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Empty Nesters Flock To Inner City

Babyboomers whose children have left home, commonly known as "empty-nesters" are buying inner city apartments in record numbers.

Director of Acton Special Projects, Marc Drexel says the trend is towards quality rather than mass developments.

"The empty-nest market is growing and expanding with people wanting to reward themselves with a quality lifestyle property".

Typically this group of buyers is seeking 2 big bedrooms, rather than 3 small ones with generous open plan living areas. These developments often include lifestyle features such as a gym, coffee shop, resident caretaker and even a rooftop library!

Drexel says Acton has 15 different developments under way at the moment worth in excess of $500 million with prices for individual apartments ranging from the low $200,000 mark to over a million dollars.

"The major inner city renewal has spurred the market on," he said.

With this growth many investors are also speculating by purchasing "off the plan". A 2.5 % depreciation against the structural cost of the building is an incentive and savings can be increased to between 5 and 10 % through discounts offered by the developer.

But Drexel also warns "be careful, selective and look for a point of difference, something unique such as location or architectural integrity so it stands out from other projects".

Drexel believes negative gearing is no longer popular with a new trend towards "neutral gearing".

This trend is supported by Trevor Hoddy a partner with West Perth accountants, HLB Mann Judd.

"We don't see at lot of negative gearing compared to five years ago and we're seeing more a move into managed funds, such as property trusts, where there is greater liquidity and less risk."

He says the reason for this is low inflation, generating poor capital growth and soft rental returns.

When considering investing into property consider these 10 Tips

Determine whether a property investment fits your financial goals, objectives and personal asset profile.

Look at the extent of your gearing (ratio of debt to equity or assets) compared to your other financial resources. If you are spending $300,000 - $400,000 on a property - how big is your debt? How much risk is there compared to your other financial assets?

Look at what income your asset will need to generate to service the debt.

Determine if there any shortfalls between the income generated and the cost of servicing the loan. With negative gearing the shortfall between the income generated and the interest costs on borrowing and the maintenance costs on the asset are serviced from other income sources. You need to look at whether you have the resources from other income, either investments or salary, to maintain or pickup this difference. The benefits of negative gearing are that this shortfall can be offset against other income, reducing tax liabilities.

Assume the property is vacant. What impact will this have on your cash flow?

If you've borrowed money now at 9 or 10 %, what happens if this increases by 1 or 2 %? With an increase in interest rates do you have the ability to service this extra cost?

Negative gearing into investments is only effective if the long-term investment is linked to income and capital growth (the growth in the value of the asset). This is influenced by a combination of inflation and net after tax benefits. For example a $20,000 negatively geared tax deduction will yield a $10,000 tax benefit. This is the real cost, so each year the value of the investment must increase by this amount plus inflation. There is also a capital gain tax is on top of this. If growth is less than inflation then you're going backwards.

Ask yourself are you comfortable with the level of debt? Consider whether this matches your psychological risk profile.

How liquid is your investment? Put simply, how soon can you turn your investment into cash? Often property may take some time to sell and a more liquid option is to invest in listed or unlisted property trusts.

Have a solid financial plan and seek the help of an expert or a registered financial planner.

Thomas Murrell MBA CSP is an international business speaker, consultant and award-winning broadcaster. Media Motivators is his regular electronic magazine read by 7,000 professionals in 15 different countries.

You can subscribe by visiting http://www.8mmedia.com. Thomas can be contacted directly at +6189388 6888 and is available to speak to your conference, seminar or event. Visit Tom's blog at http://www.8mmedia.blogspot.com.

MORE RESOURCES:

Hypo Real Estate Gets EU20 Billion Guarantee From Rescue Fund - Bloomberg

table border=0 width= valign=top cellpadding=2 cellspacing=7trtd width=80 align=center valign=topfont style=font-size:85%;font-family:arial,sans-serifa href=http://news.google.com/news/url?sa=Tct=us/0i-0fd=Rurl=http://www.washingtontimes.com/news/2008/nov/22/virginia-asks-navy-to-delay-base-move/cid=1272970285ei=ILInSe6JC6DM8ASs3vkQusg=AFQjCNEdJMAZFxyQRjF1Uq41nyZnNDQZEwimg src=http://news.google.com/news?imgefp=sFePmluJNTwJimgurl=media.washingtontimes.com/media/img/photos/2008/11/20/AUTO_001_r329x151.JPG%3Fe315d4515574cec417b1845392ba687dd98c17ce width=80 height=37 alt= border=1brfont size=-2Washington Times/font/a/font/tdtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbrdiv style=padding-top:0.8em;img alt= height=1 width=1/divdiv class=lha href=http://news.google.com/news/url?sa=Tct=us/0-0fd=Rurl=http://www.bloomberg.com/apps/news%3Fpid%3D20601100%26sid%3Da_tWZcQXw0Pw%26refer%3Dgermanycid=1272970285ei=ILInSe6JC6DM8ASs3vkQusg=AFQjCNH0PAYjuAUvkBMv43DpX7Xa7CW_9AHypo bReal Estate/b Gets EU20 Billion Guarantee From Rescue Fund/abrfont size=-1font color=#6f6f6fBloombergnbsp;-/font nobr13 hours ago/nobr/fontbrfont size=-121 (Bloomberg) -- Hypo bReal Estate/b Holding AG, the German property lender bailed out by the German government and financial institutions last month, b.../b/fontbrfont size=-1a href=http://news.google.com/news/url?sa=Tct=us/0-1fd=Rurl=http://www.google.com/hostednews/ap/article/ALeqM5iUnm1V9WJblKt9BR2u9troModrrwD94JFGBG0cid=1272970285ei=ILInSe6JC6DM8ASs3vkQusg=AFQjCNGadyKhSZspZoWmEoihagj4CuvuoAHypo bReal Estate/b to receive euro20 billion loan/a font size=-1 color=#6f6f6fnobrThe Associated Press/nobr/font/fontbrfont size=-1a href=http://news.google.com/news/url?sa=Tct=us/0-2fd=Rurl=http://www.guardian.co.uk/business/feedarticle/8057611cid=1272970285ei=ILInSe6JC6DM8ASs3vkQusg=AFQjCNFWoCzp2J9WsTz5iZLGFxAhFcGm8Q1-Hypo Real gets 20 bln euros in govt guarantees/a font size=-1 color=#6f6f6fnobrguardian.co.uk/nobr/font/fontbrfont size=-1a href=http://news.google.com/news/url?sa=Tct=us/0-3fd=Rurl=http://www.ad-hoc-news.de/DGAP-Adhoc-DEPFA-Deutsche-Pfandbriefbank-AG-SoFFin--/de/Unternehmensnachrichten/19883103cid=1272970285ei=ILInSe6JC6DM8ASs3vkQusg=AFQjCNG28zjUSE9WKIoHeSqAt5VBD5xPpADGAP-Adhoc: DEPFA Deutsche Pfandbriefbank AG: SoFFin grants EUR 20 b.../b/a font size=-1 color=#6f6f6fnobrAd-Hoc-News (Pressemitteilung)/nobr/font/fontbrfont class=p size=-1a class=p href=http://news.google.com/news?sourceid=navclientie=ISO-8859-1rls=GGLG,GGLG:2005-22,GGLG:enncl=1272970285hl=ennobrall 115 news articles/nobr/a/font/div/font/td/tr/table

Target rejects Pershing#39;s proposals on real estate structure - MarketWatch

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NAR, REAL ESTATE CHANNEL Create Online News Partnership - MarketWatch

Web sites offer real estate agent rankings - The Associated Press

Real-estate investment firm fights to stay afloat - Arizona Republic

Pure Industrial Real Estate Trust announces November distribution - FOXBusiness

Citigroup says commercial real estate bigger issue now for banks - Reuters

table border=0 width= valign=top cellpadding=2 cellspacing=7trtd width=80 align=center valign=topfont style=font-size:85%;font-family:arial,sans-serifa href=http://news.google.com/news/url?sa=Tct=us/6i-0fd=Rurl=http://www.reuters.com/article/topNews/idUSTRE4AJ45G20081120cid=1273013942ei=ILInSe6JC6DM8ASs3vkQusg=AFQjCNHEGrfDfmwnDBPfDVKn8C23YQms9gimg src=http://news.google.com/news?imgefp=a4_5Az-9orAJimgurl=www.reuters.com/resources/r/%3Fm%3D02%26d%3D20081120%26t%3D2%26i%3D6894209%26w%3D192%26r%3D2008-11-20T221527Z_01_BTRE4AJ182400_RTROPTP_0_AIRBUS-ALWALEED width=80 height=58 alt= border=1brfont size=-2Reuters/font/a/font/tdtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbrdiv style=padding-top:0.8em;img alt= height=1 width=1/divdiv class=lha href=http://news.google.com/news/url?sa=Tct=us/6-0fd=Rurl=http://www.reuters.com/article/innovationNewsFinancialServicesAndRealEstate/idUSTRE4AK6KA20081121cid=1273013942ei=ILInSe6JC6DM8ASs3vkQusg=AFQjCNFhOblhyRvsC3tY95vHG-qKbRmRdQCitigroup says commercial breal estate/b bigger issue now for banks/abrfont size=-1font color=#6f6f6fReutersnbsp;-/font nobr11 hours ago/nobr/fontbrfont size=-1(Reuters) - Commercial breal estate/b is becoming a bigger issue for US banks after the Treasury decided that funds under the Troubled Asset Relief Program b.../b/fontbrfont size=-1a href=http://news.google.com/news/url?sa=Tct=us/6-1fd=Rurl=http://www.nytimes.com/2008/11/23/business/23gret.htmlcid=1273013942ei=ILInSe6JC6DM8ASs3vkQusg=AFQjCNHnUl0DlKldK7ctx-2cBT6rlaNjcwThat Money Isn’t Leaving the Vault/a font size=-1 color=#6f6f6fnobrNew York Times/nobr/font/fontbrfont class=p size=-1a class=p href=http://news.google.com/news?sourceid=navclientie=ISO-8859-1rls=GGLG,GGLG:2005-22,GGLG:enncl=1273013942hl=ennobrall 36 news articles/nobr/a/font/div/font/td/tr/table

Real estate recovery not seen until 2011 - Seattle Post Intelligencer

Real estate group backs sick leave law challenge - Bizjournals.com

Real estate trophies on hold - Bizjournals.com

Real-Estate - Google News

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