Parents can still lend a hand

Parents can still lend a hand

Times have changed since the 1970’s when Baby Boomers could afford their first home on a single income and jobs were stable – a stark comparison to Gen Y and today’s property market.

Young first-home buyers looking to invest are facing challenges their predecessors didn’t, such as the ever-increasing issue of job security and median house prices spiraling well above what the average wage can afford.

Members Alliance CEO David Domingo says the younger generation are now asking for their parents to lend a hand in order to enter the property market.

“Some are lucky enough to receive financial help from their parents to secure their first property,” says Mr Domingo.

“Direct financial assistance is useful, but solid advice is just as good – parents who are unable to help their children with a deposit can help in other ways like attending house inspections and spotting a good investment where their child otherwise wouldn’t.

“Teaming the determination of a young saver and the first home buyers grant with the experience of a parent is profitable combination.”

The International Monetary Fund (IMF) has found Australia has the third highest house price-to-income ratio in the world, which means this trend will only grow stronger in the coming years.

The IMF’s Global Housing Watch also confirms global house prices have risen consistently for nearly the past two years and are well above the historical averages.

Mr Domingo says house prices shouldn’t defer those who are ambitious to enter the property market.

“The sooner they get started the better – home ownership doesn’t have to be out of reach for Gen Y, but they may need to ask for help at some stage, be it from their parents or the bank,” says Mr Domingo.

When thinking about your first property investment, talk to the Financial Advisors at Members Alliance who specialise in property investment advice. Call 1300 365 731 to see how they can help.

www.membersalliance.com.au

Fair go for investors and first home buyers

Fair go for investors and first home buyers

Negative gearing survived this years’ Federal Budget but there are still calls for a review in order to correct property prices and level the playing field between investors and first-home buyers.

The inflation of property prices caused by negative gearing is making it harder for investors to build their portfolio and for first-home buyers to purchase their first property.

Members Alliance CEO David Domingo says something needs to be done about the tax breaks that are distorting the property market and making home ownership for the younger generation a thing of the past.

“Negative gearing is ingrained in the Australian property market – it won’t be an easy fix,” says Mr Domingo.

“I’m not talking about a complete overhaul, I’m talking about a very minor correction in the property market, and incentives targeted to first-home buyers like stamp duty concessions.

“It’s becoming one of those situations where you can’t live with it and you can’t live without it, something needs to be done.”

Rather than reforms to negative gearing, wealth creation companies like Members Alliance believe small changes in the right places will see these inequalities in the housing sector corrected over time.

Mr Domingo says steps to address the policy’s effect on investors and young home buyers would see confidence restored in the Australian Dream of owning your own home.

“At the moment, investors are facing fierce competition in capital cities and first-home buyers are getting frustrated that house prices are well above the average wage,” says Mr Domingo.

“Without some sort of change to policy, investors will keep paying well over market price and the younger generation will be subject to a lifetime in the rental market.

“It’s a hard line to walk, on one hand you have experienced property investors who use the method to create wealth, and on the other hand you have these young hopefuls just wanting a place to call home.”

The Financial Advisors at Members Alliance can develop a customised property investment plan to help you own your own home or build your portfolio. Call them today on 1300 365 731 to find out how they can help.

www.membersalliance.com.au

Is your SMSF being administered correctly?

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The rise in popularity of the self-managed super fund (SMSF) has been confirmed with new statistics from the Australian Tax Office (ATO) showing numbers have reached over one million funds.

Many Australians have switched to the hands on approach of a DIY fund due to the appealing factors of control and flexibility, but may be unaware of the compliance issues that come with being a trustee.

Members Alliance CEO David Domingo says some trustees of SMSFs are having trouble mastering the simple yet mundane aspects of running the fund.

“All too often we see the trustees’ who are running the fund lacking the skills or time necessary to keep a SMSF compliant, and it’s the poor management of these funds that bring about penalties,” says Mr Domingo.

“The rules and regulations surrounding the Superannuation Industry (Supervision) Act are constantly changing and without the help from a professional service like Members Alliance, it’s difficult to keep up to date with industry changes.

“Negligence and improper dealings of your fund will no longer be overlooked or dealt with lightly, but that’s why we offer our services, to help people navigate their way through their SMSF to a comfortable retirement.”

From July 1, the Australian Taxation Office (ATO) will have new powers to reinforce the sector’s standards and prevent manipulation of the retirement fund to-be.

A number of new punitive measures will be put in place for the 53,000 members of the 27,000 new SMSFs setup last year including compulsory education courses and fines of up to $10,200 per trustee.

The ATO isn’t only cracking down on existing non-compliant trustees, but new ones too, which Mr Domingo says is fair but tough.

“Those new to the DIY super fund will no longer be able to plead ignorance and unfortunately, they’ll be subject to close scrutiny in their first year,” says Mr Domingo.

“Their behaviour and performance will determine the ongoing level of monitoring from the ATO – but any mistakes made in filing returns and contribution amounts will see them labelled as a case to watch.

“Going into a SMSF unassisted is a risky move – even the most financially savvy investors need assistance and advice.”

Aside from the ‘innocent’ mishaps, common contraventions reported by auditors include improper dealings with related parties, inappropriate loans and borrowings as well as incorrect use of limited recourse borrowing to buy property.

With the new changes taking effect this year, this is the first time the ATO will be able to utilise a range of actions for both minor and major contraventions.

Australians with SMSFs will be watching closely at how the ATO will hand down its new sanctions, but Mr Domingo says trustees would be wise to ensure their SMSFs abide by all the necessary legislation to safeguard themselves against a range of new penalties.

If you need help either setting up or fine tuning your SMSF, call 1300 365 731 to find out how Members Alliance can help.

www.membersalliance.com.au

To pay off or invest, that is the question

To pay off or invest, that is the question

If you are a homeowner, there may come a time when you will be faced with two decisions – one is to pay off your home loan, the other is to invest elsewhere.

Odds are that circumstances would have changed since you first acquired your home and a loan to service the debt. If you are 10 to 13 years into your loan, you would usually be earning more money and have extra funds to invest.

With so many homeowners facing the same situation, Members Alliance CEO David Domingo shares his advice on what to do when reaching that point.

Understand the type of debt

At this stage you should have the expertise to make sound financial choices. But if you have accumulated bad debt, paying it off is the first step to making the decision whether to pay off your home loan or invest elsewhere.

Bad debt usually resembles things that depreciate and offer no tax deduction for having purchased them. It typically includes cars, televisions and credit card debt.

You should aim to pay off your bad debt as quickly as possible. By accelerating the reduction of your bad debt you can reduce your total interest payments.

Make the most of your extra cash

As an established borrower, you should use your extra cash to pay off your home loan, as well as build wealth through other investments.

Dividing your cash between your home loan and your superannuation fund will give way to a number of benefits you will start to see now and in the future.

While making higher or more frequent repayments on your home loan will allow you to slash the overall interest and cut your loan time by a considerable amount, almost all homeowners do not have the additional funds to do so.

You could also commit your extra cash for salary-sacrifice contributions into your super. Income for your retirement comes from a solid financial plan and early investing activities, so acting now will ensure you have a secure financial future.

Paying off your home loan and investing in your super at the same time will create a welcome boost to any wealth creation plan.

Use the power of leverage

Once you have channeled that extra cash into your home loan and your retirement nest egg, you should think about leveraging the equity in your home to expand your assets.

Many Australians don’t realise their financial potential, and it’s at this time when the financial decisions you make will have the greatest impact on your lifestyle during retirement.

Using the equity in your home to invest in property is one of the safest ways to build wealth.

This advice should be used as a general guide only. Talk to a Financial Advisor at Members Alliance on 1300 365 731 to develop a wealth creation plan specifically tailored to your financial situation.

www.membersalliance.com.au 

Age Discrimination Adds Fuel to the Retirement Fire

Age Discrimination Adds Fuel to the Retirement Fire

Retirement and the pension have been the focal point of the federal budget ever since it was handed down by the coalition last month.

Disgruntled soon-to-be retirees have voiced their concerns saying the rise in retirement age to 70 will backfire without trying to eliminate workforce discrimination against older people.

Members Alliance CEO David Domingo says it’s now more important than ever to have a plan for retirement that doesn’t depend on employers or the government.
“The budget has sent shockwaves throughout Australia, effecting both the young and old, and it comes as a wake-up call that retirement is something you should be taking into your own hands,” says Mr Domingo.

“It’s no secret that employers are unwilling to hire older people and unfortunately, the value of an older worker is remarkably undermined.

“The older generation possess the qualities that run a great business; they understand the worth of a dollar, they’re punctual and enthusiastic and they have a lifetime of skill to offer – I say this because all too often we hear of Generation Y lacking the basic skills that make a valuable employee.”

While certain industries and occupations support the older workforce, according to Age Discrimination Commissioner Susan Ryan, 1 in 10 businesses admit to having a cut off age averaging around 50.

This combined with the Coalition’s decision to scrap the Mature Age Workers Tax Offset, which provided tax concessions of up to $500 for people over 55, has made it even harder for the older generation to find and secure employment.

Research from the Australian Human Rights commission shows one out of three unemployed people aged between 55 years and 64 years fell into the ‘long-term unemployed’ category in 2010-11.

Mr Domingo says soon-to-be retirees shouldn’t let the government determine how they will spend their golden years.

“The government’s blanket resolution of raising the retirement age to 70, when implemented, will increase the pressure on future retirees to build up assets to help protect their future standard of living,” says Mr Domingo.

“They can guard themselves against potential changes by securing their financial future through strategic planning and investment.

“The last thing we want is people reaching 60, realising they won’t be able to afford retirement and start to make irrational financial decisions that could see negative repercussions for years to come.”

Members Alliance specialise in providing tailored financial programs, derived from an analysis of your current financial position and identification of your financial goals.

If you want to start planning for retirement, call 1300 365 731 to find out how Members Alliance can help.

http://www.membersalliance.com.au

Master-planned Communities Provide Safe Investment Options

Residential property in master-planned communities is proving to be a safe investment option according to a leading financial services firm.

Members Alliance CEO David Domingo says the new communities are planned from the beginning and incorporate sought after amenities and sound management policies to benefit residents, resulting in them being highly desirable for the rental market.

“Master-planned communities are usually self-sufficient and incorporate some form of commercial development to provide shopping, dining and entertainment options, while ensuring a healthy and quality lifestyle through additional recreational facilities,” Mr Domingo says.

“These types of communities were first established in the United States, but areas such as South East Queensland helped pioneer them in Australia and they are now seen as the benchmark for all new developments.

“The investment advantages of owning a home in one of these planned communities is they will always be maintained and managed to a high level, which is exactly why they have become so popular.”

Other advantages include guaranteed quality, as all homes in a master-planned community must comply to strict building guidelines and covenants, meaning owners can be confident that the style and design of housing, including landscaping, will remain at a high standard throughout the estate.

Master-planning also improves the delivery of the community facilities, as with a good master-plan in place the future infrastructure needs of residents are already accounted for, meaning the community evolves within the plan, rather than trying to keep up with issues created by urban sprawl.

“Many master-planned communities incorporate sporting and lifestyle facilities such as walking trails and parks, swimming pools, tennis courts, and even golf courses, so when combined residents get to enjoy a wide array of facilities without the hassle of maintaining them,” Mr Domingo says.

“Due to the wide range of recreational facilities in a planned estate, a strong sense of community is often fostered as families gather at the park or at other communal areas.

“These types of close-knit communities have the added benefit of attracting a better quality tenant, should the property be rented.”

As a result of all of these benefits, property in master-planned communities typically outperforms the general market, with most residential property experts agreeing that these communities would provide an advantage over general residential property in an economic downturn.

“Indeed, the inherent value in master-planned communities makes buying a home there a better investment, which has been confirmed to us through an independent analysis of master-planned communities across southeast Queensland,” Mr Domingo says.

“In some cases, the average annual house price increase in the master-planned communities in the study was more than double that of the surrounding wider community.
“The research also found that the capital growth performance of master-planned communities with a body corporate structure has been even better.”

Investing in a master-planned community is financially more safe and secure, and this is why Members Alliance positions investment properties for clients in planned estates.
Rental tenants see houses in an estate as extremely desirable places to live, because they’re convenient to amenities and most have a wide range of quality recreational facilities.

This increases the rental return you can demand for your investment home and ensures your cash flow is maximised.

Contact Members Alliance for a complimentary initial consultation today.

www.membersalliance.com.au

Silver-hair Investors Leverage Surplus From Empty Nests

Silver-hair Investors Leverage Surplus From Empty Nests

Australians over 55 have shown overwhelming interest in the property market and are eager to start investing the “dead” equity from their homes.

A high number of retirees and soon-to-be retirees are amongst investors who made a mark on the Australian property market in 2013 according to RP data released earlier this year.

These investors amongst other investor types were at their highest levels in December since late 2003 in regards to a proportion of all housing finance commitments.

Members Alliance CEO David Domingo says silver-hair investors are changing the face of the investment market by re-entering with ambitions of returns that other ‘asset classes’ can’t provide.

“The timeline of achievement has shortened with each generation; our parent’s generation had a goal to pay off their homes before retirement, but now baby boomers are chasing full ownership of a $1 million house whilst also wanting to refinance to leverage their equity long before retirement,” says Mr Domingo.

“These days more people are realising they have ‘dead’ equity in their homes, which explains the spike in activity from silver-hair investors.

“Well located and rentable homes are at the top of the over-55s investment wish list, but purchasing means and goals can and do vary.”

These investors are using their age to their advantage, with some investing with funds from their self-managed super fund.

The real estate industry has changed immensely since baby boomers bought their family homes, which is why most experts agree older investors should buy with clear objectives to avoid financial pitfalls, and as importantly seek reputable advice before buying.

Mr Domingo encourages retirees to think long-term with their investments by focusing on a clear mandate, which may include suburbs close to railway stations with established and ongoing demand and consistent population growth trends rather than properties promising super high yields today but questionable long-term rental demand tomorrow.

“It’s a question that all investors should ask, but especially the over-55s: Am I buying for a premium rental yield with higher risk or a long-term capital gain and a reasonable rental income?” says Mr Domingo.

“Reaching out for advice from finance and property experts can also help investors steer clear from other common mistakes like retiree investors only buying homes they would live in and most unfortunately ignoring what tenants expect.

“Tenants expectations have changed to renting property that is smaller in size, low maintenance and near amenities and public transport.

“In some cases, silver-hair investors are unaware of what a good investment property looks like today because it’s been so long since they went out looking for their own homes and most critically they are least versed in the proper mandate and criteria.”

www.membersalliance.com.au