SSS – Nov/Dec 2017

G’day All,

2-minute read:

Firstly welcome and congratulations to our newest investment and owner-occupier clients!

We’ve increased our partner network to now include trusted tax & accounting services as well as DHOAS lending through Australian Military Bank.

Economy

-Official cash rate remains on hold at 1.5%. The RBA meets again in February and consensus is for rates to again remain on hold due low inflation at sub-2%.

-We expect improving economic conditions going into 2018. Trump got his tax cuts passed and Europe is powering along economically despite all the Brexit worry. Asian middle-class is strengthening which bodes well for Aussie tourism, agricultural exports, commodities and international student numbers. What happens overseas matters to us as Australia is well and truly part of the global economy.

-Aussie banks will continue to capitalise on the improving economy and increased APRA regulations by independently raising rates (investor loans especially). I agree that now is the time to fix (strategy & asset dependent) and should be aiming for sub-4.8% interest-only or sub-4.2% P&I. Fixing for 3 years now should time well for an expected mid-cycle slow-down in 2019-20 where interest rates will likely drop momentarily.

Property Market

Key land markets to watch in 2018 are:

-Greater Brisbane (heavy infrastructure spend)

Adelaide ($85 billion in naval spending)

-Perth (cyclical low)

-Townsville (Adani Carmichael mine flow-on effect)

-Cairns (tourism and tight vacancy rates) and

-Darwin (approaching cyclical low combined with defence, tourism and livestock trade increases).

Sydney and Newcastle will likely plateau with Melbourne expected to increase for the next 12-18 months.

On behalf of the Defencewealth Team and partners, I wish you and your family a very Merry Christmas and safe, prosperous New Year! As we recharge and refresh, I encourage you to take stock of what you’ve achieved in 2017 and we’ll be sure to hit the ground running in 2018!

Quote

The project you are most resisting carries your greatest growth – Unknown

Strategy

The Defencewealth strategy of TWO-50-TEN™ is based on acquiring a $2 million portfolio at 80-90% LVR over a 6-8 year timeframe. Once acquired we work to reduce the LVR to 50% over the next 4-7 years using a combination of capital growth, offset accounts and principal repayments. Once at 50% LVR, you will have some serious financial options but it will take time (10-15 years) to achieve. The new property packages we recommend are considered investment-grade based on experience and personal results and are selected for their balance in anticipated cash flow, capital growth and risk.

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