The Resurgence of Multi-generational Homes in Australia

According to a 2011 report Australian Bureau of Statistics, 531,000 people were living with “other related persons” in the family household. That number is expected to increase to 781,000 or more by 2036. In other studies, it was estimated that one in five Australians presently reside in a multi-generational household, and this trend is becoming popular.

It was once normal in many households to have younger members take care of the older generation, but this custom of multi-generational suffered a decline in past decades. But it looks like what was once old is new once again, and it resurged at a time when the life of the average Australian is the most difficult.

Research also indicated that over 50% of people living in multi-generational homes do so because of financial hardship, and the rest, for companionship.

With Australians experiencing a housing affordability problem, rising cost of living and lack of wage increase, it is no wonder that the practice of multi-generational homes (where more than one generation is living in the same home) is becoming popular once again.

The advantages of multi-generational homes

  • Reduced expenses because all bills and living expenses are divided among adult residents.
  • Saving for a house deposit becomes easier for young families because they can divide the cost of rent and utilities with their parents.
  • Some older Australians who can’t afford to pay rent or mortgage on their own can ease their burden by living with their adult children.
  • Parents and adult children can be co-buyers of a home to make it more affordable.
  • Living with their parents is a cost-effective way for young Australian families to care for them compared with a retirement home or other care facility.
  • Young families can save on childcare costs with their elderly parents living with them.
  • A family stays connected and close living together.
  • The people living together can live in an area or property they couldn’t otherwise afford.
  • The financial pressure is lessened.
  • Having companions.
  • Promotes relationship between the oldest and youngest members of the household.

The disadvantages of a multi-generational homes

  • No privacy
  • Noise transmission
  • The people living together have different schedules and those schedules can be in conflict in relation to the use of facilities like kitchens and bathrooms.
  • Having the feeling that you are living in other people’s homes.
  • No space
  • No independence.

Things that are needed to make a multi-generational home a success

  • Making sure all the people residing there have a space of their own, whether to design as they want it or to invite friends over.
  • Consider building a granny flat or a small house in the same parcel of land.
  • Open space is conducive to noise transference. An architect or building designer can fix this at the construction phase or during renovations.
  • Otherwise, use rugs to help minimise the noise of foot traffic.
  • Make everybody aware of the costs related to living together, and what their obligations are.
  • Be respectful with everybody.

 

 

Seven Things To Do Before Selling Your Home

Tips for your Open Home

The process of selling your home and moving to a new one can be chaotic, but you can streamline the process and minimise your stress by being organised.

Here are seven steps to help put your best foot forward to attract buyers and secure a sale with minimal stress. Look with eyes wide open and begin assessing your home objectively.

 

  1. Deodorise your home

Homeowners get used to the smell in their own home, often to the point that they become impervious to distinct smells. 

Eliminate stuffy air by airing out your house, and get rid of cat litter, dog beds or other things that may contain pet smells.

Check for moulds.  You can eliminate the moulds and the aroma that goes with it by spraying it with vinegar, and scrubbing the area with hot water and bicarbonate of soda. Then let it dry or call in the professionals.

Cooking smells in your kitchen can be offensive to some buyers. Eliminate the smell by cleaning the stove and oven, and around the rangehood with hot soapy water.

But first, make sure the garbage bins around the house are empty and clean.

 

  1. Throw away junk

You can accumulate lots of useless junk if you have plenty of storage like the shed or space under the house. Buyers may worry that all the junk will be left behind for them to deal with, and this could turn them off.  Likewise, once they see the junk, it can be a reminder of the junk they have and how they may not fit into your home.  Best policy here is, out of sight out of mind.

 

  1. Identify items that you will offer 

Can you or can you not take with you the statue, pot plant or chandelier? The answer is: any item attached must stay behind and any item that is portable can be removed.

If you wish to keep a particular item in your home, make sure to include in the contract that the item is not part of the offering.

 

  1. Remove anything personal and private

You want buyers to imagine themselves living in your home. However, having family photos displayed on mantles, dressing tables and walls makes them feel like you are marking territory. They often spend so much time looking at the photos that they forget to look at the house.  Store your photos during the sale campaign and make sure the artworks are neutral to appeal to a wider range of buyers.

 

  1. Let the sunshine in

Buyers love light and airy living rooms, but dark and dingy isn’t on their list. Open up your window shades to let some light in. Cheat some sunshine with light-coloured paint and some artificial lighting. Lamps are wonderful for dark corners. Lastly, arrange the space with lightly coloured furniture, and you’ll have a living room that brightens your chances of a sale.

 

  1. Conceal the flaws

All houses have flaws, so why bring them to the attention of prospective buyers?

You don’t have anywhere to hide the vacuum cleaners? Put it in the car for the meantime. Not enough kitchen counter space? Hide the kettle, microwave, or toaster to create an illusion of ample space. Tiny rooms? Get rid of large furniture and substitute it with smaller pieces.

 

  1. Get rid of pests

One of the major turnoffs for buyers is the presence of creepy crawlies like ants and cockroaches in a property. Luckily, these issues can be dealt with easily.

Remove any signs of pests, including cob webs or rat droppings, and tidy the inside and outside of kitchen cupboards. If the pests are still there, you may need to use bug spray, set traps or even use poison, or better still call a pest controller. Make sure your house is free of pests and all set to capture the attention of the next potential buyer.

There are many more tips we can provide to you, in fact 120 altogether, so call us today to book your free appraisal and e-book.

 

 

Rentvesting: What is it and Why are Professionals Into it?

Do you want to know if rentvesting is for you? Answer the following questions honestly:

  • Are the prices in the neighbourhood you want to live in way too high?
  • Are you staying away from being tied down to your mortgaged home?
  • Would you rather rent?
  • Do you want to give your property portfolio a great foundation in terms of growth and borrowing capacity?

If the answer is “Yes” to at least one of the questions, you might want to consider “rentvesting.”

What is rentvesting?

To put it simply, rentvesting entails buying an investment property that gives you a potential gain of capital growth and cashflow and lease a home in an area that you want to reside in, such as a hot suburb or street that has affordable rent but absurdly high purchase prices.

Two major advantages of rentvesting

  1. You can reside in an area you really like and enjoy the lifestyle you prefer.
  2. You take your first step towards your property investment initiative and begin growing your wealth.

This means someone is paying your mortgage (you use the rent money to pay the bank) while you live in a location you love.

Rentvesting is becoming popular among young professionals, mostly due to the fact that city and apartment living is compatible with their lifestyle. However, increasing property values is not letting them enter the market in that area.

In addition, an apartment may not be a good investment, thus leasing an apartment and buying another property type is better strategically as it could produce better lifestyle and investment gains.

Rentvesting explained in numbers

Here are two scenarios to provide a more detailed explanation of rentvesting.

Scenario 1: Purchase your own house

  • You buy your own house for $500,000.
  • You take a borrow 90% (including mortgage insurance), which means you owe $450,000.
  • You borrow at an interest rate of 5% (today’s rates are lower, but let us use a conservative number)
  • This means you have to pay $870,000 for a $500,000 property.
  • Since there is no one renting, you pay the entire amount to the bank (not including overheads, like rates).

Scenario 2: Rentvesting

  • You paid $500,000 for an investment property.
  • You take out a loan for 90% of the amount (including mortgage insurance). This means you $450,000 in debt.
  • You take out a loan at an interest rate of 5% (the current rates are lower, but let us choose a conservative figure).
  • This means you have to pay $870,000 for a property worth $500,000.
  • But if you get someone to rent the place and pay rent at 5% yield (which means the renter pays you 5% of the value of the property annually in rent), you earn a weekly income of $480, or $25,000 annually.
  • The figure amounts to $711,360 earned by you from rent (after property management, excluding any rent increase), over the life of the loan, which is typically 30 years.
  • By earning income through rent, you only have to pay the $158,640 over 30 years, not $870,000 (excluding overheads like rates).
  • Obviously, you’re staying rent where you live, but you’re free to rent anywhere you like that you can afford.

Here are more benefits of rentvesting:

Wealth creation. You can build long-term wealth with your investment property through its potential growth and cash flow (paid mostly by your tenant). You can use the money to purchase your dream home later on or for additional investments to build a passive income stream.

Possible tax incentives. Rentvestors can avail of tax benefits, because they are investing in property, are not buying to live in it. Talk to your accountant or tax advisor for more information.

Limitless investing. You can purchase an investment property anywhere in Australia, or the world, with no limit. This allows you to pick the property you want to purchase and take part in a transaction with no emotional attachment, and in the end building an investment medium that will bring growth and cashflow, rather than emotional values like lifestyle and personal tastes.

Borrowing capacity. Subject to the type of property you bought, you can increase (or basically not decrease) your ability to borrow, and the banks may determine their debt at a higher amount than the amount that was borrowed because of the interest rates being able to change, in addition to property overheads. Read more details below under “When is rentvesting most effective?”

Lifestyle. Subject to rent to mortgage/property cost differences, you can live in the area you like or remain where you presently love without sacrificing your lifestyle. You can maintain your present lifestyle while growing your property portfolio.

Flexibility. With rentvesting, you can upsize, downsize or change locations without thinking about a mortgage. This is important when your personal circumstances change for the good or bad. Or the reason could also be travel or a change in location by preference.

The negatives of rentvesting

Incentives. Because of their nature, you may not be able to claim first home incentives and likely some capital gains tax benefits.

Ownership. While you are renting the property you live in, it is not fully yours. You might need permission from your Landlord if you want to paint the walls a different colour.

Dead money. While you are renting, you are paying someone else’s mortgage. This is more a mentality that you have to tackle.

When is rentvesting most effective?

Rentvesting is most effective when your investment property is cashflow positive, and can increase in value in years to come.

What is cashflow positive? Cashflow positive means the rental income or “yield” from your investment property is higher than its overheads (the costs of maintaining the property, such as interest on mortgage repayments, insurance, rates, etc.). This means you’re getting the money back every week you own the property, as when principal (or just interest) is paid you are paying yourself.

You can research for information on how to find a positive cashflow property, or a property that pays, you, or you can hire the services of a professional investment property specialist to help you get started on rentvesting.

How has Uber Eat habits stopped some buyers from getting a home loan?

Home buyer loans increased slightly in February 2019, according to the first figures published from the time of the financial services royal commission’s final report.

However the amount of the loans approved over the month remains much lower compared to last year.

Prospective homebuyers have experienced more difficulty in securing loans over the last couple of years than in the past because the bank regulator’s crack down on lending requirements, specifically to investors and riskier borrowers.

The highlight of 2018’s financial services royal commission also revealed loans approved to people with unreported living expenses. Following the hearings, banks implemented stricter rules about verifying borrowers’ expenses. There were even accounts of borrowers getting rejected due to the Uber Eat habits.

The value of home loans for residential properties, not including refinancing, increased 2.7% to $17.64 billion in February, versus the January figures.

The small growth follows the release back on February 4 of the royal commission’s final report.

However, household loan values remain 18.6% lower than in February 2018.

Investment property loans rose 0.9%, but remains 29.1% lower than the year-ago period.

Loans for owner-occupiers rose 3.4% but dropped 13.9% from 2018.

Economists are saying that there are tentative signs of more demand for borrowing, and banks may be a little more inclined to lend but warned against over analysing one month of data following the declines over the last one to two years.  Also be aware that minor growth follows the increase in auction clearance rates in Sydney and Melbourne from their declines in late 2018 and that clearance rates hitting roughly 50% could be a sign of more price declines in 2019.

According to senior economist in the banking sector, movements in home lending are likely a good major sign of the path of housing values. One upbeat moth is too early to say that the weakness in housing values are ending because when figures are joined with the slight declines in housing prices in March, it could mean the most severe decline are over.

 

 

Loans for first-time home buyers posted their biggest share of loans to owner-occupiers in six years, at 27.1%.

However, loans for first-home buyers remain down from last year, though a more moderate level than other owner-occupier loans.

According to state, NSW loans rose 5% in February but remain down, at 23% from last year. Loans in Victoria were up 2% for the month but dropped 21`% over the year.

Now that the election is over, we are noticing changes in our local market with more activity from both sellers and buyers equally showing more confidence in their decisions.