Frequently Asked Questions

• What is meant by Gross Rent? Gross rent is the base or (NET) rent plus the cost of the Outgoings (rates, water, land tax etc).
• What is NET rent? Net rent is the base rent that the owner wants to receive for the property leased. Since the money received for Outgoings goes to pay other parties, it’s not income for the lessor, just an expense. Therefore, the NET rent is most often quoted to give a picture of what the owner will receive in his hand.
• What is a “++” lease? Sometimes a price is stated as “++” such as; $1,000++. This means the $1000 is a NET figure to which Outgoings and GST are added. NET + Outgoings + GST.
• What does WALE mean? Weighted Average Lease Expiry. Meaning; if you have 3 leases in one complex as below, the WALE is the sum of all lease terms (the length of each) divided by the amount of tenancies (3 in this case). The WALE for the below complex is 6 years. 18 years (total lease period) divided by 3 separate leases.That’s a pretty good WALE by the way!
  • Lease A – 3 years
  • Lease B – 5 years
  • Lease C 10 years

• Can a property depreciate in value? Generally speaking, before the GFC (Global Financial Crisis) in 2008, it was very uncommon for property prices to decline in value. This is why it has always been seen as a great investment. However, since the GFC, properties have frequently fluctuated in price – and often dramatically. Over the long term (10 years and more), property is still seen by many as a safe investment. This is proven by the willingness of Banks to lend against the security of property. If they thought it was unstable, there is no way they would lend against it. Make sure you carefully consider location and community when choosing a home, it can effect the homes future value greatly. If you are in a newly developed area, do some research on the construction of the surrounding areas being developed to determine if they may affect your home value.
• Is an older property as good a value as a new property? With residential homes, this is really just a matter of preference, but both newer and older homes offer distinct advantages, depending upon your unique taste and lifestyle. Older homes can generally cost less than new homes, however, there are many cases where new homes can also cost less then older homes. Most new homes will not have any backyard landscaping and some don’t include any front landscaping either. With an older home, the landscaping is normally already completed and could have 10”s of thousands of dollars in landscaping done, which is included in the purchase price. Taxes on some older homes may also be lower. Some people are charmed by the elegance of an older home but shy away because they’re concerned about potential maintenance costs. With Commercial property, there are massive tax depreciation benefits available for new property, or anything new in the property. As you can see there are advantages and dis-advantages to each, but it really comes down to what fits you and what you are looking for in a home or commercial property.We strongly recommend seeking advice from your accountant before purchasing property for investment purposes.
• In real estate terms, what is a Principal? An agent who is authorised by law to open and run their own real estate agency. All real estate offices have one Principal or “Responsible Person” who is in charge of the business.
• What is the difference between being prequalified and pre-approved for a loan? If you’re prequalified it means that you POTENTIALLY could get a loan for the amount quoted by your bank or lending institution, assuming that all of the information you provide is accurate and true. This is not as strong as a pre-approval. If you’re pre-approved, it means that you have undergone the extensive financial background checks, which includes looking at your credit history, employment status and income – and the lender has CONFIRMED they are willing to give you a loan up to the quoted amount, basically meaning you’re approved! This is the best way to start shopping for property. You will usually be provided an accurate figure which shows the maximum amount that you are approved for.  Most sellers prefer buyers that have been pre-approved because they know that there will not be any problems with the Finance clause in the contract.
• What is Lenders Mortgage Insurance? Otherwise known as LMI, this insurance only protects the lender, not you – but YOU pay for it! How good would it be if someone else paid your insurance bill? It’s best to avoid LMI if at all possible.
• How can I avoid paying LMI? The easiest way to avoid having to pay LMI is by putting down a 20% deposit. If you have 20% in cash, and it won’t leave you short of funds, then that’s the best way to avoid LMI. However, many people don’t have ready cash on hand and when the property market moves, sometimes it may be worth the price of LMI to get setup in a good property. Always seek the advice of a good qualified Financial Planner or Accountant before signing up for a mortgage.
• How is interest calculated on a mortgage loan? Most mortgages originated today calculate interest in arrears, unlike consumer loans which calculate interest to the date of payment receipt. As an example, when borrowers pay their February mortgage payments, they are paying the January interest. This method of calculating interest is based on a 360 day year in which each month has 30 days.
• How long does the loan process take? Most mortgages originated today calculate interest in arrears, unlike consumer loans which calculate interest to the date of payment receipt. As an example, when borrowers pay their February mortgage payments, they are paying the January interest. This method of calculating interest is based on a 360 day year in which each month has 30 days.
• What are Special Conditions and why should I always use them in a contract? When you sign a contract for a property, you are legally bound to fulfil your end of the deal. That is; to buy the property by an agreed date and under certain… Special Conditions. If you don’t have these conditions in there, then you have no “out” if you change your mind. Yes, you do have a “Cooling Off Period” – but terminating a contract under cooling-off will cost you a lot of money. Whereas terminating under a Special Condition, will see you walk away without any risk or cost (other than your Solicitor’s time and advice). The two most common Special Conditions are listed below and we recommend you always use them when buying;
  • Subject to Finance
  • Subject to Building & Pest Report

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