10/12/2018
Since 2006, OpenCorp has been helping investors expand their portfolios and create wealth at the same time.
Your investment firm met with Michael Beresford, director of investment services at OpenCorp, to discuss what potential investors need to know before embarking – and what the future of the Australian real estate market could .
Your Investment Property: What differentiates OpenCorp from other competitors in the market?
Michael Beresford: We are investors ourselves and we started this business because our loved ones were curious about what we were doing.
People see it working for us and have taken note of the fact that we are adding properties to our portfolios, becoming successful investors. Basically, they wanted to feed on our experience and expertise to achieve the same success for themselves.
Our track record shows that we beat the market in terms of capital growth, reflecting the time and effort spent by our research and acquisitions team in analyzing the data.
We analyze markets to determine the best way to invest in terms of capital growth potential and to help our clients build their real estate portfolios.
"Investors must have clearly defined objectives, understand the financial results they want and have a realistic timetable to achieve them"
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YIP: What are some of the most common mistakes that investors make when they plunge into a property?
MB: Without a doubt, the biggest mistake we see is that people are moved about what they buy – this may be due to the area where the property is based on the character of the property itself.
We often see people buying properties like it's about vacation homes rather than investments, and this never fails to amaze me the amount that some people will spend on properties without due diligence.
There are two key points to remember to ask yourself: The first is "Can I afford it?" And the second "How will this property help me achieve what I want?" to really do it? "
YIP: What should all potential investors know before trying to enter the real estate market?
MB: They should know what they want to achieve: Investors must have clearly defined objectives, understand what financial outcome they want and a realistic timetable to achieve them. I work with my clients to define what is needed to help them get exactly what they want. These may include tuition in a private school, choosing to retire early, regular vacations, paying for housing – or any combination of the above. Once you have established this, you can understand the amount of passive income you are trying to create. It is also fundamental that people take a long-term approach.
OpenCorp has the following saying: "Getting rich fast means losing money fast".
YIP: Where do you see Australia become a market in the next few years?
MB: It is important to understand that there is not a single real estate market in Australia; instead, there are many markets across the country, even in the same city. They ride at different times and have different drivers. Over the next few years, some of these markets will experience price increases and others, as you might expect, will not happen.
At the most basic level, supply and demand are the dynamic drivers of price growth. But to take a global view, we're seeing growth every four or five years over a decade, as we've seen in Sydney over the last five years. Then, five years ago, when it is relatively flat and stagnates. So, at any time, we must look for the best place to invest, depending on the market cycles. Investors need to understand where they buy and why they buy there.
Many do not realize the broader nature of the cycle; they buy up and are then frustrated because they feel the property is underperforming. But ideally, you want to see this growth as soon as possible, so you can move in as quickly as possible to the next property and then to the next property.
KEY FACTS AND TRENDS
For investors to create significant long-term wealth, focus on capital growth on multiple properties – compound growth. As a result, Michael Beresford is a strong advocate for the purchase of land and the construction of a new house at the top of it.
It highlights four main advantages:
1. You can get more rent for a new property than for an old property
Recent homes are often more attractive to tenants and result in higher rent.
2. You can maximize your tax benefits by being able to claim the maximum amount of depreciation
Depreciation is powerful because it is not expensive to claim, unlike interest rates or interest. All holding costs are covered by tenants and the government, via tax benefits.
3. You settle on a block of land, then you build a house at the height of it
Customers know exactly what they are committed to in terms of quality and functional design of the home, making it an optimal fit for the surrounding area. Plus, you save thousands of dollars by paying only stamp duty on the land.
4. The maintenance of old properties is more expensive
Maintenance weighs heavily on cash flow. It is better to keep this money to cover the costs of holding or to hold a larger portfolio.
"There is not a single real estate market in Australia, there are many markets across the country, even in the same city"
Michael Beresford Director of Investment Services,
is part of an experienced team
investors at OpenCorp who share
their expertise with others
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