Creating wealth & securing your future through property-IPPA

IMPORTANT CONSIDERATIONS
Please read carefully
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kathyb@investmentpa.properties
Capital growth cannot be guaranteed, properties are offered on the basis that they present above average
opportunities based on fundamental analysis and suit your current circumstances, goals and strategy. Property
investment is a long term strategy. Property cycles are typically 7-10 years and growth may be uneven during this
time, with variations around the trend. Time in the market is an important consideration and why it’s important to
choose properties on the basis that they are ‘sustainable’. i.e do not over commit
Your income or personal circumstances may change after committing to purchasing a property. Laws relating to your
personal circumstances may also change such as tax bracket adjustments, superannuation rules etc.,
If an off plan purchase is more than 3 months out from completion a finance approval can only be conditional
dependent on final valuation. This means that you must commit to the sale and become unconditional without a
formal approval. This should be done on the advice of your lender who assesses that you have sufficient
equity/income and or cash to complete the purchase including a buffer for a valuation shortfall
Valuations are a measure of the bank’s appetite for risk, which may vary over time. There is a difference between a
bank valuation (done to protect the bank’s balance sheet) and a market valuation. Bank valuations are inherently
conservative and vary widely. It is wise to be prepared for some variation in the valuation from the contract price,
anywhere between 5-7% is quite routine.
Rental estimates are provided at the time of sale. Rents are market determined and can vary from the estimates. You
need to be prepared for the fact that when your property comes to market the rent may be lower than first
estimated (it may also be higher). Also when a new multi dwelling development comes to market all at the same
time it may take a while for the market to absorb the new listings and or the initial rent may need to be lowered to
secure the first tenant. You should be prepared to service the mortgage for a month or two between settlement and
first earning rent.
Cashflow estimates are calculated on assumptions accurate at the time of purchase. Interest rates can vary as can
achievable rents. Therefore it is wise to ask your advisor to run the figures allowing for variations in rent and interest
rates to make sure you are still comfortable with the bottom line.
Tax rebates are also assumed to be collected pay by pay. PAYG tax payers can submit an income tax withholding
variation form to their paymaster to have their tax reduced each pay by the estimated per annum rebate amount,
pro rata. If you don’t wish to do this the out of pocket cost will increase and you may receive a lump sum rebate- ask
your advisor to show you this on the cashflow worksheet if you need to.
Completion dates are provided in good faith by the vendor at the time of purchase. For reasons outside of their
control completion can stretch out beyond the anticipated date- reasons include inclement weather, material supply
issues and council regulations etc.,
Once a property reaches the stage of practical completion it then needs to be certified and registered in the land
titles office after which the vendor will call for a settlement date, normally 14-21 days later. Please allow 4-6 weeks
from practical completion to settlement