While not all property owners have to pay land tax, you will find yourself with this additional cost if you own an investment property in your own name with a total local government value above $599,999. If the property is owned by a company or trust then the threshold is reduced to $349,999. 

In good news, land tax is based only on the local government value of the land, so when figuring out if you will be liable for this, all you need is the current government value assessment for the proposed property along with any others you currently own. These values do go up and down over time however the land tax is potentially payable by whoever owns the property as at 30 June of each year. 

There are ways to potentially minimise or avoid having to pay land tax however it really depends on which name the investment properties are in, how many there are, and what the local government value is for each one. Determining which entity should purchase the property will be outlined in the next post. 

When considering any property investment, it is important to carefully run the numbers and we believe it is a good idea to have an accountant review what you have come up with to see if there are any outlays you have missed. 

Firstly, we recommend you consider purchasing costs like building and pest inspection costs, stamp duty and legal fees.

Secondly, there are many ongoing costs to consider including council rates, insurance, and interest costs just to name a few. Some properties may also have body corporate fees and, if you plan to rent the property through an agency, there will be agency fees associated with this as well. Maintenance costs can be a major threat to your profit so we recommend you scrutinise what repairs need to be done and if they are minor then it may not have a huge impact however if the repairs are significant or ongoing due to some failure in the design of the house then this needs to be identified as early as possible.

Before you sign a contract, it is important to identify if there are any major repairs which need to be dealt with straight away such as installing a new kitchen, total renovation of a bathroom, complete replacement of a roof.  We recommend that you factor the cost of these outlays into your calculations and sometimes this may end up reducing the price you are offering.

We always recommend that have a building and pest inspection done as there are things which may be found during these inspections which your untrained eyes don't see. Also it is normally hard to go for a look around in the ceiling cavity or under the floorboards during a normal open house so having these thorough inspections will find if there is any termite or other activity which can't easily be seen and will also determine whether the building is good or should be condemned. 

If these reports identify any major problems you had not identified which mean the property is no longer good value for money, it is important to either renegotiate the purchase price or walk away from the deal.

When buying a property, it is of utmost importance to conduct a very thorough due diligence so you know exactly what you are buying. As a minimum we recommend getting a building and pest inspection done.  There are also many other things a discerning property buyer should check for before finalising a contract. For example:

If there are any buildings, when were they constructed? Depending on when the property was constructed you may be able to acquire a copy of the plans from the local council. Is there any builders warranty still in place? If so how long until this runs out?
What are the actual boundaries of the lot? Do not assume that fences are actually in line with property boundaries.
Are there any easements on the property?
What is the current zoning of the property? Are there any possibilities for the property to be rezoned to a higher value use?
If the current building was destroyed, would you be able to rebuild in the same footprint or would you have to apply greater setbacks from boundaries and how would this impact on the size and value of the replacement building?
Are there any physical features which could create problems such as a natural watercourse coming in from a neighbours property which has to go through the property you are looking to purchase?
Does the property have electricity, water, sewerage, NBN connected?

These are just some of the questions we always recommend you investigate when contemplating purchasing a property.

When choosing an investment property to purchase it is important to think with your head rather than your heart. It is important to evaluate its potential for:

a)      capital growth and

b)      annual return.

When considering capital growth, identify the extent to which similar properties have increased or decreased in value during the last 5, 10, and 20 years. Are there any minor or major repairs which need to be done, and what might these repairs cost? Properties with the following attributes are preferred:

It needs minimal work done to make it rentable,
It needs minimal work done to maintain a liveable standard and good presentation
It is in a good area
It has features or other elements which buyers or renters may like - such as which school catchment it is in, access to public transport, distance to shops or service centres, etc.

Contrast this to a property which may require

New kitchen
New bathrooms
Complete repaint inside and out
New floor coverings
New electrical fixtures including oven, hot water system, etc.

It is clear to see that the more you put into a property the greater the capital growth required to recover that money.  Also you need to consider are you overcapitalising for example replacing a roof may cost $20,000 but that doesn't necessarily equate to the value of the house increasing by the same amount.
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C.T. Harris & Company actively supports rural and regional businesses and have been involved with the presentation of this award for thirteen years.  Both Paul & Chris Harris have made a significant contribution to the agribusiness industry through their accounting firm as well as their own grazing operation.  The Harris family has been involved with RCS for many years and have attended grazing for profit, graduate link and executive link programs so they have first-hand experience in operating rural businesses.  Through their own businesses, they have learned about the importance of working hard, listening to and acting on expert advice, and showing perseverance in the face of adversity.  These are the qualities they looked for when deciding on the winner of the award for this year.

The selection of this year's award winner was a very tough decision due to the significant achievements of both nominees. 

We would like to congratulate Kash & Jos Maclean from 'Coolum' in Queensland on being recognised for their outstanding achievement in business.  They are good managers who implement good strategies.  The ability to think and act outside the box provides opportunities which others can't identify.  Well done for what you have been able to achieve and also for building and maintaining relationships with your stakeholders, suppliers and customers.  You seem to be getting the most out of what resources you have available. 

Congratulations and best wishes for your future endeavours. 

When looking at buying real estate, many people spend a lot of time looking at properties available on the market first and then think about whether they will get finance approval later.  We always advise to do the opposite.  If you are thinking about buying your first investment property or expanding your property portfolio, we recommend that you start by examining your own financial position and then obtain a preapproval from a bank so that you have a clear picture of what amount of money you have available to invest into the purchase of an investment property. 

Also, just because a bank is willing to lend you a particular amount of money doesn't mean it is a good idea to borrow the full amount.  We recommend that you ensure that you have contingency plans in place so that if something unexpected happens, you will still be able to comfortably meet the regular repayments. 

Starting your property search with a clear picture of your borrowing capacity will help you avoid being unable to settle the purchase of a property due to finance not being approved.  If you are trying to buy a property at auction normally there is no finance clause so if you are unable to settle the purchase then there can be significant financial penalties which you will then have to pay. 

This also reduces the chance that you will be trying to purchase a property which you can't really afford.

Additionally, we also recommend that you ensure that you have a sufficient deposit so you avoid having to pay mortgage insurance.  Mortgage insurance is a cost to some property purchasers however it doesn't provide the buyer with any benefits.  Ultimately it provides protection for the bank funding the purchase. So as this insurance does not provide you as the buyer with any real value we recommend that it is certainly a cost to be avoided if possible.

Friday's Capricornia Business Awards dinner was a great chance to reflect on what is going right for the region in terms of innovation and economic development.  It showcased and celebrated the talented business operators we have in this region, which is something we need to do far more often.  It reminds us about the many business owners doing great things for their customers day in and day out and I'd like to congratulate all of the winners and nominees for a job well done.  As Peter Drucker states 'the best way to predict the future is to create it', the participating businesses are out there working hard to create a strong economic future for Capricornia.

It was an honour to be nominated for multiple awards and it reminded me of the many people I need to acknowledge and thank as without their hard work, trust, and support, I would not be the businessman I am today.  The support of my wife and three children gives me motivation.  The team at CT Harris & Company work hard every day to make a difference for our clients and I'd like to thank them for their efforts.  Finally, we wouldn't have a business without the trust of our clients, and I'd like to thank them for allowing me to provide guidance and assistance with their financial matters.  While nobody ever knows what the future may hold, it is certainly an exciting time to be in business in Central Queensland.

With low interest rates, now may seem like the perfect time to start or expand your property portfolio. 
However, while property has been traditionally viewed as a 'safe' investment option and can potentially be a good long term investment, there are significant risks involved. 
Without careful due diligence and proactive management, your property nest egg can turn into a millstone around your neck.
Over the next couple of weeks we will outline our top tips to property investing and we hope this will help you start your property journey on the best possible footing.

It was great to be a mentor for the recent Three Day Startup event which was held at CQ University's Rockhampton campus in conjunction with Advance Queensland. 

There were some very interesting ideas and it was good to see the progress of an idea from a concept to a five minute pitch. The pitches were great as they covered all of the main issues. 

Congratulations to all of the participants for their contribution and involvement in this program. 

Well done to CQ University for being great facilitators for this event. 

#3DSAQ  #CQUni3DS

On 5, October, 2016 it was great to be a Mentor for the Mentor Blaze event run in Rockhampton by Startup Capricorn.  This event is known as Queensland's Premier Startup Mentoring Event and it was great to have the opportunity to provide feedback to some local entrepreneurs about bringing their ideas to fruition.  

The event was organised by Ilab at UQ and past participants have commented that 'Mentor Blaze is like receiving a transfusion of pure enthusiasm'.

Well done to the Startup Capricorn team for delivering another well run event. 

Just because the event is over doesn't mean that you don't have an opportunity to discuss your ideas. 

We like local businesses in this community and want to see them grow and prosper.  To enable this to occur we are willing to meet with anyone with a current business or business idea to have a free no-obligation one hour discussion.  If you are in business you may have questions about how you could do things differently to achieve better results. 
If you have a business idea you may want some clear feedback about whether your idea has commercial value.
We have many years of experience working with small to medium businesses so we have seen what works and what doesn't. 
  
If you or someone you know may be interested, contact our office today and we can arrange an appointment.  This offer is only valid until 31 October, 2016 so act quickly so you don't miss out!