Frasers Property Home Buyer Guides by Frasers Property Australia

DOWNSIZING YOUR HOME

FRASERS PROPERTY BUYER GUIDE

CONTENTS

MAKING THE DECISION TO DOWNSIZE

Timing 4 Getting emotionally ready

Weighing up the pros and cons

LOCATION AND LIFESTYLE

Community 7 Convenience 7 Security 7 Transport 7 CHOOSING THE RIGHT PROPERTY

Apartment 8 Townhome 9 House and land

CHOOSING THE RIGHT DEVELOPER

MAKING THE MOVE

Decluttering

Selling your home

Storage 13 Finance 13 WHY FRASERS PROPERTY?

Customer Care and Rewards

Contents Contents

Downsizing your home

YOUR GUIDE TO DOWNSIZING

Making the decision to downsize to a smaller home can be an emotional one. Often it means leaving behind a home where you’ve spent many years growing a family and building a life. But downsizing your home is also an opportunity to upsize your lifestyle. Leaving behind a large home can help to not only free up capital, but also reduce the time spent on home maintenance, giving you more time to do the things you enjoy. Roger and Jane, Discovery Point, NSW

Downsizing your home

This guide has been designed to give you all the essential information you need to navigate this exciting transitional period with confidence. Contents |

MAKING THE DECISION TO DOWNSIZE TIMING There’s no perfect time to downsize. Some people choose to downsize their home as soon as the kids are out of home, while others never make the move to a smaller home. It’s a highly personal decision, but there are a few tell-tale signs that you might be ready to make the move: 1. Retirement

On average, property owners hold onto houses for 11.3 years and units for 9.6 years (CoreLogic 2019).

Retirement is one of the most common reasons that homeowners choose to downsize. As you prepare for or move through retirement, most people are looking to decrease yearly living expenses in order to make savings last longer. Trading your larger property for a smaller one not only frees up capital but can also reduce additional costs like insurance and council rates. 2. Lifestyle change If you’ve always dreamed of living by the sea but have stayed close to the CBD for employment, downsizing could be just the vehicle to help you realise your dream.

Making the decision to downsize

On the flip side, it’s also important to consider how your needs may change over the next 10-15 years and whether your current property can accommodate these changes. A double storey layout or rural location may not be ideal as your lifestyle and physical needs evolve. 3. Feeling burdened by home maintenance Larger homes generally mean more maintenance. And while you might have enjoyed spending hours tending to the garden or pool earlier in life, a lower maintenance home will allow you to spend less time on upkeep and more time doing the things you love.

Downsizing your home

We’ve worked hard running a business and raising our family. Now we’ve got some time to get out and do the things we really enjoy. KATRINA, COVA, QLD GETTING EMOTIONALLY READY It’s normal to feel conflicted about leaving your current home behind. Our homes hold some of our most precious memories and letting go can often feel like saying goodbye to a dear friend of family member. And if you’re downsizing out of financial or physical necessity rather than out of choice, it can be even more difficult to come to terms with the transition.

It’s important to recognise that these feelings are normal and to be ready for them when they set in. Talking openly about your feelings with a close family member or a friend can help you to process your emotions and find peace with your decision.

WEIGHING UP THE PROS AND CONS If you’re still not sure whether downsizing is right for you, lets take a look at some of the most common pros and cons of making the move to a smaller home: Pros Unlock capital from your home Lower maintenance living

Cons Emotionally difficult Costs involved with selling and moving

Opportunity to live closer to family

Streamlining possessions

Improved amenity

Getting used to a new locale

Less space

Lifestyle change Accommodate changing needs Lower utility costs

Downsizing your home

Making the decision to downsize |

LOCATION AND LIFESTYLE

Location and lifestyle

Downsizing your home

Hamilton Reach, QLD

The location of your property can make or break its liveability. When inspecting any property, it’s a good idea to spend some time exploring the surrounding area and asking the all-important question; can I see myself living here? The key items you should be looking for when assessing a property’s location are:

COMMUNITY

TRANSPORT

It’s also important to get a feel for the community you’ll be joining. Are neighbours social with one another or do they keep to themselves? Whether you’re seeking a home as a quiet retreat or hoping to build connections and stay social with neighbours, it’s important to choose a community that aligns with your wants.

A key part of transitioning to a lower maintenance lifestyle is becoming less reliant on your car to get you where you need to go. Use Google Maps to explore the transport options to and from family and essential services.

SECURITY CONVENIENCE Downsizing should make life easier, not harder. Your new home should be in close proximity to a supermarket, doctor, pharmacy and café as well as other services you might frequently need. Access to these essential amenities can be the difference between buying a home you like and a lifestyle you love.

Downsizing your home

Downsizing to a townhome or apartment can offer greater peace of mind when it comes to security. Most new apartment buildings feature secure access for tenants and their vehicles; and being closer to your neighbours can help you to feel safer both in your home and when you’re away from your property.

Location and lifestyle |

CHOOSING THE RIGHT PROPERTY APARTMENT Generally speaking, apartments are more affordable than houses, which can leave extra capital free to invest elsewhere or help extend your retirement savings. The smaller space and lack of garden also means less maintenance, lower utility costs, and the opportunity to get rid of any excess possessions you’re no longer attached to. Newer apartment buildings often include additional resident amenities like pools, gyms and shared entertaining spaces, and higher density living can also mean easier access to parks, cafes, shopping and other essential amenities. On the flip side, there’s always a risk that apartment living could leave you stuck with

noisy or unfriendly neighbours. Transitioning into a smaller space will also force you to take stock of your possessions and let go of the things that won’t fit into your new space, even if they carry sentimental value. If you do opt for apartment living, you will need to be prepared for the ongoing cost of Body Corporate Fees. These fees are paid by all owners in the building and cover the cost of maintenance and ongoing costs of communal areas, insurance, administration and any major repairs or legal costs that might pop up. Body Corporate fees can vary widely from property to property, so it’s a good idea to find out what they will be before buying.

Artist impression indicative only

Choosing the right property for you

Downsizing your home

TOWNHOME Opting for a townhome is still a cheaper option than a house but affords a little more flexibility when it comes to space such as private outdoor areas for entertaining or an extra bedroom for friends and family to use when visiting. It’s also an opportunity to enjoy being close with your neighbours without being on top of one another. Like apartments, townhomes also require less maintenance

than houses and can mean lower ongoing utility costs. But unlike apartments, townhome floorplans are typically spread across two or three floors, which can become difficult to navigate later in life. As with apartments, owning a townhome will incur ongoing Body Corporate fees to cover the maintenance of the property’s shared areas, insurance and administration.

Nesmi, Leah and Mary, Berwick Waters, VIC

HOUSE AND LAND Many downsizers choose to move into a pre-built, low maintenance home like an apartment or townhome. But building a new home can be a great opportunity to work closely with your builder or developer to create a home that meets your specific needs. It’s far easier to work in safety and convenience features like wheelchair access or having all bedrooms on the ground floor when you’re starting from

scratch rather than retrofitting them into a pre-built home. A great developer can not only help you find the perfect block of land for your new home, but can also help you find the right home builder and design to suit your needs, as well as walk you through the settlement and construction process if you’ve never built before.

Townhomes, Ed.Square, NSW

Downsizing your home

Choosing the right property for you |

Discovery Point, NSW

Choosing the right developer

Downsizing your home

CHOOSING THE RIGHT DEVELOPER

There are countless property developers operating in Australia and it can difficult to determine which one is right for you. Some focus on standalone apartment buildings, while others deliver entire communities with homes, parks and amenities. It’s so important to do your research before buying with any developer. Start by taking a look at their existing projects. Do they have a track record of completing them on time? Do you like the style of the homes? Were there any issues with quality? If you can, try to find someone in your network Downsizing your home

who has purchased with the developer and chat to them about their experience. It’s also a good idea to visit the display centres of any developers you’re considering. Chatting to a consultant in-person can help you get a feel for the type of developer you’re dealing with, as well as important information about the company’s history and approach to community building.

Choosing the right developer |

MAKING THE MOVE Rod and Katrina, Cova, QLD

DECLUTTERING As you prepare to move into a smaller space, you’ll need to take inventory of your possessions and make some difficult decisions about what to take to your new home and what to let go of. This process can be surprisingly difficult and emotional, so it’s a good idea to give yourself more time than you think you’ll need. Go through your home room by room starting with bulky items like furniture and working your way down to smaller knick-knacks.

River Homes, Hamilton Reach, QLD

SELLING YOUR HOME You should start the process of selling your existing home well in advance. Give yourself plenty of time to find a real estate agent that you’re comfortable working with, facilitate inspections and negotiate a contract of sale that will allow you to make your next move.

Making the move

Downsizing your home

Michelle and Michael, Tailor’s Walk, NSW

STORAGE Unless you’re able to perfectly time the sale of your existing home with your move in day, you may need to make arrangements to hold some of your possessions in storage while living in temporary accommodation.

FINANCE

Fairwater, NSW

Ideally the sale of your existing home will cover the purchase of your new property in its entirety, meaning you won’t need to worry about finance. It is highly recommended that you sell your home before purchasing a new home, as it can be difficult for over 50’s to secure external finance. However, if you do find your dream home before selling your current one there is an option to help manage the transition

Downsizing your home

financially. Bridging loans provide a line of credit to cover the period between purchasing the new property and receiving funds from the sale of your old home. To obtain bridging finance you’ll need to show evidence that you can afford to pay the interest costs during the period between buying and selling. After selling your existing home, you’ll typically have 12 months to repay the cost of the ‘bridge’.

Making the move |

WHY FRASERS PROPERTY? Trevor and Linda, Port Coogee, WA

At Frasers Property, we believe that the homes we build are more than bricks and mortar. After almost a century of creating homes and places for hundreds of thousands of Australians, experience tells us that what matters the most is the simple joy of living in a place you’re proud to call home.

Why Frasers Property?

All over the country, from Sydney’s iconic Central Park to Melbourne’s Burwood Brickworks, to the coastal living of Port Coogee in Perth and riverside lifestyle of Brisbane’s Hamilton Reach, our communities have been making up the fabric of Australia’s towns and cities since 1924.

Downsizing your home

CUSTOMER CARE AND REWARDS From the moment you purchase a home with Frasers Property Australia, youâ&#x20AC;&#x2122;ll gain access to a dedicated customer care team who will guide you through every step of the purchase process to ensure that your property journey is as smooth and worry free asÂ possible. Available via phone or the myProsperity property portal and app, our care team are available to assist with every and any enquiry throughout the life of your home. In addition to personalised care, your purchase also unlocks a host of exclusive rewards in order to help support you now and well into the future.

Receive Sapphire membership to Fraser World for one year and take a further 15% off best available rates at participatingÂ hotels.

Receive $2,000* every time someone you refer purchases a property from us.

Enjoy an enviable range of benefits from our partner brands, including furniture packages, financial consultations and more.

Receive priority notification about new residential projects and get the chance to purchase prior to public release.

Receive a 2-3%* purchase reward on future purchases with us.

Share selected benefits with family members, for life. No strings attached.

Visit frasersproperty.com.au/prosperity

*Terms and conditions apply. Visit www.frasersproperty.com.au/prosperity/terms

This material is a general introduction to purchasing property and is provided as a guide, for education purposes only. Because the information is general in nature, it does not take into account your personal financial situation and does not constitute financial advice. So, you should seek personal financial advice that is tailored to your specific needs before purchasing property. Frasers Property does not make any express or implied representation or warranty that the information is accurate, complete or correct. Purchasers must make and rely on their own inquiries and the contract for sale

Downsizing your home

Why Frasers Property? |

Find out more at Liveproud.com.au Frasers Property Australia

BUYING YOUR FIRST HOME

FRASERS PROPERTY BUYER GUIDE

CONTENTS

PLANNING IS KEY

First home, not forever home

Saving and sacrifice

LOCATION, LOCATION, LOCATION

Amenity 5 Childcare and schools

Transport 5 Neighbourhood character

Community 5 GETTING YOUR FINANCES IN ORDER

Preparing to buy

Knowing your credit score

PROPERTY TYPES AND OWNERSHIP STRUCTURES

Buying off the plan

Strata

Don’t be caught out by these extra costs

Land only

Typical home construction program

House and land packages

Ready built or ‘Turn Key’ homes

CHOOSING THE RIGHT DEVELOPER

WHY FRASERS PROPERTY?

Customer care and rewards

Contents

Buying your first home

YOUR GUIDE TO BUYING YOUR FIRST HOME

Buying your first home is one of the proudest achievements in life. But before you get the keys to your new home, there are a lot of elements you need toÂ consider.

Ryan and Kelly, Port Coogee, WA

Buying your first home

This guide will walk you through every step of the process from saving your deposit to closing the deal, so you can make your first property purchase withÂ confidence.

Contents |

PLANNING IS KEY

FIRST HOME, NOT FOREVER HOME

The average age of first home buyers in Australia is 35 for a new dwelling and 36 for an established dwelling. (CoreLogic 2019).

If you’re reading this guide, chances are you’ve been dreaming of owning your own home for some time now. You probably have a picture in your head of the perfect home for you; how many bedrooms, which suburb, carpets or floorboards, house or apartment. It’s great to have a clear idea of what you’re looking for, but it’s equally important to understand that you may not be able to tick

every one of your boxes in your first home, and that’s okay. Whether due to budget constraints or availability, you may have to compromise on a few dream features in order to satisfy your most important needs right now. Remember that by entering the property market as soon as you can, you’re actively building equity that you can eventually use to purchase your forever home.

SAVING AND SACRIFICE Buying your first home probably won’t be easy, there’s no way around it. Saving for a 5, 10 or 20% deposit requires a commitment to regular saving, which usually means making a few changes to your normal spending habits.

overseas travel or curbing their online shopping addiction. Every buyer will face unique challenges as they save their deposit, but it’s important to remain consistent and committed to your goal.

Many prospective buyers who have previously been renting, choose to move in with a relative or into lower cost share accommodation while they save for their deposit. For others, the challenge might be taking a break from

Planning is key

Buying your first home

LOCATION, LOCATION, LOCATION

Ryan, Discovery Point, NSW

AMENITY

TRANSPORT

COMMUNITY

Is there a supermarket, doctor, park and café within walking distance or a short drive? Access to essential amenities like these can be the difference between buying a home and buying a lifestyle you love.

Will this location provide a solid base from which to live your life? Use Google Maps to explore the transport options to and from the places you visit frequently like work, family and friends and essential services.

CHILDCARE AND SCHOOLS

NEIGHBOURHOOD CHARACTER

If you currently have children or are planning on starting a family in the next 5 -10 years, it’s important to look into the options for care and education in your local area.

The character of the neighbourhood you choose should be a good match for your personality and the lifestyle you enjoy. Perhaps you thrive on the hustle and bustle of inner-city living, or maybe you’re looking for a quiet suburb that’s great for kids. Either way, it’s important to choose a neighbourhood that feels right for you.

Buying your first home

Location, location, location |

GETTING YOUR FINANCES IN ORDER

Finance can be one of the most daunting parts of buying your first home. The language is often unfamiliar and the order of which steps to take and when to take them can be confusing at the best of times. But when you break it all down, it’s really quite simple. Here’s everything you need to know.

In Australia, your credit score will be a number between 0 and 1200. A “good” credit score is between 622 and 725, a “very good” score is between 726 and 832 and an “excellent” score falls between 833 and 1200. Visit moneysmart.gov.au for more info.

Getting your finances in order

Buying your first home

PREPARING TO BUY Step one in preparing your finances is to set your budget. Browse real estate listings to determine the realistic price range for the type of home you’re looking for in the area you’re looking to buy. Saving 20% of the purchase price of your new home, plus extra margin for fees, stamp duty, insurance and building inspections, will put you in the best position for securing a loan. Some lenders may offer finance on a 5% or 10% deposit, but these generally carry conditions and incur Lenders Mortgage Insurance (LMI), an extra expense we’ll dive into shortly.

Once you have your savings target set, sit down and prepare a monthly budget. Be honest about your current spending and include everything you can think of – food, rent, fuel, existing loan repayments, utilities, phone bill, gym fees, streaming subscriptions, entertainment, eating out and shopping should all be represented. Compare these expenses with your household income and identify any areas of nonessential spending that could be cut until you are left with a healthy monthly surplus for savings.

KNOWING YOUR CREDIT SCORE Your credit score is a numeric representation of how reliably you have met previous financial commitments like loan repayments, rent and other bills. This score will fluctuate based on a number of factors including the number and type of credit enquiries you have made and any defaults on existing loan amounts.

Buying your first home

Lenders will use this number in order to calculate the risk of providing you with credit, so it’s important to make sure you have a healthy credit score before applying for a home loan. There are a number of online services that can provide you with a free credit score report. Visit moneysmart.gov.au for more information.

Getting your finances in order |

GETTING YOUR FINANCES IN ORDER

Danielle, Brookhaven, QLD

GRANTS AND ASSISTANCE FOR FIRST HOME BUYERS First Home Owner Grant (FHOG)

First Home Loan Deposit Scheme (FHLDS)

The FHOG scheme was introduced in 2000 to help offset the effect of GST on home ownership. It is a national scheme funded by the states and territories that allows for a one-off grant, payable to first home owners who satisfy the eligibility criteria.

Under the FHLDS scheme, a portion of your home loan from a participating lender will be guaranteed by the National Housing Finance and Investment Corporation. This means that first home buyers may be able to purchase a home with a deposit of as little as 5%.

The eligibility criteria and amount payable differs across states and territories, taking into consideration the value of the home, the age of the home and the home ownership history of the purchaser.

A number of eligibility criteria apply, as well as a purchase price threshold determined by suburb. For more information, visit nhfic.gov.au/what-wedo/fhlds.

Visit firsthome.gov.au to view terms and conditions for your state or territory.

Visit firsthome.gov.au to view options for your state or territory.

Getting your finances in order

If you can’t quite manage a 20% deposit, there is another option. Lender’s Mortgage Insurance (LMI) is an additional insurance payment paid to your lender if your Loan to Value Ratio (LVR) is higher than 80%, meaning you need to borrow more than 80% of the purchase price of your new home. The purpose of LMI is to protect your lender from financial loss if you can’t meet your home loan repayments for any reason. LMI is either paid upfront or added into your home loan, but either way it is a non-refundable fee. LEGAL REPRESENTATION

There are a number of other state or territory specific programs to support first home buyers by reducing or waiving fees like stamp duty.

WHAT IF I DON’T HAVE A 20% DEPOSIT?

Contracts of sale and exchange of property ownership can be full of complex legalese. One of the best investments you can make is to use a trusted solicitor or conveyancer to help you with the process. Ask friends or family for a referral or do some online research and make sure you read all the reviews.

Purchasers must obtain their own advice and satisfy themselves about their eligibility for any FHOG, FHLDS or HomeBuilder grant.

Buying your first home

NATIONAL

NSW

VIC

QLD

Buying your first home

First Home Loan Deposit Scheme

A portion of your home loan from a participating lender will be guaranteed by the National Housing Finance and Investment Corporation. This means that first home buyers may be able to purchase a home with a deposit of as little as 5%.

First Home Super Saver Scheme

This scheme allows first home buyers to make up to $30,000 in voluntary contributions to their superannuation fund to save for a home, with a maximum of $15,000 a year.

HomeBuilder

A $25,000 grant available to owner-occupiers building new homes valued up to $750,000, and for renovations of an existing home values between $150,000 and $750,000.

First Home Owner Grant

A $10,000 grant for purchasers of new properties costing less than $600,000 and owner-builder contracts worth less than $700,000. If youâ&#x20AC;&#x2122;re buying land to build a new home, the total cost of the home and land combined must be no more than $750,000.

First Home Buyer Assistance Scheme

First time buyers of land, existing homes or new homes will pay no stamp duty if the property is worth costing than $650,000, or vacant land costing less than $350,000.

First Home Owner Grant

A $10,000 grant for new homes is available until June 30, 2021. A $20,000 grant is available for new homes built in regional VIC with a value of $750,000 or less.

Stamp Duty Exemption

First time buyers of land, existing homes or new homes will pay no stamp duty if the property costs less than $650,000, or vacant land costing less than $350,000.

First Home Owner Grant

A $15,000 grant towards buying or building a new house, unit or townhouse where the cost of the home is less than $750,000.

Stamp Duty Concessions

Eligible first home buyers will pay no stamp duty on homes costing under $500,000.

First Home Owner Grant

A $10,000 grant available to first home buyers purchasing or building a new home.

Concessional Duty

First home buyers may be exempt from stamp duty on homes costing less than $430,000. Reduced stamp duty may be available on properties less than $530,000.

Getting your finances in order |

PROPERTY TYPES AND OWNERSHIP STRUCTURES BUYING OFF THE PLAN Buying off the plan is when you sign a contract to purchase a home, often an apartment, that is yet to be built. You base your purchasing decision on plans and Artist impressions of how the home will look once complete, along with information about the developer.

to be paid until your home is complete, giving you additional time to save. There are other benefits as well, including: •

You’re more likely to qualify for Government Assistance

•

Increased tax depreciation opportunities*

•

Early purchasers will enjoy a greater selection of what’s available in a building that meets your criteria considering view, aspect and preferred floorplan

An off the plan property can generally be secured with a 10% deposit at contract signing time. The balance of the purchase then doesn’t need STRATA If you choose to buy an apartment or townhome, you’ll need to be familiar with Strata. This model of property ownership allows for individual ownership of part of a property (your apartment or townhome), combined with the shared ownership of common areas like foyers and gardens through an owner’s corporation or body corporate. Strata schemes set out the rights and responsibilities of all parties and often include

obligations for residents around noise, the keeping of pets, storage of bulky items and other common issues. All owners in the scheme are required to pay levies. Levies are usually charged quarterly and sometimes on an annual basis and go towards the administration and upkeep of the scheme and any required works, scheduled or emergency.

Property types and ownership structures

Artist impression indicative only

*It’s worth speaking to your accountant or financial planner to fully understand how to take advantage of this at tax time.

Buying your first home

Ed.Square, NSW

DON’T BE CAUGHT OUT BY THESE EXTRA COSTS In addition to your deposit and any applicable LMI, there are a number of other costs you need to be aware of, including: •

•

Buying your first home

Conveyancing and legal fees – paid to your legal representative to cover the preparation of documents and provision of advice Stamp duty – a government tax on property transactions. This fee can be waived or reduced for eligible first home buyers in NSW, VIC, QLD, WA and NT Building and pest inspections – it’s a good idea to organise independent building and pest inspections to avoid

any nasty surprises after you’ve moved in •

Transfer fee – a one-off fee charged by the state government to cover the transfer of the title of your new property into your ownership

•

Loan application fee – most lenders will charge a one-off fee to assess your home loan application

Property types and ownership structures |

PROPERTY TYPES AND OWNERSHIP STRUCTURES

Many first home buyers feel intimidated by the thought of building their first home rather than purchasing an established home. And while there are a few more steps involved in the process, the final outcome can be tailored to suit your exact needs and wants, and there are a number of financial support schemes that are on offer exclusively to home builders (see ‘Getting your finances in order’). If you do choose to build your own home, there are three methods of purchase you can select from. Whichever method you choose, the best place to start is by visiting a builder display village to get a sense for the size and style of home you would like to build, and the land size and budget this will require.

The Morris’, Brookhaven, QLD

Property types and ownership structures

Buying your first home

The Renwick Home, Ed.Sqaure, NSW

LAND ONLY Purchasing

Designing your home

Buying a block of land and choosing a builder to construct your chosen home design is the most flexible option of the three. You can either select the perfect block in a community you love first, or you can find the perfect home design and then select a block that will suit.

Once you’ve found a home design, you’ll need to ensure it fits within the design and siting guidelines set out by the developer, which exist to create community cohesion and enhance lifestyle for all residents.

To secure a land lot with Frasers Property Australia, you’ll need to pay a holding deposit of around $1,000. You will then have 7-14 days to pay the remaining 5% deposit amount, with the full purchase price to be paid once the land titles. What happens when my land titles? Once your land is titled, you will typically have 14 days to pay the remaining balance on the purchase price of your land. If your land is already titled at time of purchase, settlement is usually within 30 to 60 days, depending on what date is set in your land contract.

Buying your first home

Frasers Property Australia encourages sustainable and innovative home design that complements the local environment. A free Design Service is available to provide advice on how you can maximise the value of your home and help you understand the guidelines in place for your community. Building your home Once your land is titled and your design has been approved by the developer, your home will be constructed in a number of stages and may take anywhere from 6-18 months depending on the design. Construction typically follows the program outlined below, with progress payments made to the builder at each milestone.

Property types and ownership structures |

PROPERTY TYPES AND OWNERSHIP STRUCTURES

HOUSE AND LAND PACKAGES Purchasing

Designing your home

Settlement

In this case, a builder has already secured the land lot and prepared a home design that is best suited for that block. The purchaser will enter into two contracts, one with the builder for the home, and one with the developer for the land. You may have opportunities to customise finishes and small details, but the floor plan is generally set.

Once you have worked with your builder to make any adjustments to your home design, the builder will work with the developer to seek design approval according to the community’s design and siting guidelines, the importance of which is outlined below.

Once you have settled on the land, building can commence. Building is completed in a number of stages taking anywhere from 6-18 months depending on your design, with progress payments made to your builder at each of the milestones outlined above.

TYPICAL HOME CONSTRUCTION PROGRAM • Concrete slab poured • Lock-up

Property types and ownership structures

•

Frame erected

•

Practical completion

•

Roof installed

•

Handover

Buying your first home

READY BUILT BRAND NEW HOME Purchasing Buying a brand new ready built home is another option and is typically sold once construction has been completed. The key benefit to this style of home is that its complete and ready to move in, you dont need to wait for the land to title, or for the home to be built. These homes come complete with everything you need to move in, making this a great low-fuss option for new homebuyers.

Image by Porter Davis Life, Point Cook, VIC Ed.Square, NSW

Buying your first home

In this arrangement you will pay a 10% deposit, sign one contract with the builder and pay the remaining balance of the purchase price upon completion. Settlement typically happens within 60-90 days of placing down yourÂ deposit. Property types and ownership structures |

Choosing the right developer

Buying your first home

CHOOSING THE RIGHT DEVELOPER Brookhaven, QLD

There are countless property developers operating in Australia and it can difficult to determine which one is right for you. Some focus on standalone apartment buildings, while others deliver entire communities with homes, parks and amenities. It’s important to do your research before buying with any developer. Start by taking a look at their existing projects. Do they have a track record of completing them on time? Do you like the style of the homes? Were there any issues with quality? If you can, try to find someone in your network Buying your first home

Choosing the right developer |

WHY FRASERS PROPERTY? M cCulloch family, Brookhaven, QLD Image courtesy of Coral Homes

Why Frasers Property?

All over the country, from Sydney’s iconic Central Park to Melbourne’s Burwood Brickworks, to the coastal living of Port Coogee in Perth and the riverside lifestyle of Brisbane’s Hamilton Reach, our communities have been making up the fabric of Australia’s towns and cities since 1924.

Buying your first home

CUSTOMER CARE AND REWARDS From the moment you purchase a home with Frasers Property Australia, you’ll gain access to a dedicated customer care team who will guide you through every step of the purchase process to ensure that your property journey is as smooth and worry free as possible. Available via phone or the myProsperity property portal and app, our care team are available to assist with every and any enquiry throughout the life of your home. In addition to personalised care, your purchase also unlocks a host of exclusive rewards in order to help support you now and well into the future.

Receive Sapphire membership to Fraser World for one year and take a further 15% off best available rates at participating hotels.

Receive $2,000* every time someone you refer purchases a property from us.

Enjoy an enviable range of benefits from our partner brands, including furniture packages, financial consultations and more.

Receive priority notification about new residential projects and get the chance to purchase prior to public release.

Receive a 2-3%* purchase reward on future purchases with us.

Share your benefits with family members, for life. No strings attached.

Visit frasersproperty.com.au/prosperity

*Terms and conditions apply. Visit www.frasersproperty.com.au/prosperity/terms

Buying your first home

Why Frasers Property? |

Find out more at Liveproud.com.au Frasers Property Australia

BUYING YOUR FIRST INVESTMENT PROPERTY

FRASERS PROPERTY BUYER GUIDE

CONTENTS

CHOOSING THE RIGHT PROPERTY

Location and growth

Amenity and transport

Trust your judgement

Rental yield vs capital appreciation

Calculating net rental yield

CHOOSING THE RIGHT DEVELOPER

INVESTING ESSENTIALS

Equity 8 Depreciation 8 Negative gearing

Rentvesting 9 Strata 9 Property management

ESTABLISHED VS NEW PROPERTY

FINANCE AND INSURANCE

Accessing equity in a home

Landlord insurance

LEASING YOUR PROPERTY

Finding a tenant

Property management

Frasers Property Management

WHY FRASERS PROPERTY?

Customer Care and Rewards

Contents Contents

Buying your first investment property

YOUR GUIDE TO FIRST-TIME INVESTING

According to the ATO, more than 2 million Australians have chosen to invest their money in property. And if you’re reading this, you’re already well on your way to joining them. Ruksanah, Ed.Square, NSW

Buying your first investment property

This guide will take you through the basics of property investing, from what to look for in a potential investment to making the most of your finance opportunities.

Contents |

CHOOSING THE RIGHT PROPERTY LOCATION AND GROWTH When it comes to investing, the location of a property is often more important than the property itself. The worst house on the best street will likely produce larger capital gains in the long run than the best house on the worst street, even if short-term rental yields are more modest. Spend some time researching the growth areas in your city. Be on the lookout for areas where population is trending upwards and there is significant investment into local infrastructure. Browse real estate listings for rental properties in the area and attend some inspections

Choosing the right property

if you can. This will give you a good idea of the supply and demand in the market and a first-hand look at the type of prospective tenant you could be dealing with. Many first-time investors feel more comfortable investing in areas they know well or have lived in themselves. And while it’s important to have a good understanding of the area you’re investing in, playing it too close to home could see you overlook an incredible opportunity for growth on the other side of town. So, make sure you keep your search wide.

Angel, Discovery Point, NSW

Buying your first investment property

Ed.Square, NSW

AMENITY AND TRANSPORT When a prospective tenant is assessing a property, easy access to amenity and transport are at the top of their wish list. These are the aspects of location that will make the property liveable and encourage longer term tenancies. Look for a property that is well connected to the CBD and surrounding amenities via public transport, ideally with a train station or bus stop within walking distance.

It should be easy for tenants to reach essential services like cafes, doctors, supermarkets, gyms and parks either on foot or within a short drive. Depending on the type of property and its location, you may also need to consider proximity to childcare and schools.

TRUST YOUR JUDGEMENT When it comes to evaluating the property itself, remember that many of the things you would look for in a home to live in will also be attractive features for potential tenants. It doesn’t have to be your dream home but try to imagine yourself living there.

Buying your first investment property

Shopping with a tenant mentality will help you to identify often overlooked issues like inadequate storage, lack of light, and strange layouts.

Choosing the right property |

CHOOSING THE RIGHT PROPERTY

RENTAL YIELD VS CAPITAL APPRECIATION – WHICH ONE IS RIGHT FOR YOU? Typically, an investment property is purchased with the goal of either capital growth or rental yield. Capital growth, or capital appreciation, refers to the increase in the value of the property based on changes in the market. Significant capital growth typically takes a number of years to build and is a longer-term approach to property investment. After a certain period of time when the home has increased in value significantly, the investor will either sell the property or use the equity they have built within the asset to refinance and reinvest in further opportunities.

Rental yield is another term for returns, which are received through the rent your tenants pay on the investment property. To calculate your net rental yield, you will need to calculate all of the ongoing costs of the investment— property management, mortgage payments, repairs, council rates—and compare these with the rental income you will receive from the property.

Deciding whether to focus on long term capital gains or short-term rental yield depends on your financial position and goals. It’s always a good idea to sit down with a financial advisor to discuss your investment strategy.

CALCULATING NET RENTAL YIELD AN EXAMPLE:

You receive $30,000 each year in rent. It costs you $10,000 in property-related expenses per annum, and the property is valued at $500,000. The net rental yield equation is: (Annual rent minus annual property costs) divided by property value x 100 ie: $30,000 - $10,000 $500,000

Choosing the right property

X 100 = 4%

Buying your first investment property

CHOOSING THE RIGHT DEVELOPER

Discovery Point, NSW

Buying your first investment property

with quality? If you can, try to find someone in your network who has purchased with the developer and chat to them about their experience. It’s also a good idea to visit the display centres of any developers you’re considering. Chatting to a consultant in-person can help you get a feel for the type of developer you’re dealing with, as well as important information about the company’s history and approach to community building.

Choosing the right developer |

INVESTING ESSENTIALS

If you’ve never invested in property before, there are some key terms and concepts you’ll need to be familiar with. Burwood Brickworks, VIC

$ EQUITY

DEPRECIATION

NEGATIVE GEARING

Equity is the difference between what you owe on a property and its market value. Normally equity grows as you pay back a loan - effectively it’s the part you ‘own’. And it might be something you can access to buy another property without having to save a deposit again.

If you’re using a property as an income-generating asset (i.e. rent from tenants) you can claim a depreciation deduction on that asset against the income you’ve earned. When it comes to what and how much you can claim, it all depends on how old the property is or how much improvement you’ve done to it. Brand new properties can be depreciated for a full forty years, which tends to make them attractive for investors.

This is when you borrow money to buy an investment property and the income from that investment is less than what it cost you to generate it. Costs can include interest on the loan and expenses required to keep the property in good working order.

It’s a good idea to talk to a quantity surveyor to understand exactly what you can depreciate on your property. They can produce depreciation schedules that will help make your claim easier at tax time.

Investing essentials

So, is this a bad thing? Not if you expect to offset your losses with a capital gain as the property’s value increases over time. And in the meantime, your investment loss reduces your taxable income and therefore the amount of tax you need to pay.

Buying your first investment property

Artist impression indicative only

RENTVESTING

STRATA

Rentvesting is a popular option for first home buyers who can’t quite afford to buy in their ideal suburb just yet. Put simply, buyers rent a home in the suburb where they want to live and buy in a suburb where they can afford, renting that property to a tenant.

If you choose to buy an apartment or townhome, you’ll need to be familiar with Strata. This model of property ownership allows for individual ownership of part of a property (your apartment or townhome), combined with the shared ownership of common areas like foyers and gardens through an owner’s corporation or body corporate.

For some, this is the compromise that allows them to live the life they want while using spare funds to build equity in their investment property. However, there are a number of tax implications to this arrangement that you should understand, so it’s best to sit down with a financial advisor before buying.

Buying your first investment property

All owners in the scheme are required to pay levies. Levies are usually charged quarterly and sometimes on an annual basis and go towards the administration and upkeep of the scheme and any required works, scheduled or emergency.

PROPERTY MANAGEMENT Many investors choose to employ the services of a property management company to deal directly with tenants and take care of essential tasks like finding a tenant, rent collection, handling maintenance and repairs, and ensuring all paperwork is in order. Property managers can save you a great deal of time and stress, but they are an extra expense and quality of service can vary considerably, so it’s important to do your research.

Investing essentials |

ESTABLISHED VS NEW PROPERTY Whether to invest in a new or established property is a topic of great debate amongst investors and industry insiders. Both property types have unique advantages and disadvantages and itâ&#x20AC;&#x2122;s important to take the time to think through which option is right for your current financial position and your goals. Older homes hold renovation potential, which can be a great way to add significant value in a relatively short period of time. Depending on where you want to invest, they can sometimes be more affordable than new properties, and there will be historical sales data showing how the value of the house has changed over time. On the other hand, older properties can require much more maintenance than new ones and may attract lower rental yield if in poor condition. In many cities there is also greater demand for established properties among owner occupiers, creating competition and driving prices skyward.

New homes are often perceived as higher quality and as such can attract greater tenant interest while also requiring less maintenance. Buying a new home also allows you to take advantage of depreciation benefits and government incentives that apply to off-theplan homes. On the flip side, there might be little opportunity to add value to the property post-purchase, so it can take longer to achieve capital gains. If purchasing a home off-the-plan, thereâ&#x20AC;&#x2122;s also some risk involved in buying based only on plans and renders, especially if the developer is not well-known.

Fairwater, NSW

Buying your first investment property

FINANCE AND INSURANCE ACCESSING EQUITY IN A HOME If you already own your own home, you can use it/the equity you’ve built in that property to finance your investment. For example, if your home is worth $400,000 and you still owe $220,000, your equity is $180,000. Banks won’t let you loan against all that equity though; depending on the general picture of your financial circumstances, they’ll lend up to 80% of that equity for investment purposes. That’s $144,000 worth of security you can borrow against to fund your next purchase. To access your useable equity, you’ll need to refinance your existing mortgage to free up some funds. You can then use the equity to put down the deposit on your new property and secure a home equity loan. How much equity you can use will vary between lenders, so it’s a good idea to sit down with a home loan specialist and talk through your options.

Buying your first investment property

LANDLORD INSURANCE While not compulsory, it’s a good idea to take out a landlord insurance policy to protect you against a variety of risks. Policies vary but will typically cover you in the event of: •

Theft or burglary by tenants or other parties

•

Malicious damage or vandalism by tenants

•

Loss of rent

•

Legal expenses required to evict a tenant

Finance and Insurance |

LEASING YOUR PROPERTY

FINDING A TENANT Finding the right tenant for your property is one of the most important steps in your investment journey. A reliable long-term tenant is a huge asset for any landlord, where a poor tenant can be a major source of stress and in some cases, financial loss.

Spend some time thinking about what your ideal tenant looks like. Will they stay in the property for six months or two years? Are they a couple, friends, family with children? Do they have any pets?

Kristy, Berwick Waters, VIC

PROPERTY MANAGEMENT If you choose to enlist the services of a property management company, theyâ&#x20AC;&#x2122;ll take care of this process and present you with recommended tenants for your final approval. If not, you can use popular sites like Domain and Realestate.com.au to list your property and self-evaluate tenant applications.

Leasing your property

Throughout the life of your property you will need to manage rental agreements, tenant changeover, rent collection, maintenance and repairs and a host of tax and legal requirements. While itâ&#x20AC;&#x2122;s possible to do this yourself with extensive education, a property management service can take care of all these elements for a reasonable monthly fee.

Buying your first investment property

FRASERS PROPERTY MANAGEMENT Frasers Property Management operates Australia wide, managing a variety of property types for a range of clients within Frasers Property’s residential communities and the wider Australian community. If you’re thinking of becoming an investor, the specialist staff at Frasers Property

Management can take care of every aspect once you’ve found the right property. From finding the right tenants, preparing all lease documentation and negotiating rental agreements, to helping streamline your paperwork and tax requirements, our specialists are here to help, so you don’t have to worry.

To find out more, visit fraserspropertymanagement.com.au or call 13 10 25.

First established

2012 Operating

Across Australia Over

2,100 properties managed

Buying your first investment property

Leasing your property |

WHY FRASERS PROPERTY? Ben, Ed.Square, NSW

Why Frasers Property?

All over the country, from Sydney’s iconic Central Park to Melbourne’s Burwood Brickworks, to the coastal living of Port Coogee in Perth and riverside lifestyle of Brisbane’s Hamilton Reach, our communities have been contributing to the fabric of Australia’s towns and cities since 1924.

Buying your first investment property

CUSTOMER CARE AND REWARDS From the moment you purchase a home with Frasers Property Australia, youâ&#x20AC;&#x2122;ll gain access to a dedicated customer care team who will guide you through every step of the purchase process to ensure that your property journey is as smooth and worry free asÂ possible. Available via phone or the MyProsperity property portal and app, our care team are on hand to assist with every and any enquiry throughout the life of your home. In addition to personalised care, your purchase also unlocks a host of exclusive rewards in order to help support you now and well into the future.

Receive Sapphire membership to Fraser World for one year and take a further 15% off best available rates at participatingÂ hotels.

Receive $2,000* every time someone you refer purchases a property from us.

Enjoy an enviable range of benefits from our partner brands, including furniture packages, financial consultations and more.

Receive priority notification about new residential projects and get the chance to purchase prior to public release.

Receive a 2-3%* purchase reward on future purchases with us.

Share selected benefits with family members, for life. No strings attached.

Visit frasersproperty.com.au/prosperity

*Terms and conditions apply. Visit www.frasersproperty.com.au/prosperity/terms

Buying your first investment property

Why Frasers Property? |

Find out more at Liveproud.com.au Frasers Property Australia

UPGRADING YOUR HOME

FRASERS PROPERTY BUYER GUIDE

CONTENTS

WHAT ARE YOU LOOKING FOR IN A LARGER HOME?

Function 4 Space 5 Flexibility / adaptability

LETâ&#x20AC;&#x2122;S TALK MONEY

Should I sell my existing home or keep it as an investment?

Timing

Budgeting

LOCATION, LOCATION, LOCATION

Amenity 7 Transport 7 Community 7 Childcare and Schools

Neighbourhood character

CHOOSING THE RIGHT PROPERTY

House and land

Larger townhomes

Rightsizing to an apartment

Sustainable choices

CHOOSING THE RIGHT DEVELOPER

WHY FRASERS PROPERTY?

Customer care and rewards

Contents Contents

Upgrading your home

YOUR GUIDE TO UPGRADING

Whether your family have outgrown their current home, or it was never quite right to begin with, there are plenty of reasons you may be thinking of upgrading your home.

The Thakur Family, The Grove, VIC

Upgrading your home

This guide will help to walk you through the process of buying and selling into the same market, as well as what to look for in your new Â property.

Contents |

WHAT ARE YOU LOOKING FOR IN A LARGER HOME?

FUNCTION

The Bouquet family, Avondale, VIC

When compiling a wish list for your new home, start by thinking about the everyday functional needs your current home isn’t meeting. Perhaps you’ve been struggling to cook meals for the whole family on limited bench space, or maybe you need a second living area where the kids can spend time with friends.

What are you looking for in a larger home?

When you’re assessing the functional needs your new home should meet, make sure you’re looking 5-10 years into the future and considering how your family will change during this time.

Upgrading your home

SPACE The Chan family, Discovery Point, NSW

Wanting more space is one of the main reasons homeowners choose to pack up and move house, but it’s important to remember that not all space is created equal. Just because a home is technically larger in square metres, doesn’t mean it will feel any more spacious in your day-to-day life. What’s more important is how the layout has been designed to make the most of the space available.

When inspecting potential homes, think about how your family typically lives from day to day. If you always eat a sitdown dinner together, make sure there’s enough space for a well sized dining table. If you’re living with teenagers or soonto-be teens, then two smaller living areas might be better than one oversized space.

FLEXIBILITY / ADAPTABILITY To ensure that you won’t have to move again any time soon, it’s important to choose a home that can grow with your family and meet your needs both now and into the future. A great floorplan includes a few adaptable spaces that can take on new purposes throughout the life of your home i.e. a study that could one day become a nursery, or a playroom that could also be used as a second

Upgrading your home

living area when the kids become teenagers. You should be able to use the spaces in your home to best suit your needs, rather than being held back by a restrictive floorplan.

What are you looking for in a larger home? |

LET’S TALK MONEY

SHOULD I SELL MY EXISTING HOME OR KEEP IT AS AN INVESTMENT? Depending on your financial position and your goals, you may choose to sell your existing property or hold on to it as an investment. If your budget allows, property investment can be a great way to grow your wealth for the future while using rental income to pay off the remaining mortgage. However, this path will incur a number of costs such as property management and maintenance, so it’s a good idea to chat through your options with a financial advisor before making a decision.

Let’s talk money money

TIMING

BUDGETING

If you do decide to sell your property, you may need to secure bridging finance. A bridging loan is used when you require finance to purchase a new property but haven’t yet sold your existing one. A bridging loan is typically an interest-only payment home loan with a limited loan term.

As with buying your first home (or any home), it’s important to work to a budget. You may already keep a spreadsheet of your family’s regular expenses but if not, now’s the time to start. Identify areas of potential savings that you can put towards the various costs of moving into a larger home— like stamp duty, relocation services and new furniture and appliances.

Interest is compounded monthly, so the longer it takes to sell your property, the more interest you’ll accrue. It’s a good idea to do your research into how long comparable homes in your area have spent on the market to ensure you’re prepared.

Upgrading your home

LOCATION, LOCATION, LOCATION

The MacHale Family, Parkside, VIC

The location of your property can make or break its liveability. When inspecting any property, it’s a good idea to spend some time exploring the surrounding area and asking the all-important question; can I see my family living here for the next 5-10 years? The key items you should be looking for when assessing a property’s location are:

AMENITY

TRANSPORT

COMMUNITY

Will this location provide a solid base from which to live your life? Use Google Maps to explore the transport options to and from the places your family visits frequently like work, school, family and friends and essential services.

CHILDCARE AND SCHOOLS If you currently have children or are planning on starting a family in the near future, it’s important to look into the options for care and education in your local area and ensure there are suitable options for your budget and values.

Upgrading your home

NEIGHBOURHOOD CHARACTER The character of the neighbourhood you choose should be a good match for your personality and the lifestyle you enjoy. Perhaps you’re an active family who love being surrounded by nature, or maybe you’re looking for a quiet village-style community. Either way, it’s important to choose a neighbourhood that feels right for you.

Location, location, location |

CHOOSING THE RIGHT PROPERTY

Which type of property is right for you?

Upgrading your home

When most people think about upgrading, their minds go straight to the double storey house with a big backyard. But as we touched on earlier, bigger is not always better. A smarter layout may be able to elevate your lifestyle without having to spend a fortune on a larger home or move further from the CBD. HOUSE AND LAND A detached home is your typical stand-alone dwelling where the buyer takes on ownership of both the land and the residence. This is the most popular property type for owner-occupiers in Australia and is favoured by many for the privacy, space and flexibility it offers.

But with so much growth potential, it’s not surprising that detached homes are generally more expensive than other property types. In some capital cities, finding a home of suitable size in the area you want to live—that’s also within your budget—can be a difficult task for many home buyers.

Buying a detached home gives you the option of undertaking renovations down the line should you wish to do so, like adding a second storey or constructing a granny flat.

Try to keep an open mind while searching for a home and categorise your list of wants into negotiable and non-negotiable. This will help in making strategic compromises along the journey to securing your dream home.

Brookhaven, QLD

Upgrading your home

Which type of property is right for you? |

CHOOSING THE RIGHT PROPERTY

LARGER TOWNHOMES Townhomes offer a familyfriendly alternative to a traditional detached home at a generally more affordable price point. And while once seen as a compromise by many, townhome living has been gaining in popularity over the last decade, now accounting for 12.7% of Australian households*. For many families who can’t afford a detached home in their ideal area, a townhome allows

them to stay in the suburb they love at a lower price point and enjoy all of the lifestyle benefits attached. Typically set over two or three floors, townhomes can help families with school age children to find their own space within the home and maintain a sense of privacy. But for families with infants or toddlers, running up and down stairs all day might not be an ideal arrangement. Fairwater, NSW

RIGHTSIZING TO AN APARTMENT If you’ve been dreaming of upgrading, an apartment probably hasn’t crossed your mind. But a new study from Knight Frank has found that a growing number of Australian families are opting for luxury, low-maintenance apartment living.

For smaller families with only one or two children, apartments can provide an affordable option with the convenience of shared amenities and building management, low maintenance living when at home, and the ability to lock-up-andleave when out and about or on holidays.

*Australian Bureau of Statistics 2016

Which type of property is right for you?

Upgrading your home

WHY MAKING SUSTAINABLE CHOICES NOW WILL SAVE YOU MONEY IN THE LONG-TERM One important consideration thatâ&#x20AC;&#x2122;s too often missing from a purchaserâ&#x20AC;&#x2122;s checklist is sustainability. No longer just a greenie buzz word, sustainable features are now expected in high-quality homes, contributing to the value of the home and improving liveability for its inhabitants. Sustainable technologies like geothermal heating, solar power and grey water systems may add to the initial purchase price of a home, but studies have shown that they can lead

Upgrading your home

to significant savings on utility costs in the long run. Home designs that work with their surrounding environment to improve air flow, harness natural light and improve insulation without the need for surplus heating will also help to reduce your dependence on the grid and bring down ongoing costs.

Which type of property is right for you? |

Discovery Point, NSW

Choosing the right developer

Upgrading your home

CHOOSING THE RIGHT DEVELOPER

Choosing the right developer |

WHY FRASERS PROPERTY? The Grove, VIC

Why Frasers Property?

Upgrading your home

Receive Sapphire membership to Fraser World for one year and take a further 15% off best available rates at participating hotels.

Receive $2,000* every time someone you refer purchases a property from us.

Enjoy an enviable range of benefits from our partner brands, including furniture packages, financial consultations and more.

Receive priority notification about new residential projects and get the chance to purchase prior to public release.

Receive a 2-3%* purchase reward on future purchases with us.

Share selected benefits with family members, for life. No strings attached.

Visit frasersproperty.com.au/prosperity

*Terms and conditions apply. Visit www.frasersproperty.com.au/prosperity/terms

Upgrading your home

Why Frasers Property? |

Find out more at Liveproud.com.au Frasers Property Australia