Business News Australia.com.au

6 ways to succeed during a recession (and become a confident and knowledgeable investor)

Bill Zheng reveals smart strategies investors can adopt to stay afloat and succeed in the current downturn

If you’re confused, uncertain and even frightened about the property market in Australia, you’re not alone. Most investors feel that way. They also feel angry and even betrayed.

During most of 2008, property investors across Australia didn’t fair too well, some couldn’t sell their properties at the right price to exit, others couldn’t refinance on a good valuation to get out of their existing mortgages provided by those defunct non-bank lenders. Many developers couldn’t sell their stocks or obtain proper development finance, and you name it.

We’ve seen some relief, in the first few months of 2009 at the low-end property market due to the first home owner grant and lower interest rates. We all know this won’t last, especially when Australia is officially included in the ‘Great Recession’ by IMF.

I believe that in tough times you should revisit your strategy, purpose and assumptions continually – especially when you’re experiencing resistance or frustration of any kind in the accomplishment of your investment and lifestyle goals.

Now more than ever, it’s especially important that you anticipate market shifts, control risk and create powerful strategies that move you in the direction you want to go.

1. Re-position your leverage level on properties

The current recession is mainly caused by financial crisis, a good percentage of the economic growth and asset value have been contributed by over-leverage.  Deleveraging across the world will see credit tight for many years to come, even after the economy recovers.  Hence we will see tight credit markets for at least another 2-3 years if the IMF’s prediction of the global economy recovery late 2010 is correct.

You should consider at least 3 factors when you look at leverage:

1. Return on investment: this is comparing your deposit money sitting in a bank vs. being invested into a property.

2. Safety: this is to avoid negative equity or loan recalls.

3. Your own circumstances: how close you can achieve the ideal leverage level.

Ideal leverage level:

• If residential property prices were going up at 7-10% each year, higher leverage (such as 80% or above) will give you higher return on your capital invested and still relatively safe.

• If residential property prices were to be flat or even slightly down each year, lower leverage (60% or below) will give you a higher return on your capital invested and it is also safer to keep your leverage lower.

In my opinion, our current property market trend is likely to be suitable for 60%LVR or below if your circumstances allow you to do so.

If you must stay at higher leverage, your income should at least allow you to pay down your mortgage principal on a monthly basis.  Because paying down your mortgage is similar to lending your money to the lenders. The lender is paying you the interest rate your mortgage is costing you; you have effectively become a lender.  Lenders make more money than borrowers in a deleverage economy (home loan calculator).

Many people are concerned about lenders recalling their mortgages if they show negative equity.  For most private property investors and homeowners, negative equity will not be the main reason why the lenders would recall your loans.  Lenders would usually recall loans when the borrowers fail to make repayments.

However if you are one of those property investors with a very large property portfolio or run a business with credit facilities with the same lender, you may want to separate the business credit facility from your mortgages and reduce the exposure to a single lender. This can avoid the unnecessary risk of your mortgage being reviewed by the lenders at an inconvenient time.

2. Re-set your minimum cash reserve

Cash reserve is not a new concept to most property investors; most of us know we must have them to cover our rainy days.

How much is sufficient is quite a personal matter, but the general idea is: how many months you would like your cash reserve to last if you experience severe loss of income and overrun of cost at the same time.

• Loss of income can be loss of your job & business income, default of debtors, loss or decrease of investment income such as rent & dividends;

• Overrun of cost can be increase of interest repayment from your mortgage, unexpected expenses.

>>>Read more at Your Investment Property magazine<<<

Republished with permission.

Riseley Cottage defies description … stunning decor, outstanding views over The Narrows, and Hartz Mountains and close to the famous Hastings Caves and thermal pools.

The property has luxurious owners quarters (2 bedrooms, bath and lounge all upstairs), and 4 sumptuous guest bedrooms that just take one’s breath away. The country style kitchen befits the property perfectly and one can laze they sunny day away enjoying the views from the north facing verandah.

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Currently operating as a low-key and exclusive B & B, there is an opportunity to gain income as well as lifestyle here.

Cockle Creek & Recherche Bay, Hartz Mountain National Park, Ida Bay Railway and Tahune Airwalk are nearby points of interest for guests to enjoy.

>>>READ MORE >>>

Beautifully presented freehold motel, pet friendly, with main road exposure and excellent reputation. Set on just over 4000 m2 land in 2 titles, with rural views and no competition.

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Wednesday 19 August 2009

Throughout the economic downturn, Australia’s banks have outperformed their global counterparts when it comes to home loans.

The news comes from the Reserve Bank of Australian (RBA), which has commented this week on the strength of the country’s financial systems.

Speaking at the seventh Annual Retail Financial Services Forum, assistant governor Malcom Edey reviews the banks’ performances in a variety of sectors from shares and profits to loan approvals.

When it came to home loans, Mr Edey explained that Australia has a “favourable position” compared to other countries, with lower loss rates than the UK and US.

This is because mortgages are full-recourse, adding an incentive to borrowers, including those looking for low interest home loans, to avoid over committing themselves financially.

Also, the Uniform Consumer Credit Code ensures that lenders distribute home loans responsibly, he remarked.

“It’s a great advantage during an economic downturn to have a banking system that remains profitable and is able to continue lending,” he said.

Research from Deutsche Bank has suggested that banks have begun to restrict lending to first-time buyers the Sydney Morning Herald reports.

This article is brought to you by Mozo – Helping you compare home loans

This easily managed excellent household name TOYWORLD toy store was bought by the present owner as a Migration Business to meet the Australian authority’s specified requirements. It is now time to retire and enjoy all the life style Tasmania has to offer therefore the business is again available.

The Business is located in Burnie Tasmania on the Main Street downtown and shows excellent turnover approaching $1.0 million excluding GST with a good GP percentage in the high thirties with excellent profits. The turnover has increased substantially in the last year following an expansion of the retail space. It is well set up with excellent business systems in place and well trained highly motivated staff which ensures its smooth operations. READ MORE >>

Tourism, Accomodation Business For Sale Noosa - Read More>>

The successful holiday cottage business has operated for 9 years with existing planning permission for 2 more cottages, all subject to the owner’s control. 25,000 gallons in water tanks plus a bore, a creek, 6 dams and 5 fenced paddocks makes the property “drought proof”. The home is situated on 2 flat acres on a private mountain with the holiday cottages at its other 95 acre base with paved driveways and extensive low-maintenance gardens. The property includes park-like open areas, a rock pond with waterfalls, gazebo and boardwalk, 4 kms of bush trails to the lower creek with over 7,000 flowering trees planted. Served by the Bruce Highway and Cooroy rail station, the property is central to the Sunshine Coast tourist area, Noosa beaches a 30 minute drive, Brisbane an hour and half drive, and 8 minutes to Cooroy.

The 293 sqm executive brick home is surrounded by a 223 sqm verandah and spacious manicured lawns and gardens with citrus trees. A garage with carports, deck, solar-heated pool, garden shed and walk-in shadehouse satisfies any owner needs. The single-story all-electric home has a unique open-plan formal design with a modern Federation style tributing its Australian surrounds. Step into the double entry lead-light glass doors with sidelights and you are immediately impressed with the sense of space and flow in this country manor. The crystal chandeliers, white and grey Italian ceramic tiles, marble mantlepiece, aquarium, tiled bathrooms and large windows with vista views reveal the high quality in construction, fittings and decor. The holiday cottage income stream is complemented by the other property half grazed by cattle and horses adding to the income stream. A large two bay implement shed with its added water tank enables easy grounds maintenance. Photos and information regarding the cottages are available on the website at www.cococo.com.au. Cottage furnishings and equipment included in total price for wiwo\going concern sale.

Visit this lifestyle Farm and Business For Sale>>

LAND:
The property is situated on the beautiful North Johnstone River, which winds around to go through the picturesque town of Innisfail and through the township of Flying Fish Point and out to the sea, which enables access to the Great Barrier Reef. 100 acres, (3 acres of which is manicured yard surrounding the house), with approximately 1.5 klm of River Frontage on the Southern Boundary and 1 klm of tidal creek on the Eastern Boundary. Approx 80 acres of the land has a Lease on it, which we receive an attractive amount paid yearly in advance by a local Banana Company.

BUSINESS & WORKSHOP:
The Business is a reputable Metal Fabrication Business. We provide steel manufactured equipment and other items to mostly local Banana Farmers and occasionally to interstate and overseas customers. At present we have 5 permanent staff members in the workshop and 1 full time office person. However there is room for more workers if necessary. We are an extremely busy workshop and there is never a shortage of work. The Business comes with a Fowler Crane, forklift, Isuzu Truck, welders, guillotine and all necessary equipment to run the business. Also included is approximately $150,000 of Stock.

Main Workshop is 13.5 m x 38.2 m, with a Side Workshop extension of 12.4 m x 15.4 m. Total area under roof =706 sq m
Steel construction with masonry block walls and concrete floor.

Offices - 13.225 m x 3 m = 39.675 sq m for 3 offices which are approximately 8 years old. The offices are air-conditioned and built from masonry block which are fully lockable. The main office has a small kitchenette and built in office benches.

Staff Room - 3.8 m x 5.3 m = 20.14 sq m.
Masonry block with sink and bench, separate toilet and shower bay.

Store Room - 3.8 m x 6.3 m = 23.94 sq m. Masonry block with shelving, fully lockable.

Crane Shed & Spray Painting Bay - 5.3 m x 14.2 m = 75.26 sq m.
Open entrance with steel racks to one side.

New 3 Bay Machinery & Storage Shed - 10 m x 16.4 m = 164 sq m
Steel Construction and concrete floor. Currently used as a garage.

Oil & Chemical Storage Shed - 3.7 m x 3.1 m = 11.47 sq m.
The shed has a timber and iron construction and is fully lockable.

Concrete Barracks for Storage has 5 Bedrooms with Kitchen, Bathroom & Toilet.

Hangar and Helipad. The hangar has a concrete floor, Colorbond walls and zinc roof. 9 m x 11 m = 99 sq m (not including the helipad)

HOUSE:
Built in 1992, the house is 548 sq metres under the roof. The house is a low set Colonial Style home with colonial windows and a bull nose roof covering the stamp crete verandah which runs around the entire house. The house is in excellent condition and is constructed of Wide Bay Bricks and has tiled floors except for the bedrooms and family rooms which are carpeted. There are 4 bedrooms with split system air-conditioning, as well as air-conditioning in the lounge, dining room and kitchen. The house has an Internal Laundry, Office, Family Room and Sewing Room.

The kitchen has plenty of bench and cupboard space and also has a middle bench, aswell as a walk in pantry. The kitchen opens on the dining room through a servery bench, which can also be used as a breakfast bench.

The main bedroom has a separate ensuite and walk in robe and the 3rd bedroom has built in cupboards, with double mirror sliding doors.
The enclosed Barbeque area has a Fireplace and stainless steel benches and is constructed of both glass and brick.

Single car port with electric roller door. The driveway to the house is lined with oil palms and then goes onto a 2 way round about driveway at the entrance of the house.

A dam is situated at the back of the house with a Jetty and has oil palms surrounding it. This is a great home for entertaining or just for a family.

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Visit this Acreage with Nursery Business For Sale at Pampoola on the Mid North Coast NSW>>

Delightful 44 square home.

Open grazing and lightly timbered. Suitable for cattle, horses or horticulture. APPROX 10.11 HA - 25 ACRES.

Excellent location, minutes to Old Bar and pristine beaches. 10 minutes to Taree and Pacific Highway.

The large home has 4 bedrooms with a billiard room, entertaing area with inground swimming pool.

The established wholesale nursery, with established outlets has a large shed for propagating, 16 igloos, 1 shadehouse, reticulated watering, part drip and part spray. All equipment currently used in operating the nursery.

The main stock includes indoor ferns, Madonna Lillies, Philodendrons, Mondo Grass, Hoya and Cissis is also available.

View these commercial units for sale>>

We have 8 units available for sale in this near completed development which is 20 mins from Hervey Bay

The “Wide Bay Business Park” is Maryboroughs most exiting new commercial and industrial precinct. The estate will comprise of 54 lots and ranging in size from 1200 square metres to 9705 squares. Stage 1 is now available, completion is due approx April.

The Wide Bay Business Park is situated on the Bruce Highway approximately 7 kilometers north west of the Maryborough central business district. Maryborough has a population of 26,000 and is the dominant commercial centre for the surrounding local government areas of Woocoo, Tiaro and West Hervey Bay. The region has a population of approximately 45,000 people…..READ MORE>>