The Q to T of property success (Ep.141) - Property Planning Australia

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In this week’s episode, Dave, Cate and Pete take you through:

Q – Qualifications that property professionals (should) have. The trio discuss the qualifications required to become a property investment advisor (you may be surprised at the answer!) and how mandatory qualifications apply to other professionals such as buyer’s agents, real estate agents, financial planners, mortgage brokers and building and pest inspectors. As a consumer it’s important that you choose your trusted advisors wisely and ask them their level of experience before you make a decision on who to partner with. Cate shares a hot tip for our listeners on how to spot the red flags.
R – Refinance, when and why should you do it. Dave shares with you the 12 benefits to refinancing and why you should consider reviewing your mortgage strategy. But refinancing is not the best option for everyone, and the trio discuss when refinancing is a bad idea.
S – Sale to Settlement, and everything in between. So, you’ve just purchased, what happens next? Cate takes us through the various moving pieces that need to be organised prior to settlement. A word of warning, if your legal representative or mortgage broker asks you to do something, put that at the top of your priority list. The trio discuss what not to do and why you should always clarify the status of your pre-approval and expected settlement timeframe with your mortgage broker before putting in an offer.
T – Tax and why you need a great accountant. The trio discuss how capital gains tax is calculated, land tax, GST and margin schemes. Do any of these apply to you? Some are only related to property development and if you’d like to dip your toe into the development pond, finding a good accountant who knows their way around property tax is step number one. Visit the show notes to access our other episodes where the trio dive into tax in more detail.

Resources

Show notes

Q – Qualifications

Property investment advisors – Pete is the chair person of PIPA and trying to improve the standard and education for property and investment advice.
You do not need any qualification to be a property investment advisor. This is a very poor state of affairs. Both of these industries involve giving advice on some big expenditure.
Trying to get this for over 10 years to get legislation and regulation in.
Buyer’s agent – Unfortunately the regulators in a lot of states are not doing a great job. There are short cut ways of getting a license. Cert IV in Real Estate Practice and 12 months full time work experience under licensed real estate agent before apply for Real Estate Agent License. To think you can get this within 5 days is a worry and people transfer licenses between states. The loopholes are changing and REBAA have been pushing really hard to have this changed. But the concern is that consumers out there will not be able to differentiate.
Selling agent – Cert IV in Real Estate Practice and 12 months full time work experience under licensed real estate agent before apply for Real Estate Agent License.
Mortgage Broker – Cert IV in Finance and Mortgage Broking, although some lenders require Diploma in Finance and Mortgage Management to give accreditation. A number of lenders will require working in the industry or mentored by a broker before you get accreditation.
Financial Planner – Bachelor of Business (Financial Planning) at the bare minimum, which has been a requirement since 1 January 2019. Some discussion about whether the barriers are too high to get into financial planning.
Building inspector –
- NSW, VIC, ACT, TAS, SA, NT or WA – don’t need any specific building qualifications to start conducting building inspections in, however it is preferred that you have some experience within the building trade. There are courses that can be taken.
- QLD – at minimum must have low rise builders license with Queensland Building and Construction Commission (QBCC) for at least 5 years and a Residential Building Inspection license with QBCC
Solicitor– Bachelor of Law (3 years) at the minimum and then 18-24 months supervised practice to be admitted to practice law.
Conveyancer – Diploma of Conveyancing or law degree and 12 months experience before you can get your Conveyancing License.
As a consumer, ask the questions and work out the experience of who you’re working with before you make a decision.
If someone doesn’t have insurance, that’s a red flag – insurers are good at sniffing out something that’s attractive and not attractive.

R – Refinance

It’s been an amazing time to refinance since covid hit – here are 12 reasons why now is the best time to refinance.
Interest rates are the lowest they have ever been. It would seem that the ‘only way is up’ from here on!
Lender refinance rebate offers mean lenders will pay $2,000 or more to move. But they are available for a limited time only.
Fixed rates have started rising, and may never be this low again! Note – This is due to the end of the $200B term funding facility that the government provided to lenders and the government will stop buying bonds to keep the 3 year bond yield under 0.1%, which will put upwards pressure on 3 year fixed rates.
Get in before access to finance becomes more difficult, as pressure builds for APRA intervention to curb runaway property prices.
Move to a lower monthly repayment to improve your cash flow.
Ensure that you are making the most of offset accounts and have an effective money management system.
Take advantage of the strong market, whilst house prices and valuations are higher, to access equity to:
invest and grow your wealth; and/or
increase your cash buffer to manage risk.
Consolidate debt to make your repayments lower. Note – Even if you’re on a fixed rate with your existing lender, the break and refinance cost may be covered by a refinance rebate and get you onto a lower interest rate.
Receive strategic advice regarding your mortgage strategy in case you are not optimising your tax deductions or your ability to hold property into the future.
Develop a plan for buying a property.
Review your loan type (variable v fixed) and repayment strategy (P&I v I/O).
Access more finance

Why shouldn’t you refinance

Some people can’t – borrowing capacity may not be at the level
Valuations coming in less
Breaking fixed loans
If you’re chasing rate and only looking at rate, that is a terrible reason to refinance. You need to think about products that works for you, customer experience.

S- Sale to Settlement

What happens from the time you sign the contract to settlement?
Might be an unconditional contract if you’ve bought under auction conditions.
Once the contract is unconditional, you have to prepare for settlement – range from 30 day to 180 day settlement period.
Solicitor or legal rep will send you documents to sign – transfer of land for example.
Broker will ask you to provide documents to formalise the loan offer – COS and updated income evidence.
If your solicitor or mortgage broker asks you for something, do it straight away.
You’ll need to do a verification of identity – legal rep will need to cite your identity to prove you are who you say you are.
Everything is done online – over PEXA
Once it goes through, it’s a magical thing.
Then you get a phone call that settlement has gone through, and you can go and pick up your keys.
What not to do
Do not book moving truck on the day of settlement – you have to wait until settlement has gone through, can be up until 4pm.
It comes down to whether your loan is complex, overseas processing, backlog in the bank, public holiday.
Re clarify the details of pre-approval, make sure it hasn’t expired – pre-approvals have lapsed and clients don’t realise it.

T – Tax

What is the rate of Capital Gains Tax? – it is your marginal tax rate, whatever the income you’ve made plus the capital gain added to your income.
Land tax – based on land value across all investment or commercial properties within a state. Generally a tiered system, which excludes value of dwelling on the land.
GST – if you own established residential property, you don’t have to worry about GST. But as soon as you create something new – subdividing or a new dwelling or commercial property, then GST is applicable.
Taxes and levies – stamp duties, emergency services levy
Margin Scheme – only related to property development, find a good accountant. If you’re going to sell the property, you need to register for GST and your accountant will recommend that you register for Margin Scheme. If you are not on the margin scheme you’d be paying GST on the full value of the sale, the margin scheme allows you to pay GST only on the difference between what you paid for it vs what is sold for.

Gold Nuggets

David Johnston – The Property Planner’s Golden nugget: if you’ve just bought a property, here are some others things to organise between sale and settlement:

Have I enlisted the service of a quantity surveyor to draft a depreciation schedule?
Have you got insurances sorted – Landlords, Building, Contents?
Mail redirected and have you notified everyone of your change of address?

Peter Koulizos – The Property Professor’s Golden nugget: don’t forget to get the power put on in your name. When the property manager is showing people through in the night time and you can’t turn the lights on, it’s not a good thing. Or if you have tradies there that don’t have access to power. Get the power on!

Cate Bakos – The Property Buyer’s Golden nugget: Qualifications, we may have listeners who want to be a mortgage broker, or developer, get involved in acedemia or be a buyers agent. Before you go looking at the qualifications, have a chat to someone in that space. Ask them to be brutally honest about the highs and the lows and the lifestyle that goes with the job. Because it’s a lot of study to embark on if you’re not certain it’s for you.

Market updates

Similarities between the car market and property market. The trio discuss their experiences of trying to purchase a car in the last 12 months and how this closely follows the experience of many budding property purchasers. Cate shares a sneak peak of our next episode, which will be addressing a question from our listener, whose brand-new dwelling has gone up in value. They all share one key theme, can you guess what it is?
Return to the CBD. Cate shares that for the first time in her career as a buyer’s agent, she has a significant number of clients that are looking to purchase inner city property. There has certainly been a shift back to apartment living in the CBD, particularly for those who chose to live regionally during covid lockdowns and wish to retain a city ‘pad’, but there are limited quality apartments blocks.
How does consumer sentiment relate to property price growth. Dave shares his research on the consumer sentiment index and how the sentiment statistics correlate to national property value growth. Can they give an insight into the future? The results are fascinating.