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May 2008 Newsletter


With clearance rates around 63% again recently, we can see ourselves settling in for the winter sales season. This tends to be a time where volumes become lower, and negotiations become far more intense. If supply drops off whilst demand stays level, then pressure occurs in certain segments of the market.

Investors have well and truly come into the market place as there are more distressed sales of property. Your choice regarding style and location of property will be paramount in your success as a property investor.

There is much talk of the government trying to coax institutional investors in to offering low cost, affordable housing to those people who need assistance. This is not being offered to the average Mum and Dad investor, who by the way own 80% of the rental properties. We also read everyday from the “property advisors” spruiking positive geared property is selling well.

I am not a financial advisor; I only assist people once they have made the decision to have some direct property in their investment portfolio. Personally, I agree with this, but each person should seek the advice of a reputable financial planning professional. There are two main ingredients in any investment; Yield and Capital Growth. In layman's terms yield is the rent you receive each week from the tenant and Capital Growth is the difference between what you purchased the property for and what you sold it for. (Or what the property is worth today).

For the purposes of this comment, I will be very simplistic. The average property is seen as “negatively geared” if your interest on the mortgage and other costs (rates, insurance, body corp. etc, called outgoings) is greater than the income you receive from the tenants. Because the government sees this as a net loss, it is treated like any business loss and you can reduce your taxable income because of this. When the tenants' rent outweighs the interest and outgoings it is deemed positively geared and these funds will be added to whatever other earnings you have and taxed accordingly.

Most areas where the capital growth rates tend to be at the higher levels (the more established suburbs of major cities, where there is good infrastructure) unfortunately usually have the lowest yield (%return). The opposite is also true. Where the capital growth is limited because of distance to infrastructure and not as many people wanting to live there, the rental return tends to be higher.

So which is better? Higher yield and lower capital growth or vice versa? If you can afford to negatively gear (where you will need to contribute out of your own pocket each month to make up the shortfall in interest) and you achieve good capital growth, I believe this will offer the greatest benefit if you wish to grow your property portfolio. If you have limited capital growth then the only way to get the deposit for your next property is to save, rather than use the equity (capital growth) from your current investment property.

Go to our “how to” series on our website to read more about Yield vs. Capital Growth in the coming weeks.

Ian James


This month, something for Sports Lovers!!!

Brownlow Fact: The very first winner received only 7 votes because at this time only one vote was awarded per match by the media. It wasn't until about 10 years after the 1924 Brownlow that umpires would award the votes.

The answer to the question in the April newsletter is:
        Question : How many cars did Nicholas Cage have to steal in the movie Gone in 60 Seconds? 25, 50, 75,or 100?
        Answer: 50 cars in just one night!

Question: Where & When was Ricky Ponting Born (The Australian Cricketer, for those like me who don't follow much sport!!)

The answer to this question will be published in the next newsletter.

Sam James


When searching for the ‘right property at the right price', adding an emotional factor to the equation can often create additional dilemmas when trying to secure the ideal property. With an investor the head usually rules the heart in such matters, and it is simply a case of ticking the ‘right boxes' to ensure the purchase will reap rewards over the long term. Owner occupiers working within a restricted budget will inevitably get caught up with the need to buy a property that feels like ‘home' as their first priority. As a result they can often end up making a poor long term investment.

Once a buyer has ‘fallen in love' with a property, the process can become an emotional roller coaster of despair. As a result the heart will often firmly rule the head when it comes to negotiation and signing on the dotted line.

When I was working in real estate sales, I can't tell you the amount of times someone would quote the old saying of ‘signing my life away' when it came to filling out contracts. There are always nerves involved during the purchase of real estate – let's face it, for most people it is the largest amount of money they will ever commit to spending in one go! However with a bit of due diligence and careful thinking, the process can become an enjoyable one, rather than one resulting in sleepless nights and packets of Panadol!

Sitting down and discussing the options you have, and what you plan on getting out of your purchase over the long term should be top of the list before you even begin to look for a home. I often find the hardest hurdle to overcome during the search process is finding out exactly what a buyer is looking for. The purchasers who have taken the time to really think about their various options are the ones that are truly ready and confident to move quickly when needed - therefore greatly reducing the possibility of missing out to another interested party.

Missing out can result in impulse buying. A well used real estate sale trick is to grab the under-bidder at an auction and take them to view another house. Agents know that the potential purchaser's emotions in this situation are ripe for a quick sale.

Clarifying your needs prior to searching reduces the chances of making a ‘heart over head' mistake. Real estate should ideally have an investment factor involved. You are committing a large amount of money and various sacrifices to your life style in order to pay the mortgage, so it would be good to know you are getting a good investment that will profit over the long term.

If you can't afford the locations you would ideally like to live in, think about buying an investment property and renting for a period of time. You may find that property investment is the first step to achieving your home-ownership goals. A good investment property can often provide the needed equity to enable you to borrow more a little further down the track.
Buying a property that won't appeal to every Tom, Dick and Harry will obviously reduce buyer competition. Think about avoiding the fully renovated homes that have the hefty ‘wow' appeal. These are designed to fuel emotions, and emotions make ‘good auctions'. Take the time to research what your long term living needs really are, and start concentrating on a property that has a good potential floor plan and location, rather than something that has instant appeal.

There is enough information in the market place and ‘property professionals' willing to assist when it comes to deciding your best plan of attack. Better still, consider using a buyer advocate who can give you peace of mind to know that the choices you make are good for the long term.

It is essential that you take the time to decide what you can afford and what your options are before you start looking and getting emotionally caught up with personal desire.

Putting a system into place means that the buying process can become an enjoyable and hopefully speedy one.

Catherine Cashmore


With my boat nearly back in the water I am looking at getting amongst the big Gummys. Anyone who hasn't seen the videos by Brendon Wing catching Gummy shark, Mulloway and Snapper based on Western Port, should get a copy and have a look. Technically, they may not be brilliant, but I can vouch for most of their methods and a lot of the areas they target.

Winter fishing on Western Port is all about picking the right days to go out. We have some beautiful mornings and overnight for that matter, but make sure you cloth yourself against the cold and check weather forecasts often.

Fresh baits of couta, salmon and squid will give you the best chance on mulloway, gummy and seven gill shark.

Good luck with your fishing.

Ian James


In our regular spotlight section we examine a selection of Melbourne suburbs, highlighting what's happening in these areas right now.


Council: Geelong City Council
Post Code: 3216
Area: 9.2km²
Population: 13,646 (2006 Census)
Neighbouring Suburbs: Grovedale, Highton, Newtown

Median House Prices

Dec 07
Dec 06
Belmont $245,000 $270,000 $310,500 $258,000 4.7%
Source: REIV.

Belmont Location Map
Click for larger map

Belmont is a suburb of Melbourne's second largest city: Geelong. Belmont is located 3km south east of Geelong's centre. The Barwon River runs along the North and East side of Belmont.

Belmont is one of Geelong's largest, oldest and most popular suburbs. With a population of approximately 13,600 (2006), Belmont has one of the largest and busiest strip shopping centres. Belmont is also close to Deakin University.

Belmont was settled in 1836 by Dr Alexander Thomson. It wasn't until 1865 that Belmont began to expand; three hotels, a flourmill, tanneries and a court of petty sessions were built. By 1927 an aerodrome was built and a tram service to Geelong ran (this ceased in 1956). The residential growth boom in Belmont really grew after World War II and during the 1950's and 60's.

Public transport in Belmont is primarily by bus, with a number of local services linking to local areas and the V/line country rail network, as well as direct coach services to Torquay, Lorne and Apollo Bay.

Rental Analysis: Belmont

Median Advertised weekly rent Gross rental yield (%)
$245 per week 4.9%
Figures for 12 months to End of February 2008.
Source: Australian Property Monitors.

Courtney James


Council: Banyule City Council:
Post code: 3085
Area: 2.7 km²
Population: 8083 (2006 Census)
Neighbouring Suburbs: Yallambie, Watsonia, Rosanna, View bank

Median House Prices

March 08
Dec 07
March 07
Macleod $380,000 $435,000 $530,500 $447,000 $338,375 -2.7% 28.6%
Source: REIV.

Macleod Location Map
Click for Larger Map

Macleod is a small North Eastern suburb, located about 18klm from Melbourne. It is established residential area with a small commercial area. Macleod is bounded by the southern edge of Gresswell Forest Wildlife Reserve, Wattle Drive and Harborne Street in the north, the transmission line, Yallambie Road and Greensborough Road in the east, Finlayson Street, Stanton Crescent, Chapman Street and Ruthven Street in the south, Waiora Road and Cherry Street in the west. Click here for an interactive map via Google maps. Part of the suburb of Macleod is located in Darebin City.

Major features of the area include Banyule Netball Stadium, Macleod Shopping Centre, Macleod Park, Harry Pottage Reserve and two schools.

Macleod's main public transport option is Macleod railway station, which is located on the Hurstbridge railway line. Journey time to the CBD is about 30 minutes. Macleod is a 'premium' station, meaning that it is fully staffed from first train to last, seven days a week. Macleod station also serves as a major hub for more than 20 local bus routes.

Macleod is named after Malcolm Macleod, an early land holder. Settlement of the area dates primarily from the early 1900s. Significant development did not occur until the post-war years. Development in the western section continued into the 1970s. The population has been relatively stable since the mid 1990s, a result of some new dwellings being added but a decline in average household size.

Rental Analysis: Macleod

Median Advertised weekly rent Gross rental yield (%)
$320 per week 4.3%
Figures for 12 months to End of February 2008.
Source: Australian Property Monitors.

Sam James


The following is a special pre-release extract from our latest 'how-to' article. For the full series, please visit and bookmark How to buy property in Melbourne. Be sure to re-visit on a regular basis for all the latest articles!!

Negotiation: a Buyer's perspective, Part 1.

Most real estate agents that you speak to have a reasonable amount of experience but very little theory knowledge when it comes to legislation that surrounds their industry. The vast majority of agents the public deals with are Agents Representatives. This represents a six day course at the REIV. Most of their ongoing training is based on their company's mentor and internal training programs. Some of these are very good and others are sadly lacking in structure and content.

As such you will come across a vast range of good, average and poor negotiators in your Real Estate quest. If you are negotiating against a professional, fully licensed Real Estate Agent, who is the agency principal or one of its directors, you are in competition with somebody who would be a “Queen's counsel” in the legal fraternity. Good Luck! This agent is probably involved in a couple of hundred property negotiations each year, similar to what we are involved with. When you are negotiating with someone who has superior knowledge of the industry and vastly more experience, then the idea is to “keep your eye on the prize.” Always work out your “walk away” point and stick to it.

When dealing with the average Agent's Representative, you still need to keep your mind on when to walk away, but don't be too scared in asking questions. Most of the time inexperienced agents are as nervous as you are when they are negotiating. I can remember back when I was selling, how incredibly worried I was about losing a prospective buyer by asking for too much money or asking for a difficult settlement.

One of the first things you need to decide is how much risk you wish to take and what rewards that will achieve. If you have found the perfect property that suits all your needs, and the agent is asking a fair and reasonable price, then it is probably not the time to give a “one off” low price and say “take it or leave it”. There is too much risk of losing the property. Words you can live buy whilst buying property; “Paying $5000 more for a great property is far better than saving $10,000 on a poor one”

In a flat or “down-turned” market, agents are far more likely to be cautious when it comes to shutting down and offer. If you have ever dealt with a Victorian inner city agent, in the peak of a sellers market, any offer you try to push prior to auction will usually be dismissed out of hand unless it is absolutely ridiculously over the top. We will deal with this scenario in another topic. Whether the property is being offered at public auction, private sale, “sale by set date”, “tender” or any one of a thousand other euphemisms, a legally binding deal can be reached once the vendors' statement (Section 32) is available. In any negotiation you are involved in you must try and exercise some control. This doesn't mean you try to be difficult for the sake of it, nor does it mean speaking “louder” to get your point across. I am sure we have all seen the person who thinks that if he shouts louder, he gets his point across easier.

Some of the ways of wresting some control from the agent are:

a) setting the timing of the meeting to put in an offer
b) setting the timing of when the deposit will be paid
c) talking about a slightly different settlement time than the agent had first mooted

There are many other ways of doing this and you shouldn't try for every one of these. Don't make the agent think you are a pain for the sake of it. Just try and make sure the agent sees you as a negotiator, not a follower.

Do you have a question, comment or 'war story' regarding your experiences in buying or selling property? If so, we would like to hear about it; email We are always happy to offer advice; selected stories will be highlighted in future articles.

Ian James


Honey Joys

Here's one for the kids: a foolproof recipe that can be put together in just minutes from ingredients you probably already have.

My children always enjoy making these with mum, but they love eating them even more!


  • 1/4 cup honey
  • 4 cups cornflakes
  • 60 gms butter
  • 1 tblsp sugar 
  • 24 patty cases



  • Place the honey, butter and sugar in a large sauce pan and heat until they melt together.
  • Remove from heat, add cornflakes and mix well.
  • Place spoonfuls of the mixture into patty cases.
  • Bake in a low oven at 150c for 10 minutes.
  • Allow to cool and serve immediately.

A simple and delicious treat that everyone loves!

Craig Hart


It is with some regret that we announce the departure of Justin Lilburne from the JPP team. Justin is moving on to other opportunities, and I know he will be missed by everyone. We thank him for his time at JPP, and wish him well in his future endeavours.

Kind regards from the team at JPP.

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JPP Buyer Advocates
368 Hawthorn Road
Caulfield South 3162
P: 03 9523 1054 F: 03 9523 1082
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