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As an independent property agent we are able to source property across Australia and after extensive research offer the best available property in the right area that meets our Property Selection Mandate.
We do not offer loans, financial advice or taxation advice. We only offer property services, sourcing investment property.
Every developer and builder have a cost of sale no matter if their own sales team or an agent sells the property, this cost in built into the price, like when you buy property from a real estate agent. API alliance is paid commission just like a real estate agent, at normal real estate agents rates, no additional fees are add on top of the price nor is the price marked up.
All properties are sold at market price, the same price you would pay buying directly from the developer or their consultant.
API Alliance has no financial interest in the property we sell.
We do not source property in mining areas as we see Property Investment as a long term investment and do not deal with investment property in speculative high risk markets.
Seeking out the next big boom location, mining or otherwise, is speclative and not a long term stable investment.
A change in world demand for resources (eg the GFC), exchange rates, the mining company packing up and moving to greener pastures, the trend towards a fly in fly out labour force, and the list goes on, make this type of investment property too high risk for us to recommend. eg Dysart BHP Mine Closure April 2012 etc
Our approach is to provide long term investment property in proven long term markets, such as in and around Capital cities, where population growth is stable and sustainable over the long term.
Many Buyers Agents services are free to the buyer, however unless they are charging you a fee they are then acting for the selling agent as a 'Conjunction Sales Agent'. Confused? So are we.
A true Buyers Agent charges a fee to the Purchaser for their services (straight forward).
A Selling Agent (like API Alliance) represents the vendor (seller) and are paid a sales commission or fee (straight forward).
A 'Free Buyers Agent' (no fees to purchaser) is paid by the vendor (seller) either directly or by the selling agent sharing their sales commission, so how can they represent themselves as looking after the buyers best interests? This appears to us as a conflict of interest so we advise to steer well clear of Buyers Agents offering a 'Free Service'. Why? Because they say they are looking after Your Best Interests but are legally obliged to look after the Sellers best interests under their Fiduciary obligations
Firstly ask your Accountant, then friends, relatives and business associates if they have someone they can recommend or search for a Financial Planner located near you at the Financial Planners Association OR Association of Independently Owned Financial Planners (AIOFP) OR CPA Australia
Each industry body is different so we suggest you look at all three to ascertain which meets your individual needs.
Capital Growth (Capital Gains) in real estate usually occurs in cycles or spurts, for long periods of time real estate appears to do nothing, then all of a sudden may increase dramatically for various reasons. The main factors affecting Capital Growth can vary wildly from local market factors, such as a large new industrial estate opening in the area creating employment, to State level factors such as a new major freeway (or other infrastructure) being constructed to Federal issues, such as an increase in immigration or interstate migration. There is no definitive answer to why Capital Growth can occur.
We do know that from 1955 - 2009 property prices increased generally 8% pa and that the current dramatic shortage of housing will increase property values. See our Property Facts for detailed information.
.Occupancy Rate is the percentage of dwellings in a defined area eg postcode area, that are occupied.
Vacancy Rate is the opposite of Occupancy Rate and is the percentage of dwellings in a defined area eg postcode area, that are vacant.
The property investment industry generally, refer to Vacancy Rates or Vacancy Factor rather than occupancy rate.
Not unlike the factors that affect Capital Growth there are many things that affect vacancy rates that are difficult to define.
We do know that vacancy rates are at a very low level generally across Australia, particularly in and around State Capital Cities and this is related to an under supply of property and population growth. We also know this situation will continue over the long term, perhaps well into the next generation. Some predict it will take over 30 years to fix. See our Property Facts for detailed information.
It is a simple calculation - annual rent, divided purchase price multiplied by 100. EG a property rented at $450 per week ($23,400 pa) that is purchased for $450,000 returns a yield of 5.2%. Try out our Investment Property Yield Calculator
Property Speculation involves taking high risks to potentially achieve high returns, generally over a relatively short period of time, usually less than a year. Property speculators buy property on the basis of its potential selling price rather than on the basis of its actual value.
Property Speculation is high risk and not a recommended strategy without an in-depth knowledge of the local and overall market. Our experience is that some speculative investors do very well, but most lose money.
There are four reasons API Alliance recommends only new property
a. The same reason Financial Planners and Accountants recommend new property, to maximise your tax position through claiming depreciation on the construction cost and other depreciable items. The tax deductions for depreciation fall considerably in the first 5 - 10 years.
b. New property does not carry as many ongoing costs as second hand property in relation to ongoing maintenance as everything is new and carries manufacturers warranties on appliances etc. Property maintenance costs escalate with a buildings age, just like your own home.
c. New property carries a Statutory builders maintenance warranty and a Statutory Structural Guarantee.d. It is easier to rent out or lease a new property as it is more desirable for tenants.
API Alliance recommends buying a completed home or one under construction on a single purchase contract for the following reasons
a. Cashflow
Purchasing land then building a home (or buying a House and Land Package) usually takes from 9 to 12 months to complete. It requires you to settle your land purchase before house can commence. You are then required to pay interest every month on the land purchase eg land value $250,000 x 7% = $1460 per month over say 10 months is $14,600 in interest. You are also required to make progress payments to the builder whilst the home is constructed, usually around attracting around $7,000 or more in interest payments to the lender. By the time the home is completed you have outlaid over $20,000 in interest that can not be claimed as a tax deduction, but deducted when you sell the property, as a purchase cost. Compare the costs - click here for cost comparison calculator. Further information is also available by clicking here
b. Timeframe
Quite obviously you cannot rent the property until completion and as it has not become an income producing asset you cannot claim tax deductions until a tenant pays rent, usually the following financial year.
Other considerations
Is the land registered and ready to build on, or do you have to wait for subdivision registration before putting plans to Council?
How confident are you that the builder is financially stable?
Is the builder large Company with strong financial backing?
Is the building contract an absolutely fixed price or can you suffer increases from the builder on the way through?
Delays can be experienced for various reasons such as buying unregistered land, Council delays in approving plans or bad weather, to name a few.
Yes there are, buying a completed home has distinct advantages
a. A single contract purchase with 5% or 10% deposit and balance is paid upon completion (if under construction) or around 4 to 6 weeks after paying deposit, if completed
b. Minimise risk as you are not outlaying money over a long timeframe, hoping the building will be completed on time, without delays that increase the interest costs to you
c. Maximum security as ready built homes are generally constructed by large Companies that have strong financial backing.
API Alliance only sells stock from Companies Listed on the Stock Exchange (Public Companies) for this reason.
d. Start generating income upon settlement, once property is rented.
e. Start minimising tax by obtaining tax deductions in the shortest possible timeframe.
The disadvantage is you pay stamp duty on the whole amount, which is always far less than the interest on progress payments (see FAQ above).
One off costs, for a completed home, include
Stamp Duty – varies from State to State. Click here for stamp duty calculator
Solicitors or Conveyancing Fees – varies from State to State and depending on what services you require.
Quantity Surveyor to maximise tax deduction benefits – highly recommended.
Additional ongoing costs to consider include
Land Tax, if applicable. Land tax structures vary from State to State. We suggest you speak to your Accountant or Financial Planner to see if this applies to your individual circumstances.
Council and Water Rates – vary from area to area
Agents Property Management Fees – These vary from State to State and agent to agent and is deducted from the weekly rent.
Loan Fees and Interest – vary between lending institutions. Your Mortgage Broker can advise on these.
Building Insurance
Pest Control
Landlord Protection Insurance
The best part is these are tax deductible once your investment property is rented.
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