Posts Tagged ‘money’

The home of the future

August 22, 2012

The internet has already change the nature of shopping. We comparison shop between real stores and online stores. Sometimes it is more convenient to buy locally. Other times because of range, availability, price or convenience we prefer to shop online. Currently, retail purchases are only 5-10% online. But that is only after ten years or so of online commerce. Already we can purchase so much online  for under $1,000 from any where in the world – that threshhold being the limit for inporting in to Australia without the need for payment of duty, GST or any other importing red tape – and in many cases have it delivered faster and cheaper than placing a back order with a real live store. What of the next ten years?

How does this leave the real world store in the average shopping mall? Your local mall is owned and operated by a large listed property manager. The average mall business has almost no control over their rent, outgoings or share of the mall’s advertising costs. Their hours are regulated, seven days a week and there are precious few days of the year that they can be closed. But there are no guarantees…on most mid week mornings and afternoons the mall barely has any customers. The weekends, late nights and school holidays are a mad dash to make some cash to cover the rent, outgoings, advertising and wages. And then there is competition from the internet. Any business in the mall that sells any THING – clothes, books, music, home wares – can be beaten for price, convenience, range and service by the internet retailer. And already, some of us don’t even go to the mall for our groceries.

The only businesses alive in the mall of the future are those where the customer HAS to be present – cimemas, hair dressers, chiropractors, dentists, coffee shops and take aways. But once all the other stores have disappeared, how will the whole food court be available to survive?

The plan of the future. Much of your local shopping mall will be converted … to housing? Don’t believe me? Studio apartment/1BR apartment/ 2 BR apartment for rent/sale, features: plenty of parking, central city location, public transport at the front entrance, complex includes a gymnasium, convenience store, coffee shop, hair dresser and pharmacy. Walk to the cinema, heated pool or indoor skating rink. Wait a minute, no mall has a heated pool or an indoor skating rink! There will be plenty of room once the supermarkets and large chain stores have vacated the premises!

And turning shops into apartments? Simple. Most major shopping malls have a major overhaul every 10-15 years. Turning a shop into an apartment only involves a few internal walls and some plumbing and electrical work.

You heard it hear first. In the future…you can live at the mall… and you have internet shopping to thank for it.


Be Street Smart – Raise Funds while you Dine Out

December 5, 2011

So, volunteering by giving time is just not possible at the moment. How about supporting Street Smart. Here is a little bit more about the organisationfrom their website:

“We established StreetSmart Australia in 2003 to support and strengthen smaller, grassroots community organisations helping the homeless, frustrated by the lack of action and support from Government. These smaller organisations are critical in helping many people in crisis. StreetSmart helps out by raising funds and delivering financial grants, raising community awareness of the issues of homelessness and assisting these organisations to connect across their communities.

We see StreetSmart as a unique bridge between those that want to help people experiencing homelessness and the grassroots agencies that are changing lives. We believe in the support of emergency aid and critical services, and development of projects and programs that encourage social inclusion, empowerment and sustainable change for people experiencing homelessness.

When money is raised from the public 100 per cent of your donations are distributed in the form of grants. To date we have raised $1.67 million, supporting 400 grassroots projects.

We currently operate in Victoria, New South Wales, Queensland, SA, WA and ACT.”

From now until 24 December just add $2 or more to your bill at participating restaurants to help raise money for the homeless. More details are here!

Are you a business person who owns and runs a cafe or restaurant? You and your patrons can get involved, details here.

Investing: Rental Properties – The Financials Part 1

January 26, 2011

So, you’ve found your ideal investment property after plenty of diligent research.

You should also consider the financial aspects of buying and owning a rental property.

Buying the Property

Buying a rental property is not just about the purchase price. There are additional purchase costs. These include:

Stamp Duty on property purchase price – this is an amount charged by state governments on property transactions, so it varies from state to state. It is usually calculated as a percentage of the purchase price. Stamp duty is lowest if the property is being purchased to live in by the owners and is the first property they have ever purchased. Sometimes, for a first home purchase, there is no stamp duty below certain thresholds. There are also some concessions on stamp duty if the property is being purchased by the owners to live in. There are no concessions for property purchased as an investment property.

Conveyancing Costs – this is the cost of a solicitor or conveyancer for their services in preparing all the documents so that the transfer of the property can take place.

Various searches – these are the out of pocket costs that your conveyancer will ask for reimbursement. Many of these searches are fees to search government data bases to determine if there are any planned activities on or near the property (eg new roads etc)

Adjustments on Settlement – the adjustments are for things like council rates and body corporate charges. These adjustments occur because while rates may have been levied up to 30 June or 31 December, the transfer of a property hardly ever happens on those dates. The adjustments are to account for expenses that have already been paid by the previous owner that need to be reimbursed to them.

For all of these purchase costs allow between 3% and 5% of the price of the property.

Financing the Property

Banks typically want a minimum 20% deposit of the price of the property. This deposit can be in cash or another property can contribute towards the 20%. What is so magical about 20% deposit? While some banks will lend on a 5% or 10% deposit, they require additional assurance that the mortgage will be repaid. That means the bank will require mortgage insurance. Mortgage insurance is paid by the borrower BUT protects the bank in the event that the mortgage cannot be fully repaid even after the property is sold. Mortgage insurance is expensive as it will require another 2% to 5% of the property purchase price up front.

Check the latest interest rate deals here.

NOTE: Tom On Tuesday IS a CPA but is NOT a tax agent, a financial planner, a banker, a stock broker nor a real estate agent. Please note that all blog posts written on financial matters should not be taken in any way as advice from Tom On Tuesday. This blog post contains general information and the opinions of Tom On Tuesday. This general information also only pertains to Australia. Anyone reading this blog should seek out professional advice for their own personal circumstances before making any decisions.

Investing: Rental Properties – Research

January 24, 2011

Of all the different types of investments available, one of the most common is the residential investment property. Being a common investment, it is also subject to many myths and half truths. The following outlines some of the basics and rescues the vulnerable from some of the myths.


The first important step in making any investment is research. Understand what it is that you are committing yourself to and what effect your decision is likely to have on your financial future. Real estate people will readily tell you that the key to property is location, location, location. What does that mean?

People are attracted to live in homes that are located conveniently near shops, workplaces, schools, medical facilities, public transport and attractive natural features like beaches and mountains. Rarely though are ALL people looking for ALL these features in the one property. So, who are your potential tenants, what stage of life are they at, how big a property do they need and does the area have the facilities they are likely to value most highly?

The need for research is one reason why a first time investor would be well advised to check their local area first, including nearby suburbs and towns. Since you live there you are familiar with local facilities and have access to local resources like real estate liftouts in newspapers and open houses put on by local real estate agents.

One important thing to keep in mind while researching is that you are NOT buying a proeprty for yourself to live in. You are looking for a property that someone else would like to live in. The difference is that you can buy, say, a smaller property than you live in because it will suit someone else’s requirements. You could buy in a suburb that you would not live in but may have features that are attractive to other people. Try to put yourself in the shoes of a potential target tenant.

One more thing. BE CAREFUL if you are invited to a seminar or induced to take a trip where you will be asked to consider purchasing real estate that is a long way from where you live. For example if you live in a regional area and are asked to conbsider capital city real estate. Or you live is Western Australia and you are invited to look at property on the Gold Coast. It MAY be a good deal but it MAY NOT be. Being taken out of an area with which you are familiar simply makes it more difficult for you to adequately reseach a potential property and to judge whether the price is fair for that area.

You could start your online real estate research here.

Next Time: Investment Properties, the financials. 

 NOTE: Tom On Tuesday IS a CPA but is NOT a tax agent, a financial planner, a banker, a stock broker nor a real estate agent. Please note that all blog posts written on financial matters should not be taken in any way as advice from Tom On Tuesday. This blog post contains general information and the opinions of Tom On Tuesday. This general information also only pertains to Australia. Anyone reading this blog should seek out professional advice for their own personal circumstances before making any decisions.