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JPP News

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Happy New Year to all!

2013 proved to be JPP's expanding year - that is with babies as well as business.
We (Ian and I) are proud grandparents to 2 beautiful little girls.

Daniel & Charlotte James welcomed their beautiful baby Isabella to the world early May.
Courtney & Chris Thursfield welcomed their beautiful baby Zoe to the world early December.
For those who know Courtney as our senior property Manager,
Will note she was still working until 2 days prior to this arrival of her beautiful baby Zoe.
I think her husband was worried she would be taking calls and assisting people during labour.

After returning from a well-deserved short break, between renovating and a short trip to Japan, Justin has returned to work on full throttle,
Busy year ahead for him.

2014 has begun as busy as ever, with very little calm over the break, we are full steam ahead and back into the fast pace our business runs at.
We have purchased several properties this year prior to the auction campaigns and at the early auctions so far, with the next few weeks filling quickly with auctions to attend.
Both Buyer Advocacy and Property Management have been inundated with enquires which has seen a great start to the year for us all.
2014 is shaping up to be a strong year for us, with many investors coming back for 2nd and 3rd investments whilst the market is in the condition it is.

Sam James

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Market Overview

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First big test for the Melbourne market

In the past 5 days we have purchased 5 properties. they have been geographically and financially all over the place. We have purchased under the hammer at auction, bought at an in-rooms auction, private sale negotiation, a negotiation prior to an auction and and late on Saturday secured a property after a passed in auction. However, there has been one overwhelmingly similar factor. Every property has sold at a level similar to that which we thought it would. None of these properties sold cheap, but none sold "over the top". Each of these properties had competition. Each of these properties were in good locations within their respective geographical areas and each of these properties represented sound fundamentals for long term growth. In other words, each was not purchased as a unique offering for a particular client, but as a property that would not only suit their current needs but would be a good long term investment.

The Real Estate Institute of Victoria has released the first auction result figures that at least give a reasonable indication of clearance rate. This being, 71% on 620 auctions. just on 16% sold prior, and just under 30% passed in, 94 of these on a vendor bid. RP Data and APM had similar results on a different set of numbers, but overall, a sample of 600+ auctions clearing better than two thirds is a reasonable indication that the market has not changed substantially since the end of the spring selling season. Next week and the week after we will see "Super Saturday" conditions of 1000+ auctions.

In a balanced market, if you are looking to purchase a property being advertised for auction, then you need to be ready to negotiate in a one on one situation with the best negotiator the Real Estate agency has as well as being ready to "perform" at a public auction. Whilst there are no definitive numbers on how many properties would actually sell under the hammer, the anecdotal numbers would be much, much less than 50% of the time. This means if you add the times where a property will sell prior to the property passed in and sold, or not sold, then sold prior to the amount of properties that are put up for private sale in the first place, then we are talking about 1 in five properties may sell under the hammer during the auction at the front of the property.

If you were feeling that it would be easy just to outbid another inexperienced member of the public, think again. you would have less than a one in five chance of this occurring. And so you had better be thinking very carefully how you will handle the negotiations with a professional Real estate negotiator. Over the next few weeks we will work our way through some of the normal negotiations and some "not so normal" ones.

On another topic, Self Managed Super Funds, the article in today's Age by Max Newnham, resonates quite loudly in my ears. He is writing about the failure of The Charterhill Group and the fact they integrated a "one-stop-shop" approach to setting up a SMSF, organised the loans to buy property, found the properties for the SMSF to buy, and or developed them, and then managed them as well. The fact that one of the key factors in doing this was the promotion "negative gearing relating to the depreciation of the asset. This does not make any sense when you are in the SMSF low tax environment.

I am regularly asked to find new, highly depreciable properties for people to purchase in their SMSF, because their financial advisors have tried to get them to buy interstate or mining town new properties, and they have wanted something local. It is when i explain that many financial planners are paid huge referral fees to get their clients to buy these properties and then explain the low tax rate "negative gearing" scenario, that the penny drops and they realise they probably shouldn't have even set up a SMSF.

Always get a couple of opinions when thinking about buying new property in your own super fund!

If you are thinking of buying a property this year, please drop us a note. We would be happy to come and have a chat. If you are already a landlord and you want to get some professional management, please give us a call, we would be happy to have a chat about this as well.

Ian James
Director
JPP Buyer Advocates

Need help bidding at auction?

Auctions are simply a way of life in the Melbourne property market. Even though, in overall Metropolitan Melbourne, there are only about 30% of properties that go to auction, in the inner suburbs around the 20km ring of the CBD, this could be closer to 60%. If you are intending to purchase in these areas, you will need to understand the auction process and how to handle it.

This is an overview of what you can expect on the day of auction. Over the next few weeks I will break down the sections of the auction in a lot more detail. Feel free to comment or ask questions via our feedback section.

Firstly, you need to understand that the auction system is a method of sale, but do not assume all properties up for auction will sell under the hammer. In fact, most do not. The "clearance rate" is made up of all properties that are listed for auction that are sold before auction, sold under the hammer, passed in and then sold in post auction negotiation on the day. Many more than half of the auctions I attend as a professional buyer's advocate pass in and then are negotiated. When you see the result in the papers the next day, it is listed as "sold".

Assuming you have found the property you wish to purchase and it is listed for auction, you need to understand that within 3 days of the auction (usually a Wednesday) and 3 days after the auction, there is no cooling off period. If you sign a contract at this point then the deal is done! This means if you wish to have a building inspection done, you need to have done it before you sign the contract, very few agents will allow a conditional contract to be offered to the vendor within this time frame. You will also need to have the contract vetted by a competent solicitor or licensed conveyancer. If there are any legal issues with the contract or property, you need to sort these out prior to signing the contract.

Assuming you know what the property is worth to you, you have had the contract checked and the building and pest inspection done, then you are ready to bid on auction day. You need to understand, when buying at auction the work you do before the auction is of paramount importance and this will prepare you for the auction. If the auction is being held at the property (95% or more are) then the property will be open for inspection 30 minutes prior to the auction. In Victoria, this is a legal requirement as the rules of auction must be on display for 30 minutes prior to the start of the auction.

Once the auction begins, the auctioneer will usually introduce him/her elf and his/her colleagues and then talk a little about the contract and then about how good the property is. Amongst this "street theatre", the rules of the auction must be read out and the property identified, usually as the volume and folio number on the title. Once the auctioneer has finished his spiel (usually around 6-10 minutes, however I have been to a few auctions where the crowd are almost starting a slow clap) the serious part of the auction will get under way.

The opening bid from the public is very rare and more often than not, the auctioneer will start with a vendor bid. This is a bid on behalf of the vendor, which is simply used as a starting point. In Victoria, an auctioneer can vendor bid as often as he/she likes, however, they are quite meaningless bids. If there is no bidding at all from the public, then the property is "passed in on vendor bid" and listed that way in the papers the next day.

Assuming there are people there to bid (you are!!) then someone will usually shout out a bid. Note: you do not have to register as a bidder in Victoria - you can just stand there and bid). Bidding can be putting your hand in the air to accept the suggestion of the auctioneer, or you can call out any number or increment increase you want. If the increase is too small, the auctioneer does not have to accept it. Assuming the auctioneer does, and there is another bid, then the auction is off and running.

In an auction, you need to be the highest bidder to win the prize. If you hear the auctioneer call out "The property is on the market" this means the vendors reserve has been met and the top bidder will purchase the property at that price. If the property is not on the market, then you are bidding for the first exclusive right to negotiate with the vendor directly. Either way, if people are bidding, then you need to keep bidding up to your limit, whether the property is on the market or not.

Once the highest bid has been reached, the auction is over and either the property will be sold to the highest bidder at the last number bid, or negotiations will commence inside the property in private with the highest bidder and the agent. Either way, when the hammer falls, you have not yet purchased the property. This only occurs once the contracts are signed. In the state of Victoria, no property sale has occurred until the contracts are signed. (Even though the auctioneer may have yelled out SOLD!)

Assuming you are lucky and you are the highest bidder and the property is on the market, then you will be ushered inside by the agent. You will be kept away from the vendor until you have formally made a written offer on the property. This will mean you will sign 3-5 copies of a contract of sale but before you sign, make sure the documents are exactly the same as the one's you had checked prior to the auction. When you have signed, and the vendor has signed, most of the time the agents will introduce buyer and seller and then quickly finish up and put the sold sticker on the board.

This is the process of an auction. Over the next few weeks I will break down the individual sections and explain the pre-auction offer, how to bid at an auction, post auction negotiations and your rights as a purchaser.

If you are considering purchasing a property this year in Melbourne and you require some assistance because you are overseas, or interstate, or simply because you want to save money, time or make sure you pay the right price, please feel free to give us a call. We assist investors and owner occupiers alike.

Ian James
Director
JPP Buyer Advocates

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The Block

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Driving in and around the beautiful suburb of Albert Park you will notice the former Dux cinema, 47 O'Grady Street, Albert Park which was purchased by Watercress Productions for $5.85mil has had its full on transformation to the modern warehouse conversion by the 8 contestants from The Block.

With the building completion close the contestants will be getting ready for their agents to start their campaigns and begin there inspections, all vying to get the highest price paid at auction on the day, and like any auction the agents will be aiming to market their campaign the biggest and the best.

As last year's win showed, it is not always the best position which will get the highest price paid on the day for The Blocks properties; purchasers are looking at what design and what inclusions the properties have also. This is where having contestants with a good eye for detail and a good style and design will allow them to achieve the best results. It can also have a little to do with the auction timing, whether it is 1st 2nd 3rd or 4th? As we have seen on TV many of the purchasers / buying agents there are just bidding to win any of the apartments, so if they have successfully purchased on the first property, they no longer need to bid further. However other purchasers are actually trying to achieve a good result and only looking for the best property to suit their needs.

This year's build should interest many people with the location, history and the style of the property with Warehouse style living with their high ceilings and most times bigger than usual spaces, allows for more creativity, and this is surely what we are seeing with the latest Block contestants this year. With the fact you are buying the apartment and all that comes with it, fixtures fittings and furniture, you can simply move in or lease these properties out as they are.

Attending any auction can be daunting and it is easy to get caught out spending far more than you intend to,
JPP can assist as to what you should pay and what the properties are likely to achieve on the day.
If you need advice on any or all of the apartments, or auction bidding on the day,
JPP Buyer Advocates will happily attend on your behalf or attend with you.
Call - JPP on 9773 8404

Sam James

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Leasing In Melbourne

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With increasing vacancy rates around Metropolitan Melbourne it may be becoming more difficult to lease your residential property. There are areas that will be feeling the pinch a lot more than others. These are areas with an abundance of rental properties and in some of those areas developers are still building, areas such as the CBD, Port Melbourne and parts of St Kilda and Richmond. These areas have multiple new buildings going up which is pushing the supply and demand issues when they come to settle.

This issue is predominately affecting newer apartments as those 1 - 5 year old buildings tend to lose their flair and wow to the new developments that have everything still shiny and wow. Even so, these new developments tend to settle at the same time and you are competing with 5 - 50 other apartments in the same building that are very similar. If you are in this situation you need to make yourself stand out from the crowd by doing things in your control:

  • Reduce the rent to put you in front of similar other apartments
  • Request an earlier settlement, see if you can get in before others
  • Use good photos and change these throughout the advertising campaign if you are not getting the interest

The aim of above is to lease your property out quicker than others. The difficulty in holding out for a higher rent does not always equate to a higher yearly rate. Reducing your rent by $10 per week is $520 over the year and if your weekly rent is $500 then holding out means losing that week's rent anyway. When it's looked at like this it puts the leasing time in perspective and shows what a difference the lower price can make.

The higher vacancy rate also means most rental prices for established property are staying at very similar rates to last year and there are very few areas that are actually increasing. This is a shift in a landlords mind frame from the last few years where rents have been on the increase and there have been 5 - 10 tenant choices. We are now seeing much fewer group numbers at open for inspections and we are likely to see 2 - 3 tenancy applications throughout the advertising campaign.

Properties are still leasing, there will always be tenants looking for homes. This shift in the market means you need be smart about what you are hoping to achieve, which at the end of the day is a good tenant, paying a fair price who is going to look after your property.

If you would like to have a chat about any of this or about the services offered by JPP Property Management then feel free to call Courtney Thursfield on 03 9773 8404 or email at courtney@jpp.com.au.

Courtney Thursfield

JPP Property Management Offer

Now that we are in mid-February (how did that happen???) we would like to offer an Autumn Special to all of our JPP Property Management and Buyer Advocate readers.

If you transfer your rental property across to JPP Property Management before winter we will do your first months management for nothing.

We are not forgetting about our very loyal current clients either, if you recommend a friend or bring any of your other rental properties across to JPP Property Management we will send you out a double pass to Village Gold Class.

Please contact Courtney or Daniel at JPP Property Management to take up this current offer.

We are looking forward to looking after your very important investments.

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REIV News

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Strong final quarter growth with affordable suburbs still to be found

Low interest rates, a record number of auctions and auction clearance rates of more than 70 per cent combined to push Melbourne's median house price up more than 7 per cent in the final quarter of last year. But while such figures focus attention on the city's million-dollar suburbs and areas of most growth, they also show that Melbourne still has many affordable suburbs.

Medians include the highest sales as well as the lowest - in Toorak, for example, there were numerous sales of more than $3 million in the December quarter. This can inflate the median but does not necessarily mean all the suburb's houses will reach such heights.

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The rest of the article can be found here: (Source: REIV Website)

Sam James

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Gas Safety: Carbon monoxide - the silent killer

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Did you know?

Carbon monoxide has no smell and no colour, you may not know until it is too late if there is an issue with your gas heater.

Dangers of Carbon-monoxide:

When large quantities of carbon monoxide are being produced during combustion and the flue products are not being dispersed to the outside atmosphere.

Don't wait for the warning signs but if you see any of the following a problem may already exist:

  • Soot or discolouration around the gas appliance
  • Yellow flame
  • Heater goes out after a short time for no apparent reason
  • Debris falling from the flue pipe
  • Missing or damaged cowl on the top of the flue pipe

In the past decade nine Victorians have died from carbon monoxide poisoning, including brothers Chase and Tyler Robinson who died in their Mooroopna home in May 2010.

It is recommended that you get a gas wall heater checked every two years to ensure there are always. A standard carbon monoxide check will cost between $175 and $210. This will involve the use of a Carbon Monoxide analyser/detector that can detect a reading of less than 10 parts per million. If the unit is found to be faulty the tester will recommend a repair or replacement. These tests are conducted by licensed gas fitters in accordance with regulations.

Article source: Energy Safe Australia Website
Image source: Star Community Website

Daniel James

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Spotlight On Melbourne Suburbs

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

Bayswater

Municipality: City of Knox
Population: 10,738 (2006 census)
Postcode: 3153
Location: 28km from Melbourne CBD

Located 28km east of Melbourne's CBD Bayswater has a population of approx 10,738 (2006 Census). A residential suburb attracting families with parks, schools and large 600sqm+ blocks of land. Mount Dandenong provides an attractive backdrop to Bayswater (situated to the east) with some stunning views. Residents like the peaceful nature of the area, lower land prices, yet still easy access to the CBD via the recently built Eastlink freeway. There are significant commercial areas in Bayswater, and a large proportion of residents are employed in the manufacturing sector. Shopping facilities include Mountain High Plaza which was built in 2009, with other shopping precincts located around the train station on High Street. There are two ovals in Bayswater regularly used for local Cricket matches as well as catering for other sporting activities. Bayswater park (also known by the locals as Train Park) has an old disused steam train which has been turned into a children's playground.

Locals generally describe the suburb as a friendly area to live and generally quiet, however others have described it as both dull and boring. I would suggest it's an area more suited towards families than single professionals who would appreciate a livelier atmosphere. Therefore investors should consider houses over apartments and look towards land and potential development opportunities.

Amenities

Main Schools:

  • Our Lady of Lourdes Primary School
  • Bayswater Primary School
  • Bayswater West Primary School
  • Bayswater Secondary College

Transport - Bayswater Train Station and a number of bus services

Shopping - Mountain High Plaza built 2009 with local shops on Mountain Hwy Rd.

House Styles

Most of the housing in Bayswater is detached, on large blocks of land (600-700 + sqm) - plane 'post war' in style (brick veneer or weather board) Many of the blocks - particularly in areas close to the shopping precinct and train station - have been subdivided. There's a smaller number of apartment blocks and 2 bedroom villa units typically in blocks of 6 - 8. Newer town houses - generally double story - are becoming common is the population increases.

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Something Interesting

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See Melbourne in a different way

Click the image below to view Miniature Melbourne...A tilt-shifted video by Nathan Kaso: (An in-depth explanation of tilt-shifting can be found here.)

Miniature Melbourne

*Source: Vimeo.com

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Technology Monthly

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Samsung Galaxy Note III

Released by Samsung in early October 2013 in Australia, the Galaxy Note 3 is Samsung's new flagship phone, and you can tell they mean business.

The Note 3 is a powerhouse of a phone as you can see by the specs:

  • Display: 5.7" Super AMOLED display with a resolution of 1920x1080 (386 ppi), making it a true 1080p screen
  • Processor: Qualcomm Snapdragon 800 2.3ghz Quad-Core Krait 400 CPU (the other version not available in this country has an Exynos 5 Octa 5420 CPU comprising of a Quad-Core 1.9ghz Coretex-A15 CPU and a Quad-Core 1.3ghz Coretex-A7 CPU)
  • Camera: 13mp, 4128x3096 pixel camera capable of recording video in 4K video quality (4K not available on the Octa version)
  • O/S: Android 4.3 Jelly Bean
  • Memory: 16/32gb with MicroSD slot expandable to an additional 64gb
  • RAM: 3gb

Additional Features:

  • S Pen (a stylus, but in a completely new way)
  • 4G
  • 802.11 a/b/g/n/ac
  • Bluetooth 4.0
  • MicroUSB 3.0
  • Front Facing 2.0mp camera capable of recording 1080p video
  • 50gb of dropbox storage

The phone feels big in the hand, but no so big as to be unusable, and as Samsung have moved from the slippery plastic back to a textured faux leather one, there is not longer a feeling it will jump out of your hands any second...if you need to use it one handed, you can swipe the screen a certain way and it will shrink the display to either the left of right of the screen for easier use.

The screen is one of the best displays I have ever seen on a portable device...the blacks look completely black and the colours are vibrant.

The S Pen can be used to take quick notes, open a second application, take screenshots and numerous other features...while I probably won't use it too much, I can certainly see the appeal to someone who takes lots of notes, or saved snippets from webpages.

I have not once in my useage felt the 'Android Lag', the phone is super quick and can run multiple applications at once without hesitation.

The only gripe I have with the phone, is that it occasionally gets a little hot, but that is to be expected with the power inside it, you can enable a power saving mode that seems to fix this, but disables some of the features.

The phone is arguably one of the most powerful on the planet at the moment and it is amazing to use, I would recommend it to anyone who loves to have the latest technology.

Chris Thursfield

*Image From Samsung.com
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Recipe: Chewy Meringues with Tangerine-Lemon Curd

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Ingredients:

Meringues

  • 3 large egg whites
  • Dash of salt
  • 3/4 cup superfine sugar
  • 1 1/2 teaspoons cornstarch
  • 1/2 teaspoon grated lemon rind
  • 1 1/2 teaspoons fresh lemon juice

Curd

  • 6 tablespoons granulated sugar
  • 1/2 teaspoon grated lemon rind
  • 1/3 cup fresh lemon juice
  • 1/3 cup fresh tangerine juice
  • 1 tablespoon cornstarch
  • 3 large egg yolks
  • 1 tablespoon unsalted butter
  • 3 tangerines

Method:

1. Preheat oven to 325F (160C).

2. To prepare meringues, line a baking sheet with parchment paper. Draw 6 (3-inch) circles on paper. Turn paper over; secure paper with masking tape onto baking sheet.

3. Place egg whites and salt in a large bowl; beat with a mixer at medium speed until foamy. Increase mixer speed to medium-high. Gradually add sugar, 1 tablespoon at a time, beating until stiff peaks form. Add 1 1/2 teaspoons cornstarch, 1/2 teaspoon lemon rind, and 1 1/2 teaspoons lemon juice; beat 1 minute or until the mixture is well combined.

4. Divide egg white mixture among 6 drawn circles on parchment paper. Shape meringues into nests with 1-inch sides using the back of a spoon. Place baking sheet in oven; immediately reduce oven temperature to 225F (110C). Bake meringues at 225F (110C) for 1 hour or until dry to the touch. Turn oven off (leave pan in oven); partially open oven door. Cool meringues in oven 1 hour. Remove pan from oven; carefully remove meringues from paper. (Meringues will be crisp on the outside and soft on the inside.)

5. To prepare curd, combine granulated sugar and next 5 ingredients (through yolks) in a medium saucepan; bring to a boil, stirring constantly. Reduce heat, and cook 1 minute or until thick and bubbly, stirring constantly. Remove pan from heat; add butter, stirring until butter melts. Pour mixture through a sieve into a bowl. Place plastic wrap on surface of curd, and chill.

6. Peel and section tangerines; discard membranes. Spoon about 2 1/2 tablespoons curd into each meringue. Top each meringue with about 3 tangerine sections.

*Recipe From Myrecipes.com
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Vote for Zoe!

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We have entered our daugher Zoe in the Bonds Baby Search 2014.
Please vote for her by clicking on her picture below:

Zoe Jane Thursfield

Chris & Courtney Thursfield

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Kind regards from the team at JPP.

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