bad for the property market and want the associated tax write-offs scrapped completely or heavily restricted. 

However, another truth of the Australian property market is that Aussies love property investing. And any policy that removes tax concessions will also lose votes.

Regardless of what you think of negative gearing, it’s most likely here to stay, and if you are pursuing long-term capital gains, it’s a strategy worth considering.

At the very least, this strategy can reduce your tax liability and alleviate some of the stresses associated with collecting weekly rent, advertising for tenants, and covering initial losses while your property increases in value.

My name is Andrew Stone and I’m a Real Estate Analyst, Licensed Buyers Advocate in Melbourne, and Director of Property Analytics. To discuss Property Analytics’ comprehensive, data-driven approach to acquiring high-growth investments in Melbourne, get in touch today.