RedCap Consulting - Residential Property Investing

 “Creating an Asset-Based Ongoing Income!”

Allan Pearson, founder of RedCap Consulting, has always recommended for careful consideration to all his clients the inclusion of investment-quality residential real estate when considering creating an Asset-Based Ongoing Income.

Why is this important?

Because an investor has a greater degree of control over the performance of a real estate investment than other types of

investments. The 2 main types of Income that Residential Investment Properties create are… Cashflow & Capital Growth.

CASHFLOWReal estate cashflow returns are directly linked to the rents that are received from tenants. Some leases contain provisions for rent increases to be indexed to inflation. In other cases, rental rates can be increased whenever a lease term expires and the tenant is renewed. Either way, real estate income tends to increase faster in inflationary environments, allowing an investor to maintain its real returns (cf. Interest Rate Returns on Cash held in a bank).

CAPITAL GROWTHHow do you ensure that you purchase the right type of investment property?Real estate agents might sell properties on the views, what the neighbours are like and whether there are bay windows or picture windows, but take heed. As property investors it’s the potential for capital growth that’s most important and there are really only two factors affecting price change: demand and supply. As property investors, RedCap Consulting will assist you to find markets to buy into that have a high demand to supply ratio at the point in time when you’re ready to buy. We want to see some quick capital growth potential to create further equity that you will need to buy again.  These locations with a high demand to supply ratio will not last forever. As prices rise for property in a suburb, demand will subdue. And over time, developers who have realised the high demand will complete projects in these highly sought after areas thereby adding to the supply. Over time the market will re-balance the demand to supply ratio.

Good investing has a lot to do with recognising and capitalising on imbalances. 

Through our relationships with expert property groups around the country, RedCap Consulting clients have access to a broad range of property investment opportunities. At times, we are able to offer our clients access to unique and outstanding properties prior to public release.If you are considering investing in property please consider the 5 criteria below before making your final investment decision to buy:

5 Property Selection Criteria1. Timing in the CycleIt is Best to Purchase property after a growth cycle has commenced in a Targeted Area.It makes sense to consider an already growing market. It is noted that the top end, i.e. the more expensive properties / trendy areas, are the first to move in a property boom.Once the property price rise is noticed, many property commentators and analysts receive a lot of media attention. This is a time when investors are exposed to various forms of 'education' on the topic of property investment.Each cycle is different, being dependent on the particular economic conditions (eg. inflation, unemployment, interest rates) that are present at that time. Differing geographic areas can have vastly different property price performances, based on local economic and demographic issues.Remember: Your Profit is made when you PURCHASE not when you sell!

2. LocationChoosing the right position for your investment property is very important. There are four key inclusions that the area should possess:a. Employment growth — population growth supports property demand, which in turn supports property prices. Areas with high employment growth will always attract population.b. Micro-economic facilities — parks, cafes, corner shops, bus stops etc. These facilities make the property more attractive and support strong (adequate) rental demand. The social changes evident today suggest that many people demand the convenience of local infrastructure.The micro-economic elements need to be matched to the style of the property and the likely demographic demand sector; for example, trendy area units may require micro-economic facilities that appeal to young professional couples, while houses may require facilities that appeal to families with children.c. Macro economic facilities — hospitals, recreation outlets, shopping centres, schools, day care, public transport, access to the internet, etc.d. Access and Egress — the entry and exit routes to an area. It is not advantageous to have a community that is isolated from nearby areas or central locations.

3. Select Property for the Future (not of the past)When investing in property, it is beneficial to consider a ten-year window. Appealing to a growing market of the future is essential to ensure demand for the investment property is supported.The changes in today's demographics suggest several clear growing markets for real estate are emerging. These target markets include:• Single parents• Young professionals• Ageing sector and;• In the states that enjoy positive migration (QLD, WA): Nuclear families

It is necessary to determine the features of properties that these target groups require. Identifying the groups where demand will be strongest is only half the story, meeting their needs for accommodation is equally as important.

Specific needs among these groups include:• Location• Accommodation• Affordability• Security• Low Maintenance• Privacy4. Price

The price must be right - for the investor AND for the tenant AND for capital growth.It is very important to remember the most likely long term and relevant underlying demand influencing strong price growth comes from the owner/occupier market.This market needs to be convinced that your property is better, more attractive, affordable and in the right location. When this occurs, your investment property will rise in value, regardless of investor sentiment.Consider properties that are priced around the median price for the area, giving the largest possible market for resale. In this way the property will be within reach of the majority of owner/occupiers. Most often, buyers choose an area and then choose a property.Assuming there has been careful consideration of the area chosen for property investment, the demand for the area will be sound. To ensure your property has the edge, it needs to be in the median or lower price sector.When discussing median prices, it is important to consider the analysis on an area by area basis. Very often this process is completed with reference to some 'common knowledge' or through market comment rather than provided by statistics.

5. Age of property: new versus oldThe age of the property is an important consideration for investors. Each property investment needs to be assessed individually - with full consideration of the investor's needs and risk profile.The final consideration of PRICE is a key component to a sound investment.

There must be adequate room for capital growth and clear evidence of future market demand to support it. This, after all, is the sole investment objective.There are a number of reasons why RedCap Consulting recommends new property rather than old (existing) property to investors:

New property provides attractive gearing benefits through generous depreciation allowances.

The maintenance requirements of new property are expected to be significantly lower than older properties.

New property often has a better rental demand than similar properties that are older.

New properties often achieve higher rental returns than older properties.Regardless of all other aspects consideration should always be given to the location of

the property. If the property is not in an area where future demand is expected, it is not going to perform well, even if the property is brand new.Consider: Dual-Income Properties that enable Investors to achieve a higher yield without the added costs of Body Corporates or Dual Rates. In many cases you get a Higher Return on every Dollar Invested.

RedCap Consulting “Creating an Asset-Based Ongoing INCOME”At RedCap Consulting we focus on your education, growth and enhancing your decision-making process so that you can master your wealth-building skills. Our unique consulting business model is all about helping you build wealth in the first place using strategic investment in Residential Real Estate. You remain in control by learning how to manage your money smarter and make better-informed investment decisions.  

At RedCap Consulting we focus on financial coaching of our clients! We believe that financial coaching still pays attention to principles of wealth creation and the retirement planning side of the business, BUT it is just approached in a different way.  With financial coaching; the focus is more on education, information strategies and risk management so that you can LEARN HOW to make your own, independent investment decisions.

If you wish to engage us as your Financial Coaches or discuss adding an investment property to your ongoing wealth portfolio, please book an appointment with your RedCap Consulting specialist TODAY to discuss your options…Phone: (07) 3102 4477 or Email: PropertyWealth@redcapconsulting.com.au

------------------------------------------------------------------------------------------------------

RedCap Consulting Property AlertThe RedCap Consulting Property Alert is a special email Alert featuring RedCap Consulting recommended new property investment opportunities from around Australia that meet our five point selection criteria for maximum growth potential over time.RedCap Consulting recommended properties continue to be outstanding investments that are researched by professionals to deliver well priced, well positioned properties for growth and great rental potential.

We also include great existing properties from time to time as well – when they meet our criteria.Phone: (07) 3102 4477 or Email: RedCapPropertyAlert@redcapconsulting.com.au

------------------------------------------------------------------------------------------------------ Website: www.redcapconsulting.com.au

FREE Mortgage Health Check!

"No matter who you are, YOUR bank won't tell you… IF their competitor has a better home loan product for YOU – BUT - WE WILL!"

BE Finance Ready - know how much you can actually Afford to Invest!

EZFinance Offers A Free Mortgage Health Check: Click HERE to go to Allan’s Online Fact Finder.

EZFINANCE: SPECIALISTS IN PROPERTY FINANCE

When it comes to the question of property finance, you need to feel confident that you are getting quality advice. Being well informed might help you avoid costly mistakes.  Whether it is a Financing a new Property Purchase, Re-Financing an existing Property, a Construction Loan, SMSF Loan, or Just getting a qualified Accredited Credit Advisor’s opinion to contrast with your existing financier, then…

This is where our Quality Finance Review comes in:

SAVING YOU MONEY - Our No. 1 goal is to save you as much money as possible! We are able to compare 1000's of loan products across the entire lending arena in an instant; we are not limited to any one particular lender.

STRUCTURING YOUR LOANS CORRECTLY - We provide a clear tailored 'Finance Strategy' laid out in a simple easy to understand flow-chart that supports

YOUR goals.

MORE BORROWING OPTIONS - Some Bank's lend a considerable amount more than others (important if you are building a portfolio). We can find these Lenders with a click of a mouse.

PURCHASE COSTS REVEALED - Let us crunch the numbers for you. Our 'Funding Position' outlines ALL the fees and costs involved when buying a property.

CURRENT VALUE OF YOUR OWN PROPERTY - Find out how much EQUITY you actually have. We can easily determine the fair market value on your existing property through a Comparative Market Analysis.

BEFORE AND AFTER TAX CASHFLOW - If you are looking to buy an investment property, our PIA (property investment analysis) will show you your before and after tax cash flow based on your financial circumstances.

Phil Rice, EZFinance Licensee:- Australian Credit License Number 392611Head Office: 169 Fullarton Road. Dulwich SA 5065

Allan Pearson P: 07 3102 4477 M: 0418 66 11 25 F: 02 9506 1092

http://www.ezfinance.com.au/introducer/allan