Despite last year's pandemic riddled situations throughout, residential real estate maintained an upward trend in terms of everything from price to development, than its commercial counterpart which very much acknowledged a stagnant progress.Both sectors breathe a world of difference between them, and the pandemic, without remorse, made things even worse by widening the gap further.But in spite of all that, the start of 2021 witnessed a gradual resurgence of commercial real estate. Principally, between residential and commercial real estate, the latter has a reputation for being one of the most reliable ways of growing wealth down the line, even though some investors who were more into commercial real estate investing were challenged by COVID-19.That said, our focus should be more on what we've learnt from the pandemic in order to cement our investments in the future, than earning immediate profits.Still unsure about why you should invest in commercial real estate? Don't worry. Read on to get inspired.Why should you invest in commercial real estate in 2021?A figure of speech, yes, and worthy of a place in real estate investing. You see, there are several ways to invest in real estate.There's house flipping, buying real estate-related stocks (more common overseas), renting out properties, and then there's the BRRRR strategy - unique in itself yet not far from the steps that govern house flipping.Is there more? Most significantly, yes, one among many, and that's commercial real estate (CRE) investing.A speculative option but a promising asset class that reaps high rewards if done correctly. Commercial real estate encompasses a resume of property types which haven't been under the investment radar all this time. If this piques your interests, then read on for what you need to know about this asset class. To begin with, you need to understand what exactly qualifies as commercial real estate. Commercial real estate, in essence, is the embodiment of any property designed to be profitable.This may cover every major real estate category one might expect - office buildings, retail stores, warehouses, factories, etc., and not to mention the well-intentioned and specialized properties that ticks off hotels, club houses, cafes, even healthcare facilities and anything else along these lines. Why invest in commercial real estate?Investing in commercial real estate, if you don't know yet, is a smart move and it doesn't really matter if you have years of experience in residential properties or you've never invested a toea in real estate at all.Then comes the question 'why commercial real estate?' Well, here are eight reasons why investing in this property sector can add fuel to your real estate portfolio - if this the path you’ve chosen.1. High income potentialThe key reason why you might want to consider commercial real estate investing is its potential - meaning, for what it's worth, its potential to earn you handsome returns. Now, most often than not, in Port Moresby and PNG as a whole, many commercial buildings are synonymous with huge rents and price tags, yet these indicate a huge potential for nourishing returns on investments, too.Rather than earning just a few kina monthly on a one bedroom apartment or single-family home for that matter, why not opt for a few thousand kinas or more with a genuine commercial real estate commitment?The expanding margins could inspire a growth to your portfolio in a sprightly fashion - that's if you strategically invest all your earnings in new properties as they come in leaps and bounds.2. Less competitionAs evident as ever in PNG's current real estate climate, residential real estate is a highly competitive market with respect to housing prices, although it nearly took on a snail's pace last year. While, commercial real estate, on the other hand, took on a stagnant role.One way of determining whether it’s a good time to invest in commercial real estate or not is to observe the kina volume for commercial real estate in Papua New Guinea. If a lower percentage is evident year over year, this means commercial properties might just be easier to find - especially compared to other assets in the market.3. Endless investment opportunitiesCommercial real estate investments are irrepressible in that they entail investing in a huge shopping mall such as Range View Precinct, or a high-rise office building such as the Noble Center. But if that's too much to handle, you can still settle for small, which would entail investing in warehouses, or apartments and what have you. Flexibility is rife in terms of what you can afford to invest, and where you can invest.4. Minimal turnoverIf you're well versed in every aspect of residential real estate, you'd probably agree with this one. It's not like every apartment and single-family home operate much the same way as commercial real estate, when it comes to investing. But are worlds apart, especially when considering lease agreements. At this point, commercial real estate is susceptible to three year agreements at a minimum, than the typical one year agreement common among apartments and single-family homes.A long-term lease agreement, for the most part, results in a mild turnover (including unnecessary hassles and associated costs) and ensures the property owner receives a steady cash flow.5. More help maintaining (and improving) your propertyThe maintenance, general upkeep and general updates to commercial properties is not something that you, as the owner, will have to do on your own, due to the fact that there's more than one net lease at work here. What this means is that the majority of the property's expenses such as tax, insurance, maintenance costs and even utilities, will be shouldered by your tenants. Normally, the landlord is responsible for these expenses, but who helps make it possible? Yes, the tenant.On that note, you will be privileged to have tenants who are vested in giving the best of their ability to keep the property in shape, than what's commonly standard in residential real estate.This means regular upkeep and leads to an increase in your property's value, overall. It's like a series of positives where one thing leads to another… 6. Less problematic tenantsThis reason calls to mind a residential property's tenants’ behaviour towards paying rents and leaving day: 'are they paying on time?', or 'will they be moving out soon leaving the place in total disarray?' and a host of others like regular tenant disputes and renter complaints.If this sounds familiar, then investing in commercial real estate is the best way forward, because here things are a bit more professional and ordered.Since you're hosting business tenants- those who have a reputation to protect and money on the line - rest assured that maintaining a good rapport with the landlord and following codes of conduct in ensuring the property is in good shape at all times will be at the top of their minds. In turn unnecessary hassles are kept to a minimum.7. Multiple portfolios If you're knee deep in residential real estate, then know this: commercial real estate can be the next best thing in diversifying your real estate portfolio.Since 2020 has taught us that the future is always uncertain, and anything can happen to us in the next minute, hour or day, we should learn from the lessons it brought and strategize towards strengthening our investment goals, and what better way to begin then to spread your investments beyond different assets. 8. Complete proofEventually, commercial real estate, in effect, is a worthwhile investment as we've seen so far.And if that's not enough, a multi-billionaire like Warren Buffet, for instance, has made heaps of fortune in commercial real estate alone, and he’s still doing so.Now that you know what to expect when it comes to investing in commercial real estate, let it not exist as an idle dream, but a work in progress.Final thoughtsRome wasn't built in a day, likewise wealth isn't built overnight. If you want to reach the top, there are endless possibilities as well as failures you have to pass through before you see the light at the end of the tunnel.In real estate, investing in residential properties is half the story. With commercial real estate investing to dip your fingers in is entirely a different story - better yet, the most reliable, efficient and effective way of building wealth.DisclaimerThis article is meant for informational purposes only. Hausples digs into the details of a specific topic and teaches its readers all about how the real estate industry operates. Therefore, not all articles are intended to be construed as financial, or investment advice. Hausples encourages you to reach out for professional help regarding your own real estate situation.

Pre-qualification and pre-approval are real estate financing terms that are synonymous with the loan process, and each varyingly punctuate the level of commitment a lender has with a customer/buyer.Unfortunately, at least a majority of us here in PNG aren’t really intune with the meaning of these concepts; either we’ve heard about them but never gave much thought to their differences, or we just couldn’t make time to understand their existence and how they affect the home buying process.Nonetheless, in this article we’ll document the differences between both terms and focus on their appropriation in a home buying process. The thing to keep in mind is that a slight misunderstanding of their differences can cause the home buying process to stall. So the aim of this article is to make sure you understand both terms to their core, and when they’re used interchangeably in a home buying process.  Pre-qualificationThe prequalification, more or less, immediately comes into view the moment you find yourself in a home buying process.It's not uncommon for many home buyers to avoid a loan/mortgage with an overwhelming intention to buy a house. Once the inclination is there, getting a loan becomes a prerequisite in the home buying process, because you will want to know if you're eligible for a loan, and what type of loan will you qualify for, respective of your credit history and financial status. By the rights vested upon lenders, once your loan application has been submitted, they (lenders) will proceed to clarify the following questions:How does your credit look?How much house can you afford?What type of loan will you be using? On average, your credit history or credit rating score is the overriding factor in this story, as it will help determine your eligibility to get a loan, what type of loan suitable, or neither; hence, your strong advocate or your nemesis.Mind you, the lender will pull your credit history/score to pieces, to weigh your eligibility, and a handsome score of say, 700 or better, will go as far as qualifying you for the loan in question. It’s also at a position where the interest rates will gradually shift-shape for the better. When all is said and done, you will find that a conventional loan normally attracts huge down payments. This is why loans such as BSP’s First Home Ownership Scheme are popular among those borrowers who have grasped its purpose.  Loan LimitsIn hindsight, with every other loan like the FHOS, there are drawbacks. For one, they have limits, and for the other, they aren't suitable to all property types and developments. For instance, Anitua properties are FHOS approved, compared to several other developments.But this shouldn't be a major concern, although it's worth the mention, because your real estate agent or lender will have you covered in terms of professional advice. What should be of importance here is your understanding of prequalification.The point is each loan type, First Home Ownership Scheme or not, comes with individual, unique limits; nonetheless, prequalification remains a force to be reckoned with in each case. Your cognizance of these limitations will be clear the sooner you reach the prequalification stage.Being pre-qualified means knowing:What type of loan are you going to get? Traditional or FHOS?How much cash, if any will you need to put down.What’s the plan for paying closing costs?Any limitations on the type of property you can buy.The next step that’s readily on-hand to greet you in this story is the pre-approval. But before long, you must begin your journey with properties that directly or indirectly open to the type of loan you’ve pre-qualified for.For instance, once a home seller accepts your offer, the property in question is taken off the market; provided there’s proof of your pre-qualification, because anything less will not render the sale close. In other words, if the lender disqualifies your loan application, the seller will not take the house off the market. However, this is also one moment where the seller can easily become emotional (seller's remorse), and may actually ask to keep the earnest money, instead. But not unless the agent, acting on behalf of the buyer, effectively resolves this problem and ensures the earnest money goes back to the buyer. The best practice, then, is to take pre-approval by the horns. Pre-approval Pre-approval is the stage at which you've submitted a detailed loan application, and the lender has:Sighted your applicationAgrees with what you’ve providedNot yet given the full approvalFor the most part, a pre-approval paints a clear picture of the maximum funds available for the taking, helps you negotiate with certainty, and if you're involved in an auction, you'll be bidding with increased confidence.However, the surprising thing with a pre-approval is that it’s not a necessary evil in a home buying process. But it does make life easier for the borrower, because of its power to bring you closer to your new family home, or dream investment property. How Pre-approval worksPre-approval is the lender’s commitment that you qualify for a particular loan type and amount based on your income and credit.If everything looks good, the lender will generate a pre-approval letter and a “Good Faith Estimate of Settlement Costs”. These are important documents to have when shopping for a home as they prove to both sellers and their agents that you have the means to buy their house. These documents are generally good for 60 to 90 days.The approval letter is a letter from the lender stating that based on the information they have, you qualify for a loan. This letter also gives the amount of the loan you qualify for.A good faith estimate is a standard form that outlines and discloses the fees associated with your loan. Lenders are required to provide this document.At this point, you are “pre-approved”. The lender waits for us to send them a contract for a particular property. At that point, they start to work on getting a full loan commitment. Full Loan Commitment Requires:Contract on PropertyAppraisal on the propertyIn some cases, the Inspection ReportUpdated paycheck stubs for the months before closing.Bank statements for the months before closing. Pre-approval is the lender’s way of saying they are willing to loan this person X amount of money. It now depends on the house they want to buy. The appraisal, and in some cases the inspection report of the property, will determine if the lender is able to make a full loan commitment to the buyer. In other words, are they loaning on a good investment? If the buyer defaults and the lender has to take the property back, will the lender be able to resell it for the amount they loaned on it?No matter what type of market, it’s always wise to start the home buying process with prequalification and preapproval. This path gives you, the buyer, more leverage.  DisclaimerThis article is meant for informational purposes only. Hausples digs into the details of a specific topic and teaches its readers all about how the real estate industry operates. Therefore, not all articles are intended to be construed as financial, or investment advice. Hausples encourages you to reach out for professional help regarding your own real estate situation.

There's quite a number of moving parts to go by, when buying and holding a property. This typically leads to the question, "where do you even begin?"If you're a newbie property investor and you're wondering what success looks and sounds like in real estate, start with the 1% rule; it's your best foot forward. But here's the catch: there's a time and place for everything and it also applies to the 1% rule. For starters, this rule of thumb in real estate investing follows a simple calculation process, and what one would like to call a “metric baseline”. It comes with the added advantage of giving you a good idea of whether or not a rental property is worth your investment.This in mind, we begin part one of this two part article covering:How the 1% rule can help you pilot the property evaluation processWhat the 1% rule is all aboutPutting the 1% rule into perspectiveThe importance of the 1% rule in evaluating investment propertiesExamples  The 1% Rule Can Help You Pilot The Property Evaluation Process As a first time real estate investor, your goal may stem from your desire to maximize your cash flow, create room for passive income, establishing a property portfolio, or become financially independent, or an integration of the whole lot. Regardless, they're achievable and, at best, require a great blueprint to reach reality. This is where the 1% rule comes into high gear.For instance, say you found yourself with a buy and hold property purchase, the next phase in your decision should be all about the 1% rule. The math behind this metric will certainly set you on the path towards milk and honey. Even though it is wise not to rush into a deal that solely revolves around the 1% rule, by and large is an excellent screening tool for real estate investment deals.The 1% rule, in general, saves you a lot of time and money when analyzing investment properties. What Is The 1% Rule?This is a simple investment calculation that's designed to propel an investor towards an inclination, resting on the premise that the property of interest has the outright proclivity to generate a gross monthly rental cash flow no more than 1%. This figure will reflect the total purchase price. Some investors, however, have the habit of including upfront costs of renovations in the equation, and it's not an issue, really. In fact, it's advisable.This criterion integrates the logic needed to determine if the projected gross cash flow is high enough to account for monthly expenses, at the same time offering the investor a golden dish of positive cash flow. Bringing The 1% Rule Into Perspective To make clear what the 1% rule is all about, consider the following example where the asking price is K350,000. What you want to know is if investing in this property will bring you a handsome ROI, through analyzing the monthly rental cash flow. Purchase Price x 1% = Monthly RentK395,000 x 0.01 = K3950 per monthNow, depending on your expected forecast, in this scenario your monthly rental income will be K3950.  From the example, you can see that this baseline calculation is a starting point analysis that gives an investor the room to decide if the property analyzed makes sense, and if further analysis is required.Example 1 - A Property That Meets The 1% RuleA newbie investor looking to establish himself in real estate is considering a property going for K250,000 (an assumption). The pull factor in this case is the property's condition and the neighborhood it is located in, which adds up to a reasonable K2,500 a month.  This indicates that not only has the property passed the 1% rule, but also incites further evaluation just to ensure it bears all the markings of a good deal.Example 2 - A Property That Does Not Meet The 1% RuleAs much as the investor would love to invest, the cap rate is sadly low at K1,500 per month. This means that this property does not pass the 1% rule, which is K5,000 a month, thus, not a worthy investment in that part of town, because of the fact that its monthly rental income is below K3,500. (K5,000 - K1,500).The Importance Of The 1% Rule In Evaluating Investment PropertiesInvestors evaluating buy and hold properties such as single-family homes, duplexes, and triplexes etc., will normally begin with the 1% rule which puts them on the path not to righteousness, but to success and are justified by the following reasons: 1. The Starting Point For Evaluating Buy And Hold PropertiesThis particular rule of thumb in real estate investing serves as a gateway to analyzing and distinguishing an investment property's financial risk from its profit-making potential. Executed correctly, the 1% rule can result in deals that are streamlined, efficient and profitable in all respects. In the process, investors will also discover that they can easily eliminate properties having the characteristics of low cash flow potential.For instance, a new investor finds himself with twenty properties to view. He applied the 1% rule calculation and was able to determine which ones were worth the hassle, in no time.He now has enough time to go through those that are worth his time and investment intentions. 2. Determines if there is a Baseline Cash Flow that Makes SenseWhile a handful of factors fall in line when calculating the cash flow of a buy and hold property, the 1% rule turns out to be the consummate plateau on which to determine if the cash flow - no less - makes sense ahead of time.Supposedly your 1% rule calculation reveals that you should entirely focus on a much higher rent than what you can collect at the moment, it's an indication that you'll be falling short of your expectations once your mortgage and operating expenses are paid. This tells you clearly that the deal is not worth pursuing any further.Ultimately, the chances of you becoming an investor with a goal to surge ahead in your financial game will be high. In this vein, you will want to ensure that a real estate asset has the potential to reap a favorable monthly net income, setting you apart as a successful investor from the others as hit-or-miss investors. 3. Helps Set Target Rental RatesWhen it all boils down to setting your target rental rates, it can be quite intimidating, especially when you have to account for influential factors such as location, proximity to amenities and so forth.At this stage, it's imperative that the fine print of a rental agreement has within itself the final figure of what you intend to charge as your rental rate, and mirrors an achievable positive cash flow.This is where the 1% rule serves as a handy guide in decoding your target rent tag. Hence, the 1% rule dictates that your rental amount for the property in mind should be greater than, or equal to 1%, in order to qualify as a good deal.This particular metric buffer is largely effective in creating good opportunities for building wealth after all the qualifying expenses have been settled. Here is an example of the 1% rule to elaborate on the above points:Let's say you've stumbled upon a single-family home going for K300,000 on the market, and you want to turn into a rental property. You do your math using the 1% rule to determine how much your rental rate should be, and end up with K3,000 a month. Immediately, you knew that this is an excellent deal that will earn you a positive cash flow. So you pursued the deal further and closed it, after the property also satisfied other relevant criteria.After buying the house, you placed your tenant, and began your first month of rental. As expected, the beginning month earned exactly what you had in mind. This enabled you to pay off your monthly mortgage of K1350 (assumption) and other qualifying expenses totaling K1095, leaving you with a total net income K555 (K3,000 - K2445). In this case, you realize that the 1% rule actually helped predict a positive cash flow, and deemed the property worthy of your investment. While the opposite is true, do you see the usefulness of the 1% rule in evaluating real estate for rent?We hope you liked this article. Please stay tuned next time for part two where we’ll conclude with the pros and cons of the 1% rule, and what you should consider next after your rental property passes this rule of thumb.   Disclaimer:This article is meant for informational purposes only and is not intended to be construed as financial, or investment advice. Hausples encourages you to reach out for professional help regarding your own real estate situation.

Have you ever wondered if it was possible to invest in real estate with no money? Or, do you know how to become a property investor with little to no money at all?Generally, the first thing that comes to most peoples' minds when talking about real estate investing is "money" - that is “one needs money to start investing”. The fact of the matter is, there are real estate strategies in existence that require little to no money to kick start your real estate portfolio.Yes, you really can invest in real estate with no money. But if you don’t have any money, you will have to find some other way to contribute resources – time, skills, relationships, or sweat equity. There are a million ways to structure a real estate deal, and if you can’t bring money to the deal, then what can you bring? A Real Estate Investing MindsetBefore we delve into the strategies for investing in real estate, even when you have no money at all, it's imperative that the reader understands the importance of having a property investor's mindset.One of the key fundamentals in this situation is passion. If you're not passionate about what you want to do, chances are you will fail; or, you will not find satisfaction in what you do. The antidote is found in your enthusiasm, even if you aren't getting paid for it. And this applies to just about anything. It doesn't mean you worship the pursuit of happiness, rather be overwhelmed by a healthy passion at the core of your goal or mission. Become A Real Estate Investor With No MoneyThere are three types of real estate investing strategies that require little to no money at all, to trigger your journey towards real estate success. They are: Real Estate wholesaling; Lease Options; and, Seller Financing Shall we? 1. Real Estate WholesalingThis investment strategy is the cornerstone of this article, hence; being at the top of the mentions here. To all intents and purposes, real estate wholesaling doesn't require any money , to begin with; other than yourself and your intelligence. In short, all that's needed is for the real estate wholesaler to first contract a seller, followed by reassigning the contract to a buyer, usually another investor. And these deals can amount to several thousands, for the most part.In essence, this topic appeals to a significant number of real estate educators before you make any attempts, but for informational purposes, the concept is broadly outlined here, just to show those who are interested what lies ahead in this venture. How Does A Real Estate Wholesale Deal WorkThis strategy begins with finding properties that are either classed as distressed, or below-market value, however this isn't always the case. Once the wholesale investor locates this property, the next step is to locate the owner.The idea here is to discuss a price that the owner will happily oblige. To achieve this, once the owner has been located, there are several key numbers that you will rely on, in order to accurately come up with a good estimate.Your task then is to calculate the ARV, the cost of repairs and maintenance, holding costs, closing costs, the buyer's profit, as well as your profit.In hindsight, after the estimation of the number, the investor will use what is known as the 70% rule in order to determine whether the deal is workable or not. If the outcome is positive, the investor will move forward with an offer and negotiate the estimated purchase price with the seller. If the seller likes the idea, a purchase agreement will be sought for signing.The next step then is to find a targeted buyer, which is obviously another investor - in this regard - who is in the market for below market properties, whereby they're prepared to purchase, renovate, and retail the property at an ARV. Once such a buyer is found, the investor will move on with price negotiations, and close at a title/escrow company.The wholesale investor's profit for his/her part equates to the difference between what was paid to the seller, and what the buyer will give. This is also known as an assignment fee; thus, you've made money by investing with no money down payment. 2. Real Estate Lease OptionsLease options are actually alternatives that involve leasing a home to someone under legal oath to purchase the property within a set time period, usually between two and three years, tops. This strategy is sometimes known as rent-to-own homes. How does a Lease Option WorkThis strategy embodies creative endeavors and is heavily dependent upon the situation at hand. Regardless of the numerous ways to put this strategy into play. One way this is feasible is when the investor contacts a motivated seller. This particular seller will be one that's either in distress, facing a foreclosure, or is on default with his/her mortgage payments.Be that as it may, the investor is bound to make a reasonable fair price offer on the property in question, provided the terms and conditions of the deal are positive. This will either be found in the price or the term, where the chances of the investor making money are imminent.In addition, the investor will allow the homeowner to choose one of the two, rather than both.  Say the homeowner is motivated and is in great need to sell it, but can't. What the investor can do is offer a lease option to allow the homeowner to sell "in time" within a three year period. Put differently, the investor will decide on a lease option on the house from the seller, and negotiate a price as well as figure out terms to factor in the agreement (down payment, monthly payments, etc).Once you have the signed lease agreement, you can make a lease option on the property to a potential buyer.The investor, in this case, earns his/her money based on the difference between what he/she is going to pay for the property, plus what they sell and the difference in the monthly payments. 3. Real Estate Seller FinanceAmong these three strategies, this one’s the easiest. However, it’s only the down payment that may require you to execute some cash. Seller finance refers to a loan offered by a seller of a property or commercial enterprise to a purchaser, in spite of the fact that legal ownerships are vulnerable to changes in payment to the seller. Seller finance narrates that the seller must actually own a home outright, without any qualifying mortgage on the property.The benefit that comes with this strategy is it prevents an investor from requesting a bank loan. Better yet, the strategy enables those with poor credit ratings, or are without money, to invest.If the investor negotiates with the seller, provided they meet the requirements of the term or pricing, the seller will be more than happy to oblige with what's being offered. For example, they may not require a down payment if you increase the sale price, offer more on the monthly payment or have a higher interest rate.Sellers with their own homes will find it economical in getting paid periodically, than earning a one off large payment from a sale. By and large, these sellers will potentially get a lot out of this deal, when they assume the role of the bank, and resort to charging interests.This is one area where effective negotiations skills become handy, especially when the investor - by all accounts - is trying to strike out a good deal with the seller finance. We hope you liked this article. Please subscribe to our newsletter for more useful content and soak up as much as you can, while we work hard in the shadows to bring you more practical information about real estate.   Disclaimer:This article is meant for informational purposes only and is not intended to be construed as financial, or investment advice. Hausples encourages you to reach out for professional help regarding your own real estate situation.

Welcome back to Part 2 of this two-part article on real estate investing terms and formulas. As promised, here we’ll take a look at:Additional BenefitsExpensesTerms and DefinitionsSo, without further ado, let’s head straight into it... ADDITIONAL BENEFITS Principal AppreciationPrincipal appreciation simply refers to the value of your property that appreciates or increases over time.This may be unheard of in PNG's real estate market, but there are those among us that buy properties - apart from investment and ownership reasons - because of the appreciating nature of their values.Since a property's appreciation value, in itself, has the tendency to create and develop wealth, it is equally important that you understand full well that it (appreciation value) can decrease as well. To ensure this insight, it's advisable that you consider cash flow first before considering principal appreciation as the sole motivation towards buying rental properties. The main goal behind buying investment properties at this point is to make money, and one way of doing this is buying properties that are below market value, so you can flip them to build equity - one of the simplest ways of earning positive cash flow, thus, making money for yourself. Principal Pay Down/Principal RecaptureThis is the equity that you gain when making your monthly mortgage payments, and can also be seen as the extra savings that you're entitled to within your loan. Since your property will be up for rent, your tenants will indirectly make these pay downs, while you stand back and witness your net worth rise. Tax Benefit(s)Tax benefit is actually a comprehensive summary that talks about a form of savings by a taxpayer. This means anything, in monetary terms, that lessens a taxpayer's monetary burden - and they usually promote responsible behavior and profit-oriented enterprises.Examples of expenses that you can claim tax deductible interest on are:Loan interestProperty Management FeeMaintenance and Repair CostsProperty TaxesLegal FeesTravelDwelling InsuranceUtilitiesand moreOverall, when it comes down to tax benefits, always seek professional advice from an accountant, just to be on the right track with your investment calculations. EXPENDITURE Capital ExpenditureThis type of expenditure specifically represents the costs involved in replacing critical fixtures and fittings of a property such as fencing, walls, plumbing and hot water tanks, etc.Capital Expenditure (or CapEx) is one of those varieties of expenses that many rookie investors fail to understand and consider, when investing in real estate for the first time.To execute a rough estimation of how much you can prepare for CapEx, begin by saving up to 5 or 10% of your monthly rental income as your CapEx allowance.By and large, when you purchase an investment property, bear in mind that you're entitled to find out the last time these big fixtures and fittings were serviced or installed. With such information on hand, you can work out, according to your capability, how much you can put aside as CapEx, in case you may need to do maintenance on or replace these items in the future. Debt Service(s)Debt services actually represent the amount of money that you put forward in paying off your loan every month. This money is part loan principal and part loan interest, which you are required to pay towards servicing your loan. In other words, it is the payment that you make periodically to reimburse the principal and interest you paid on the loan.Of course, if you’re dealing with cold hard cash to purchase your property, then debt services will be far-fetched. In addition, when out shopping for a loan, always make sure you visit every lender you can possibly find to get the best rate, and a loan that suits your situation.All in all, if you tend to stress too much on where exactly you can at least obtain the value of your investment property for analysis, use a debt calculator online, so you’ll have a fair idea of how much of your rental income can qualify as your monthly debt payment. Dwelling Insurance Dwelling insurance, also known as "dwelling coverage" or "hazard insurance" makes up part of a homeowner's insurance policy, and can help to facilitate the costs of rebuilding or repairing damages to all or part of your property by a covered hazard.As a homeowner, you will need to cover for potential unfortunate events that might happen at your property, and this is one such insurance you cannot ignore.Whilst most homeowners may define their dwelling as a structure in which they live in, a dwelling insurance can help protect more than just that dwelling. This insurance policy may protect other physical structures, beside your home, that are attached to your home. For instance, a hot water tank or a garage, etc., as long as the structure, no matter what type, is attached to your property, it can be covered by the dwelling insurance.For the most part, the contents specified in a dwelling insurance coverage will vary from one policy to another, or from region to region. So if you're thinking along this line, it's best you seek expert advice from a licensed insurance broker or the real estate agent you're dealing with. Vacancy Allowance/Vacancy rate Vacancy allowance or vacancy rate is the money that a landlord puts aside every month to match the rental expenses of their investment property, once it becomes vacant.Formula: Vacancy Allowance = Vacancy Rate (%) x Monthly Rental IncomeThis is one thing all new real estate investors must be aware of and prepare for when venturing into the realm of real estate investing.Without awareness and preparation, you’ll end up squeezing out your personal savings account when your rental property is vacated. To better understand how much you should save as your vacancy allowance, first of all find out the vacancy rate of the area you wish to invest in. Your local real estate agency is probably the best place to start with in obtaining this information. Maintenance / Repairs These are the costs of maintaining good living conditions in your rental property, for the sake of your tenants. They are worth mentioning because they do happen and will happen.In addition, when your rental property encounters the need for repairs and maintenance, you will have to classify each of these tasks into regular expenses and capital improvements. Some of these repairs and maintenance work can be done by your tenants. But it’s wise to prepare anyway, in case things do not turn out the way you expected them to.For those who may be confused about how much to put aside for these tasks, you don’t necessarily need expert advice. You can decide with what feels right to you - setting aside 10% of your monthly rental income isn’t a bad idea. Property Management This term talks about a company acting on your behalf in managing your investment property. Property management is plausible when, for instance, you’re in Port Moresby but investing in Lae. This way, you can engage a local property management company or real estate agency in Lae to help manage your property. The advantage of this is that it helps you avoid making emotional decisions. In other words, when you become personally acquainted with your tenants, you will be ashamed just to get them to make up for their missed payments. So property management is one of the best ways forward when you find yourself in one of these situations. Property Taxes This is a tax you pay on your property. In real estate, property tax is often described as an ad-valorem tax, and can also be considered as a regressive tax. This tax is usually calculated by the government and, thus, is met by the property owner.In essence, this tax normally reflects the value of the property together with the land. However, there are some jurisdictions that go as far as taxing personal properties like motorbikes and boats. TERMS AND DEFINITIONS Closing Costs Closing costs are fees that you pay at the end or the closing of a real estate transaction, and usually make up between 2% and 5% of the mortgage principal. In fact, there are various other closing cost components, and they vary from one country to another. Some closing costs, however, are negotiable between a property buyer and seller.How much you should pay as closing costs will entirely depend on the home’s purchase price, the flexibility of the market, and the location. Examples of fees that are associated with closing costs include:Appraisal feeCredit report feeOrigination feeTitle searchTitle insuranceUnderwriting fee, etc Days On Market In real estate, Days On Market (or DOM) simply refers to the number of days a listing has been on the market. Put differently, a property's active time on the market while on sale.Generally, the longer a house for sale sits on the market, the less valuable it becomes. Nevertheless, there's a catch, just like there are two sides to a coin.The number of days a home sells on the market gives you the opportunity to get a few statistics out of that saga. A handsome grasp of those statistics will lead to your prosperity in real estate.You see, through these data, you can be able to work out the average number of days it took for a home to sell in any number of categories:By province;By city;By neighborhood; or,By suburb For instance, say it took four months for a single family home to sell in Gerehu recently, compared to two months with a similar property at the same time last year. This tells us that the market is slow, and probably because of COVID-19.Or, say it took just two months to sell a property in 8 Mile on average, while it took a similar property in Gordon to sell in four months. With this, we can say that 8 Mile is in high demand, etc. The essence of such statistics come about when you're in the process of comparing the average number of days of properties for sale between locations. This averages, overall, will tell you exactly how the local market is performing.On the other hand, when you find a property that has been on the market for too long, most of the time you’ll be able to negotiate a better deal; the owner is probably tired of listing their property and wants to get rid of it as soon as possible.And this is what Days On Market or DOM is all about in real estate. Down Payment This is the amount you put down as your part in purchasing a property, when you apply for a loan. In PNG, the down payment is usually 10% of the property's purchase price. So if you've applied for a home loan to buy a K400,000 property, you're required to chip in K40,000 as your down payment.That's basically what it means. Emergency FundsThis has a lot to do with "saving for a rainy day". It can go by many names depending on how it’s interpreted, but in all entirety it’s simply your personal savings set aside in case of emergencies.In real estate investing, it would mean just that: emergency funds. How to go about it as a rule is to earmark 3 - 6 months of expenses, or better, concerning your rental property. This means to take stock of everything that your investment property gives you as expenses. Security Deposit Security deposit is basically the amount of money given by tenants to landlords, banks, or home sellers as a confirmation of their intentions to move-in. In PNG, most landlords would be familiar with this term as "Bond Fees".These deposits are sometimes refundable, while other times they aren't. The purpose of a security deposit is to cover any damages to the property in the future, on the part of a tenant(s). In conclusion When analyzing two kindred properties to determine the best deal, try to remain prudent with your numbers.Since the real estate industry has tons of formulas to offer, in order to assist with your cash flow analysis, where applicable, use them with a grain of salt. At the end of the day, you want to be comfortable with the results of your investment, rather than one that spells poor judgement.Remember, not all deals that reflect one or more of these terms and formulas will suit your situation. The goal is to not stop until you find the one that works best on your behalf. Furthermore, although some of these terms and formulas may not be common in PNG’s property market, they’re worth your understanding, just like what an emergency fund entails. So it’s wise to take your time, be patient and do the math before heading straight into a deal.   Disclaimer:This article is meant for informational purposes only and is not intended to be construed as financial, or investment advice. Hausples encourages you to reach out for professional help regarding your own real estate situation.

Are you thinking about paying off your mortgage early? What’s your target period? Monthly mortgage payments can be a huge burden on your budget. Fortunately, there are ideas to help you work around this problem.So, if you’re looking for an easy way out of your self-made enigma, consider the following six tips:1. Loan RefinancingLoan refinancing is another way of saying get a new loan to replace the existing one, because you're aiming to cut back on the amount on your current loan, as well as lower current interest rates, cash in on equity, or simply switch between a fixed-rate mortgage and an adjustable rate mortgage, and vice versa - provided your circumstances are justified accordingly.As a rule, you must qualify for a short-term loan with higher monthly payments, as this will help you pay off your existing mortgage quickly, providing the luxury of huge savings in total interest. For instance, say you have 25 years left on your loan and you decide to refinance it with a 30-year mortgage, obviously your monthly payment may actually go up, but you may pay tens of thousands less in interest over the long run (and you’ll have your house paid off 10 years sooner).Secondly, ensure you have a good credit score because down the line, you can apply for yet another loan to offset the one before; and with a poor credit rating, you inflame your own undoing. All in all, the two major reasons to refinance in this scenario are:To reduce your monthly mortgage payment or;To save on the overall interest you will pay on your house in the long run.2. Extra Mortgage PaymentsLike any other debt, or "dinau", you must pay off your mortgage. So, in order to get it over and done with as soon as possible, every usable alternative counts, such as additional payments on top of your required monthly loan repayments. This is another simple way to pay off your loan early.When you make extra mortgage payments, not only do you get rid of your debt or “dinau” quickly, but you also end up saving enough in interest payments. The cognition behind this is that, obviously, the more debts that you have, the bigger the interest and the more it will lead to your undoing; and this is one position you don’t want to be in.Worse yet, if you fail to capitalize on the opportunity to make extra payments, chances are your interest rate will grow and you’ll end up paying huge interest costs. Remember, your goal here is to pay off your loan early, in order to achieve financial independence. However, this will depend on the type of loan you qualified for and the strategy used in paying off your original mortgage.Like yin and yang, it should be in your best interest to better understand the condition of the loan, because you don’t want to be paying extra interest costs that come with extra payments. For the most part, there are some loans that restrict extra payments, that’s why it’s essential that you fully understand the type of loan you’re getting. 3. Strategize With DisciplineThere are two things that fall into place here: a strategy and the discipline needed to fulfill that strategy.The essence of establishing a time frame to pay off your mortgage early is that it gives you a target to work towards, and a vehicle (mindset) to reach that target (paying off mortgage early). As a starting point, use a mortgage calculator online or one that’s offered by your lender. This will tell you how long it will take for you to complete your mortgage payments, and how much you’ll be paying periodically.You can then use the result to determine if that’s what you’ll settle for, or consider a viable alternative to help you pay off your mortgage quickly. 4. Create Side Hustles To Help Offset Your Mortgage PaymentsUnless you’re disciplined to the point where you can manage one or two snacks biscuit and a cup of tea a day for two weeks, and have more than enough saved up, then maybe you won’t have a problem affording extra payments on your loan. Other than that, in most cases, your fortnightly expenses will exacerbate your ability to make that stretch.Now, making extra payments is one thing, how to manifest that is something else, and requires a great deal of exploring alternatives apart from loan refinancing. One that sticks out like a sore thumb is a side hustle.This can be as simple as selling buai and cigarettes, writing CV and cover letter for job seekers, designing book covers or company banners, and the like, for a specific fee; even writing blogs for companies at K1 per word, whichever that works for you, as long as it’s legal and helps you make extra payments on your monthly loan repayments.There are heaps of ideas for side hustles out there you can use. You just have to explore them and put into perspective one that suits you. Besides, this will come in handy if refinancing your loan is an option if you have a poor credit score rating.A side hustle will also prove very useful when you no longer have a stable income. 5. Cut Down On Unnecessary SpendingThis may result in a smile on your face, but it’s no laughing matter. It’s quite a drag, when you’re in the shops with a list of things to buy but end up with extras because you simply can’t walk pass those reflecting twisties packets, or that shimmering, transparent bottle of Trade Winds Vodka inside a room at the far end of the shop that has a huge sign that reads: Bottle Shop - just some examples of unnecessary spending. Come to think of it, some of the things that we end up buying, apart from the shopping list we’ve written back home, are things we don’t necessarily need. So if you have a loan to pay, and you want to pay it off early, there are certain things you will have to sacrifice, and one of them is unnecessary spending. It’s all about being disciplined, that’s all.  6. Lump Sum PaymentsEspecially when you want to pay off your loan or mortgage early, this another thing you’ll have to work into the equation. Either it’s a tax refund, a bonus, or overtime, try consider those rightful earnings as extra payments. Of course, we can’t deny the fact that temptations are just that - very tempting. The moment we get some form of bonus or extras, we are tempted to buy this and buy that. Worse when we have a loan to pay and quickly. But with a strategy in place alongside discipline we'll realize that these additional earnings can be used as extra payments on our loan repayments. ConclusionPaying off your loan or mortgage is one of those ideas that help you save money. There are dozens of ways to achieve that and become financially independent, and we’ve six in this article. You don’t have to take them all in, as you might have an extraordinary idea that will make these tips obsolete. Rather, what you should remember is that you need a strategy and the discipline to get you there.   Disclaimer:This article is meant for informational purposes only and is not intended to be construed as financial, or investment advice. Hausples encourages you to reach out for professional help regarding your own real estate situation.

Once you decide to invest in real estate, it's crucial that you gain an in-depth understanding of some of the investment terms and formulas used explicitly, in real estate.These will come in handy when purchasing an income-producing property, and will greatly help you mature in the business of real estate; hence, evolving your rental property portfolio.The truth of the matter is, first-time investors will find them (investing terms and formulas) somewhat overwhelming and intimidating, and that’s okay because, like everything else, the first time is always the hardest. But a little perseverance goes a long way, and the more focused and involved you are, the better you become with understanding and insight of these lingos and calculations. To start you off, imagine asking yourself the following questions:How do I know if a property is a good deal?What kind of ROI should I be looking for?What is cash flow?Now, if the answers came to you meticulously with real estate investing terms and formulas in mind, then you can stop reading right here. If, however, you were confused or it took you some time to think through the best possible answers, then read on. You might be surprised at how tricky it can be to lead yourself astray, without a glimmer of discernment why these terms and formulas are important in real estate investing. Let’s get started!This article is the first of a two-part article (Part 1 & Part 2), and the list of terms and formulas chosen for discussion are categorized into the following points of reference:Rental Property Analysis Rental Property Analysis Formulas & CalculationsIncomeAdditional BenefitsExpensesTerms & DefinitionsHowever, we’ll only be covering the top three points here, while the latter half of the list will be featured in the next article.   (1.1) Rental Property Analysis Terms Now, envision yourself coming across a single family home which you found compelling. As it stands, the property is selling for K395,000 (only an assumption) and according to you, this would make for an excellent income-generating asset. But you also want to know if it’s a good investment or not. Here are some of the key calculations you can learn and experiment with to determine the nature of the deal, as a new investor:The 1% RuleThe 2% RuleThe 50% RuleCap RateCash FlowCash on Cash ReturnGross Operating Income (GOI)Net Operating Income (NOI)In reality, the outcomes would be aloof if “vacancy allowance”, repair and maintenance, and capital expenses were left out of the equation. However, they will be discussed in a later article. For now, this article will only look at the generality of these terms and calculations, with a few simple examples.In retrospect, it’s no big deal really, when it comes down to determining how and when your tenant should pay; as you won’t necessarily whip out your spreadsheets to smoke a deal into thin air. Instead, you can ask your real estate agent for an insight on these terms and calculations and, in PNG especially, if any of these are applicable or familiar. But for the sake of succeeding in real estate investing, these lingos and formulas are worthy of introduction and reiteration. Let’s move on! (1.2) Rental Property Analysis Formulas & CalculationsHere’s where everything comes undone. Just like the BRRRR strategy, these terms and formulas may seem foreign to PNG’s property market. But, they’re worth your understanding when all that’s left in front of you is ascertaining between two similar properties, in pursuance of deciding which one has the highest potential rate of return (ROI). 1. The 1% RuleThis rule is ideally suitable in determining if your monthly rental income will be more than your monthly mortgage payments. The rule of thumb here is your monthly rental income must be greater than or equal to your monthly mortgage payments.Formula: 1% Rule: 0.01 x Purchase Price = Monthly Rental Income (i.e., your monthly rental income must be more than or equal to your monthly mortgage payment). You can get the same result by reversing the 1 percent rule:  [100 x Monthly Rent = Maximum Purchase Price]  Example:If a property rents for K1,500 per month, after a quick calculation, you know that you can’t pay more than K150,000 on an investment property. All in all, the 1% Rule dictates that you should multiply the purchase price of the property plus any necessary repairs by 1%. This is the baseline rent you should charge every month. Compare the result to your potential monthly mortgage and you will have a better understanding of a property’s monthly cash flow. 2. The 2% RuleSimilar in concept to the 1% rule, the 2% rule is all about progressing investors' rental portfolios, but with a twist simply because it also introduces the rent to value ratio. For the most part, this criterion states that in order for an investment property to translate into a good investment, its monthly rental income should equate to or surpass 2% of the purchase price.Formula: 2% Rule: 0.02 x Purchase Price + (Any Maintenance & Repairs) = Monthly Rental IncomeThe 2% rule seems a good investment measure for "cash flow investors", as it helps them decide, between two kindred rental properties, which one is more fruitful. There's a time and place for everything, likewise, there's a time and place for the 2% rule to work effectively. This depends entirely on what an investor plans to get out of an investment property. But the alternatives are straightforward.Once your investing goals are clearly defined in this scenario - be it property appreciation or monthly cash flow - you'd know exactly when to or when not to use the 2% rule. Example:A property that costs K150,000 should rent for at least K3,000 per month. A property that costs K350,000 should rent for at least K7,000 per month, etc.3. The 50% RuleThis rule may be tricky in the sense that you might be thinking it shares similar sentiments with both 1 and 2% rules, but that’s not the case. The 50% Rule is strongly associated with your monthly rental expenses, adding that such expenses must be at least 50% of your rental income (excluding mortgages) - talk about effective management of your earnings. Formula: 50% Rule = 0.5 x Monthly Rental Income = Expenses (excluding mortgages) Example:Referring to the earliest example where the single family home is selling for K395,000, let's say we used the 1% rule to determine our monthly rental income, and the result is K3,950.Now, applying the 50% rule to sort out the expenses, we end up with K1,975 (0.5 x K3,950); hence our expenses.That’s how much your expenses should be worth, in order to settle for a good deal. Note: Under the 50% Rule, the expenses do not include mortgage. 4. Capitalization Rate (or Cap Rate) Capitalization Rate, or commonly referred to as Cap Rate, is a method used in real estate to evaluate a potential investment.In consequence, you must know how much the annual return on the property is before you can calculate the cap rate.Again, using the above example, your annual return would be K47,400 (K3950 per month x 12 months). Now that you know how much annual return this property will generate, calculate the cap rate, as this will help you decide if the property is a good investment:Formula: Cap Rate = Annual Return / Purchase Price = K47,400 / K395,000 = 8.33%.Keep in mind here that the higher the cap rate, the bigger the risk, while a lower cap rate means a good deal. Advisably, cap rates between 4 and 10 percent are considered low risk, which makes for a good investment in a rental property. Also of note, a cap rate varies with where you invest, so it’s a good idea to find out more from a professional agent, with respect to your property investment goals. 5. Cash FlowGenerally, cash flow is actually profit after deductions. The principle idea is the same, it's only the adaptation of it into various industry lingo that gives it a different sway.For instance, in business, cash flow may be understood as: Profit = Revenue - Expenses. In real estate however, cash flow ideally narrates income less expenses; rental income less expenses, or to be more technical: Cash Flow = Net Operating Income (NOI) - Debt Services.If both Net Operating Income and Debt Services are overwhelming, don’t worry. For now, just remember your monthly cash flow as rental income less expenses.6. Cash on Cash Return (CCR)This investing term basically is a metric that’s used in measuring the profitability of a real estate deal. After all, you don't want to waste your time on a deal knowing beforehand that it won't profit you in any way, as a new investor.Truth be told, this calculation serves as the basis for clarifying your net income generated by your investment property, which is pertinent to your initial investment made to purchase the property.Put differently, this metric verifies how much you earned on top of what you invested in the property.Formula: Cash on Cash Return (CCR) = Annual Cash Flow / Initial Capital Investment; where Annual Cash Flow = Monthly Cash Flow x 12.Initial Capital Investment = Down Payment + Closing Costs + Improvement Costs (money that you put into the property to get it ready for rent.) At this point, you might be wondering about the kind of CCR to look for. In actual fact, It's quite easy, to begin with. All you have to do is calculate the average return you're presently receiving from your other investments, then use that result as a goal to beat, when out looking for a rental property to buy.7. Gross Operating Income (GOI)The Gross Operating Income (GOI) is the result from which vacancy allowances are subtracted from the total monthly rental income of an investment property. Sometimes referred to as Effective Gross Income (EGI), this term, however, is only arrived at when you figure out the Gross Potential Income (GPI).Here, the biggest challenge faced by rental property investors is maintaining a consistent positive cash flow every month for a year. Needless to say, your journey towards  Gross Operating Income begins with what is known as a Gross Potential Income - potential is self-explanatory, by the way; it's just potential and not a reality as yet.Gross Potential Income has everything to do with the expected rent your rental property will generate in a year, if your tenant(s) will rent for 365 days straight; with an agreed full payment throughout.Once the dust settles, the calculations for your Gross Operating Income begins.Formula: Gross Operating Income (GOI ) = Monthly Rent income – Vacancy Allowance8. Net operating Income (NOI)Net operating income is the money that you're left with after deducting property expenses from what is left as a result of subtracting any vacancy allowances from gross operating income.Simply put, NOI is the earning you receive from an income-producing property, if the property is owned by you free of a mortgage.(1.3) Income 9. Rental IncomeAs we've already discovered, rental income simply refers to the money your renter or tenant pays you periodically for using or renting your property.Additionally, rental income is not just about properties or investment properties. There are multiple alternatives by which you can also earn a rental income, such as:Storage spacesParkingVending machineMaintenance servicesand more if you're a creative, these ideas won't be difficult to come by, since you'll be able to identify and capitalize on them as soon as possible. Because if there's a demand for such items, but aren't available anywhere else than your location, obviously people will want to rent them.This then gives you the perfect opportunity to put either of these terms and formulas into perspective, where applicable.After all, rental income doesn't apply to just one rentable asset, but multiple.   Disclaimer:This article is meant for informational purposes only and is not intended to be construed as financial, or investment advice. Hausples encourages you to reach out for professional help regarding your own real estate situation.

When it comes to real estate investing strategies, it’s quite an ordeal to determine which ones you can use, and which ones will make a statement. There are, however, a variety of investment strategies to choose from, but none morecatchy, creative and full of flair than the BRRRR strategy.The BRRRR strategy was coined by a real estate entrepreneur, Brandon Turner from BiggerPockets.com, and it stands for Buy, Refurbish, Rent, Refinance, Repeat.At first mention, it may remind you of the sound we make when we're cold, or as if reacting to a Sumerian utterance. (pun intended)  Although it may be new to PNG real estate jargon, it’s rarely the case among investors in other countries, because it has been around for quite some time.Speaking of building your rental property portfolio in a short space of time, this strategy is the best way to sustainably bag a rental property. The originThe BRRRR strategy barely qualifies as a new concept in this era.Real estate investors of old have been submitting to this model for years under a different theme before the name "BRRRR" bounced into existence.However, these quirky acronyms have a way of engraving themselves on our minds, and because they're easy to remember, new investors tend to become familiar with them in no time. The essencePurchase a below-market value property or fixer-upper with short-term cash or financingOnce refurbishments are completed, put it up for rentWhen a tenant is secured and an income stream generated, the property can be used as collateral for the next project.As a matter of choice, a new BRRRR investor should be able to get back most or all of their initial capital back, in preparation for the next BRRRR income-producing property All in all, the logic behind this strategy is buying a cheap, rundown house, “flipping” it, and putting it up for rent as collateral for the next BRRRR investment. Enter the BRRRR strategyReal estate investing is seldom trivial within a set time period. There's always a pulse, a happening, a new way of making money; consider sweat equity as a relevant example. More often, you will come across a new strategy or a new approach to making money in real estate; not up, not down, nor left or right, but through investing.And there are those that actually get imprinted in your mind, because of their name, their purpose, and their proven success. It is among these that you will surely pass by the BRRRR strategy.This strategy is ideal for newbie real estate investors, and is a concept worth a thought in PNG's very own property market. The specs Let’s look at the specifics:B - BuyPurchase an investment property that's in dire need of reconfigurations or value adds. This can vary from minor cosmetics to major repairs and maintenance, even landscaping will factor into this equation - anything that will help bring it up to par, making it livable as well as rentable. R - RefurbishJust like an ugly duckling turning into a beautiful swan, in a similar fashion, that's what you must do to this unattractive, relic of a property - transform it into a living, breathing, beautifully charming abode. But don't go overboard. Work within your budget so as to be sufficient, not exaggerated. What you should aim for here is to get back more than what you invested in repairs and maintenance, once it goes on rent. R - RentAt this stage, your once fixer-upper property at below-market value has achieved the move-in-ready title, and is welcoming applications for long-term tenants who are able to take care of it.  R - RefinanceHere, you will want your remodeled property to maintain its new image, because you'd be anticipating a lender to offer a loan of 90 percent that will match the after-repair-value of the property.If you find a lender that agrees with you, expect them to hire a valuer (at your expense) to give a considerable estimate of your property's value.What the valuer will do is compare similar properties in your area and how much they're going for on the market, how much you're charging for the rent, and the total cost of the repairs or improvements.If the valuer offers the bank a much higher appraisal amount than what you originally intended, you’ve got the loan fair and square. Now you’re at a vantage point where you can pay off any loans or mortgages you acquired earlier for the property, plus reimburse yourself for what you invested on repairs and maintenance.Bear in mind that, to be successful under this strategy, you must first qualify for a loan. Unless you're a self-made billionaire, to qualify for a loan, you must be able to substantiate your income statement and credit history. In fact, there are certain creative ways to work around this, however, they're way beyond the scope of this overview.Needless to say, don't let these details discourage you. It only takes a mixed dose of open mindedness, creativity and enthusiasm to overcome whatever that stands between you and prosperity. R - RepeatIf you’ve made it this far, that means you still have some finances remaining. You’ve got two choices: 1) Spend it carelessly, or 2) Invest in another BRRRR.Imagine if you continued this trend within a year or two, having several BRRRR properties to your credit? You can picture the rest.  Who should use the BRRRR strategy?Let’s get this straight - the BRRRR strategy is not for those who want well-appointed or fully renovated properties, ready to be purchased and rented out. This strategy works best for those who prefer:Projects and project managementSeeing the life cycle of things from start to finishA bit of uncertainty around construction dates and budgetsTo grow their real estate investing portfolio very quicklyTo truly learn the ins and outs of real estate investing (with the BRRR method, you tackle several different hurdles involved with real estate investing) The BRRRR strategy exampleAssume that you paid K80,000 for a property below market value worth K120,000 (only an assumption). Then you chipped in another K15,000 for repairs and maintenance. This leaves you all-in for K80,000 on a property worth K120,000. Applying the BRRRR method, the refinance part comes after the refurbishing of the property. Your lender will base the property’s value on the initial price of K120,000 and not the K80,000 you paid for. At a 90% loan-to-ratio, you could easily refinance and recover K108,000 (or 90% of K120,000). As it stands, you only spent K95,000 (K80,000 + K15,000) to buy and remodel the house, so now you’re left with K13,000 (K108,000 - K95,000) in the deal.Now, if you compare this to the traditional method that involves down payments, you wouldn’t recover much of the capital that you put into refurbishment. More will be discussed in a later article.  Bottom lineMany real estate investors - overseas - have struck gold with this strategy. You get what you give, and this strategy can be your friend or foe, depending on how well you understand its schematics. On the whole, it's an incredible way to build wealth in real estate, as well as your real estate portfolio.The best part is that in the long run, you will come to consider leaning towards lower risk strategies like what is known in real estate calculations as the Rental Debt Snowball.Most importantly, however, is to get your remodeled property rented, because if you don’t then you’ll only end up with a growing list of debts to pay, as well as digging your own grave.Nevertheless, these concepts may be foreign to PNG's property market but they're worth bringing to light. After all, “ideas” are bulletproof - they cannot be killed, only be accepted or ignored.

Most people find that their journey towards homeownership is often overwhelming and stressful. It’s the biggest financial decision they will ever make, as first home buyers. With more and more homes costing hundreds of thousands of kina, most of these first home buyers experience a lapse in their ability to pay cash upfront - for the entire property. As a result, they turn to banks for loans. BSP First Home Ownership SchemeBSP’s First Home Ownership Scheme is not an ordinary loan. It’s a specialized loan facility designed to suit borrowers who have the outright potential to repay the loan. And like any other loan, FHOS is a convenient contract between BSP and a first home buyer, when it comes to buying a home.With a strong tailwind, the FHOS significantly applies to newly built homes, or brand new homes soon to be completed. These properties must prove to be on a state leased land with a genuine title. The home buying experience can be intimidating in a way, but with a teaspoon full of motivation, you can calm your nerves to put that journey into perspective, with BSP’s First Home Ownership Scheme. There are three types of loans currently available at BSP:BSP Standard Home LoanBSP Personal Property Investment LoanBSP First Home Ownership Scheme And each loan is typically influenced by four main characteristics:PrincipalThe principal describes the original amount being borrowed. It is the amount a borrower gets from a lender upon application, excluding closing costs and other related fees.The TermThe term of a loan explains how long it will take for it to be paid off. For instance, FHOS can take up to 40 years to complete.Interest RateRefers to a portion of a loan typically expressed as an annual percentage of the loan outstanding.Repayment FrequencyRefers to how often you should make your payments until the loan is paid off. Let’s consider an example that illustrates the four main factors in perspective:Picture this, you decide to buy a house so you begin your search and you came across one that matches your definition of the ideal house. It’s worth K400,000.According to your financial situation, you will need a loan to help secure the house, so you turn to BSP. But in order to get that loan, BSP requires that you purchase 10% of the house, to begin with, as a down payment. So, you chip in K40,000 (10% of K400,000), and BSP covered the remaining amount of K360,000 (the principal) with a fixed term of 40 years (the term) at a rate of 4% (the interest rate), which is to be repaid in monthly installments (the repayment frequency). By putting these numbers into BSP’s Loan Repayment Calculator, your monthly repayment would be K1, 688.(Note: Your monthly repayment amount does not include property taxes, personal insurance or other additional fees) Components Of The First Home Ownership Scheme (FHOS) BSP’s First Home Ownership Scheme is characterized by:A minimum loan of K200,000 and a maximum of K400,00040 years maximum repayment term4% fixed-interest rate annually1% additional bank feeLoan amount exceeding K400,000 will be assessed under BSP Standard Home Loan Fixed-Rate LoanBSP’s First Home Ownership Scheme is a fixed-rate loan. Meaning, the interest rate on this type of loan remains consistent throughout the term; it doesn’t go up, it doesn’t go down and it doesn’t go sideways (pun intended). Case in point, in the previous example, say your annual loan repayment amount is K20, 256 (K1,688 x 12 months), and comprises the 4% interest rate on the principal. This 4% will not change throughout the term of the loan - it is unchangeable, and that is what is meant by a ‘fixed-rate loan’. As one of the most common types of home loans, a fixed-rate loan such as FHOS requires a borrower to repay the principal over a ‘fixed term’ (an unchanging length of time) with a ‘fixed rate’ (an interest rate that never fluctuates over that length of time).This type of loan is ideal for borrowers strongly interested in a steady and predictable loan repayment term. Borrowers are usually allowed 30, 15, or 10 year fixed-rate loans. Traditionally, the shorter the term of the fixed-rate loan, the lower the interest rate.The magic of home loans is that they make home ownership a truth for everyone. But not without a substantial investment (closing costs, down payment, time to apply, etc.). How to qualifyIn order to qualify for a loan, a borrower typically needs to submit some forms of identification and basic personal financial information, such as employment history, projected down payment amount, authorization to pull credit rating and so forth. For BSP’s First Home Ownership Scheme, a borrower is required to provide the following proof:Be a PNG Citizen and a first home buyerProvide proof & evidence of 10% equityBe an employee of either public service or the private sector and earning a regular incomeProvide Bank StatementStatement of outstanding debts with other banks or financial institutions for the last three months if any.Provide three (3) months statement if account is held with another bankProvide three (3) latest payslipsConfirmation of employment or copy of contract of employmentHow to ApplyComplete a BSP Loan Application.Submit copy of Title Deed confirming ownership of land/Lease is State owned.Statutory declaration confirming acquisition is your first and will be owner occupied Understanding ‘pre-qualification’ and ‘pre-approval’ Once you’ve met all the lender’s requirements, you’re given a pre-qualification letter saying you’re eligible to purchase a home up to a specified kina amount, although the pre-qualification does not guarantee the final approval of the loan.At this stage, the lender is truly satisfied with your basic personal information, along with your deeper financial information - which may translate as your annual income history, recent bank account activity, and the likes. In fact, between pre-qualification and pre-approval, the latter is more strenuous than the former, where it involves a more in-depth look at the costs and interest rates that the borrower will be meeting as part of the loan. ApprovedWith BSP, a borrower qualifies for a home loan once a down payment has been made - immediately - after every qualification requirement has been satisfied. The down payment assures BSP that the borrower is serious about owning the home.The BottomlineOwning your own home is everyone’s dream. For some, it gives a sense of security. For others, it symbolizes accomplishment and prosperity. For a few, well, a shelter over their heads, a cozy corner to sleep in, a private space, will just about do it. With BSP’s First Home Ownership Scheme, you can turn these dreams into a truth. For more information, you can speak with BSP’s Relationship Manager or call BSP Corporate Banking toll free on 180 1100 or +675 305 7900.

Image from: etsarchitects.com.au The Department of Lands and Physical Planning has gone digital in its bid to secure Papua New Guinea’s land tenure records. Minister for Lands and Physical Planning Justin Tkatchenko said the new Scanning and Archiving Center at the Department of Lands and Physical Planning is a step forward to secure all the department’s records.“The new center is the outcome of National Government funding support and testament of its commitment to better work place mechanisms to ensure efficient, effective and transparent public service delivery,” he said in a recent post on social media.“The task at hand against corrupt and greedy individuals and syndicates is far from over, however, our efforts to change perception and instill faith in our processes must continue. Our work in very close consultation with Acting Secretary Oswald Tolopa, senior department management and key officers in the last six months has ensured that we have done and achieved more than the department has ever delivered in years.”The new digital storage facility was purposely built for storage of all titles and records including land titles, title files, surveys and all other forms of documentation.The new technology will ensure the problems of file theft and duplication became a thing of the past, Mr Tkatchenko added.   “The process of scanning and data entry will be undertaken by a team of trained and qualified young men and women under the supervision of senior and specialist managers over the next two years.”Prime Minister Peter O’Neill officially commissioned the new digital storage facility and was accompanied by the National Planning Minister Richard Maru.“I thank Minister Maru and the Planning Secretary once again for initially seeing the importance of this technology and center to ensure funding commitment, Prime Minister and National Government for the direction and guidance,” added Mr Tkatchenko.The Department of Lands and Physical Planning has been dogged by controversy in recent years with missing land title files connected to high profile projects in the NCD and other urban centers, making news headlines and drawing criticism from the public.Ensuring the security of official documentation is not the only issue on the agenda for Mr Tkatchenko with the Lands Minister keen to make progress on freeing up customary land for future development in the country.He met with the CEOs and staff of PNG-based commercial banks in January this year to discuss how customary land leases can be accepted as security for bank mortgages (besides State land titles). The banks were urged to work together to look for a way forward, as currently only 20 percent of land in PNG is developed with 80 percent still in customary possession and not available for development.Customary land registration is a sensitive issue in PNG and continues to be a challenge for successive governments. Attempts by the World Bank to get the PNG Government to incorporate land registration into its Structural Adjustment Program, as part of its loan condition backfired in 1991 when there were student-led mass demonstrations and four ensuing fatalities.

Maggie Kupp Kuli, 39, from the Western Highlands Province has been a BSP customer since 1999, when she was still a student. She moved into her house recently and the experience was truly rewarding. “It is with great satisfaction I have my own house, a place to rest, no more rentals and moving from house to house,” she said with a smile.She utilised the BSP and PNG Government First Home Ownership Scheme (FHOS), a Home Loan Product that offers:Highly competitive interest rates, at only 4%, affordable loan amounts up to a maximum of K400, 000 and a flexible repayment plan of up to 40 years. Equity is only 10%.“I really appreciate BSP for making available this loan facility to assist the average Papua New Guinean to own a home, where the requirements are affordable. Thank you BSP, thank you PNG Government.”If Maggie can do it, so can you. “I encourage others to participate, no need to save big, as long as you have enough equity to meet the bank’s requirement you can own a home, so it is worth trying rather than waiting,” she adds.Vagi Vicky Kulu-Manek, a BSP customer of 20 years, says: “I encourage Papua New Guineans to purchase a property, a dwelling place you can call home. This is a lifetime asset for you, your children and the future. It is a milestone achievement.”There are sentiments that home ownership is for the wealthy or something to be done post retirement when superannuation funds are cashed, but these myths have been broken by ordinary, average Papua New Guineans who have taken a step to seek information and help from the bank.Linzy Tonnakku Bari, 29, from the Autonomous Region of Bougainville could not agree more.“The thing that really stands out for me in this experience is that you do not have to be a millionaire to purchase your home. Anything is possible you just have to commit your time, manage your money well and you will surely own your own home.”“This is a true investment, not only for yourself but for your future. I highly recommend the BSP first home ownership loan” she added.What can BSP do for you?BSP has funded up to 141 loans for first home buyers under the FHOS, with a total value of K 54.448 millionThe FHOS is now considered a catalyst for growth in the housing market. The market has been attractive to property developers who started building homes and offering them for sale in and around Port Moresby.BSP First Home Ownership Scheme was introduced with the aim to provide Papua New Guineans with an affordable Home Loan to purchase their first home.The majority of loans funded are in Port Moresby largely due to size of market and increased interest from housing developers. However, interests from potential home buyers also remain high from across PNG, from young professionals to long-serving employee in both the public and private sectors.It is the intention of the partnership arrangement with the government to have a clearly defined set of eligible purposes to guide potential borrowers attempting to benefit from the First Home Ownership Scheme.These eligible purposes are:Purchase land under a state lease for the construction of a new house;Build a new house on a state land; andPurchase both house and land under a state lease; orPurchase a house which is less than 6 months old that is on a state land.There have also been concerns raised about limited number of properties going for K400, 000, but BSP has assured that they also have options to address those concerns.Besides FHOS, customers also can take advantage of BSP’s standard home loan product. This product also gives you the freedom to work out your equity and apply for a Home Loan with BSP. The Interest rate and repayment terms vary in this instance.All interested and potential first home buyers can call into any BSP branch to seek more information or simply express your interest by filling the form below.Banks and Finance FormWe would love to hear from you! Please fill out this form and we will get in touch with you shortly.Name*Number*Email*Inquiry typePlease select inquiry typeAsset FinanceBusiness loansConnect to Finance BrokerHome loansInvestment loansPersonal LoansSmall Business LoansOtherChoose BranchPlease SelectAitapeAlotauArawaBiallaBorokoBSP HausBukaBuloloDaruGordonsGorokaKainantuKaviengKimbeKiungaKokopoKundiawaLae CCLihirLorengauMadangMarketMendiMount HagenPogeraPopondettaPort MoresbyRabaulTariTop TownVanimoWabagWaigani BCWaigani DriveWewakCommentsEmailThis field is for validation purposes and should be left unchanged. This iframe contains the logic required to handle Ajax powered Gravity Forms.

The satisfaction of owning a home is truly priceless because your own home is a place to raise your family, and importantly, it can be passed down to provide security for your children.Many Papua New Guineans do have a dream to own a home, but are often reluctant and put it off until later, due to many reasons, including high house prices, interest rates and repayment terms.Well there is good news, the BSP First Home Ownership Scheme (FHOS) has a much longer loan term and a concessional interest rate. About the First Home Ownership SchemeThe FHOS is a joint initiative between the Government of PNG and BSP, and provides access to all Papua New Guineans to flexible and affordable financial arrangements to enable them to own their own home.The FHOS offers a loan up to K400,000 which means customers will not have to pay for stamp duty. Equity is at 10% and repayment up to 40 years at an interest rate of 4% per annum.And we have a happy FHOS customer, David Jonah, who recently moved into his new home with his family, and he is thankful that he took that step to seek help and advice from BSP.“It was a wise decision to visit my branch and enquire, as I given valuable information which resulted in me deciding to purchase my new house” said Mr Jonah.You can have a house and call it your own. Take that first step HERE. It is open to all Papua New Guineans, whether you are working in the private or public sector, as long as you have the income capacity, including housing allowance, that ensures you afford loan repayments.Now the FHOS is tailored for first home buyers for self-dwelling. If you are interested it is important to note that you must not have not owned or part owned a house under state lease. Your spouse or defacto partner does not own or part own a property under a State Lease. And also you must not have applied for any other housing loan via another scheme.Under the FHOS, these are some criteria:•   Buy land under a state lease for the construction of a new house;•   Build a new house on a state land; and•   Buy both house and land under a state lease; or•   Buy a house which is less than 12 months old that is on a state land.•   Buy land under a state lease for the construction of a new house;•   Build a new house on a state land; and•   Buy both house and land under a state lease; or•   Buy a house which is less than 12 months old that is on a state land.Want to renovate or buy your second home?BSP also offers other Home Loan Products for other customers who may want to purchase another home, want to renovate or extend.The BSP Home Loan product is the best option to take. Unlike the FHOS, this product gives you the freedom to work out your equity and apply for an amount over K400, 000 +. The Interest rate is fixed and repayment terms vary in this instance.Set a Goal and start saving for your House.Everyone can be able to own a house. Make a commitment to start saving up for a house.photo credit: skerah.comIf you are interested, please visit your nearest branch or email [email protected], [email protected] or CLICK HERE to send an inquire.

The recent Court’s fires, the Brian Bell fires in Lae, and the continuing car accidents along the Highlands Highway have called on PNG citizens and property owners to insure their lives and properties against these ongoing risks.The significance of insurance in Papua New Guinea has not been widely acknowledged by citizens in the past years and it has remained a low priority when purchasing a major asset such as property. However, Papua New Guinea has experienced dramatic economic growth driven by major real estate projects such as the PNG LNG, Duran Farm, Edai Town and many others still under planning, all of which have opened interesting opportunities for the insurance industry. Meanwhile, as new developments spring up across the country more and more citizens are insuring their assets against natural disasters such as fires and earthquakes.Thanks to the growth in PNG’s real estate market, along with the government’s initiatives to increase private spending, the home insurance and insurance industry in general is growing at a rate of 12% per year as more and more citizens insure their homes. The recent real estate developments will only increase demand from home insurance seekers, while inadequate public healthcare services are also expected to increase demand for private health insurance in PNG.Considering the presence of rising healthcare expenditure, the country’s personal cover and health insurance sector is expected to increase by 3.9% for the next five years.According to Bima’s Country Manager, Simon Schwall, the three most popular forms of insurance in PNG are car insurance, health insurance and life insurance. The nationwide Micro-bank launched MiLife in April 2013, an insurance package perfectly suited for low-income married couples.Insuring your life or assets is considered a precautionary measure against unforeseeable risk – in case an unfortunate event affects you, your assets or your family. Insurance helps you manage the event and limit its damage on your health and your assets. For example, when a person passes away and he or she is covered by life insurance, the family members are entitled to receive funds to deal with the death and funeral costs. Health insurance may also cover hospital costs in case you have an accident and need to go to the hospital for several days, incurring costs and/or lost revenue. However, every insurance company has a different package.The same concept applies to home insurance. There are more and more Papua New Guineans who tend to insure their homes. This is only natural – as many have seen their property burnt or damaged by an earthquake. There are different levels of coverage that one can apply to his or her assets; some only insure their homes for fire damage, while others prefer to apply for a complete home insurance against any damage possible.“The idea in general is to make sure you will be helped financially when you or your family needs it the most. It helps you go through difficulties and maintain the same quality of life even when facing a problem,” Schwall said.Estimate the value of insuranceIf a person was to save K10.8 per month in a piggy-bank to cater for haus krai and funerals, it would take more than 90 years to gather K12, 000 (K10.8 x 12 x 90 = K11, 664).With life insurance, one can pay the same amount (K10.8 per month) and his or her family will receive K12, 000 already on the first month of cover in case of an unfortunate and damaging event.“If you really care about your loved ones, then you should spend at least a few kina every month on insurance. It would be selfish to rely on the generosity of others when accidents happen,” Schwall commented. He also added that providing insurance in a young nation like Papua New Guinea was difficult, adding that Insurance was intimidating even in countries like the United States, Australia or New Zealand.There is no doubt that Papua New Guinea is a young country and that insurance penetration is low. But it is clearly growing fast as more and more Papua New Guineans realize the benefits of insuring their assets, securing a bright future for the entire nation.To receive news and updates about New Developments, Free Land Titles News, Real Estate Trends and other programmes to help PNG home buyers, CLICK HERE to receive the Hausples.com.pg Newsletter!

BSP is committed to helping Small to Medium Businesses (SMEs) in Papua New Guinea grow and this is evident in the fact that more than 14,000 SME’s are using the bank’s Smart Business Account and have direct access to finance via the BSP Smart Business Loan.According to Dennis Konu, who heads the banks Smart Business Unit, since 2013, BSP has provided in excess of K40 million in loans to this valuable group of bank customers.  The Smart Business Loan product was introduced as part of BSP’s strategy to empower the large number of small to medium businesses in Papua New Guinea.“The product has generated considerable interest around PNG and is gaining momentum with over 800 loans funded. Despite the inherent risk associated with small business lending BSP has developed a process and criteria that suits the capacity of small businesses,” Mr Konu explained.The Smart Business Loan is accessible to registered SMEs that have traded for more than 12 months and use a business bank account. BSP extracts critical financial information about the business, from banking records to calculate how much the business can borrow. The loan is aimed at SMEs that may experience difficulty in meeting certain commercial lending requirements such as providing financial statements, or contributing equity and loan collateral.Owner of a local SME, Tapioca Delight, Ginia Siaguru, is a success story of the BSP Smart Business Loan product, which she used to purchase equipment that has helped her business grow.She says: “Looking for Small Business Loans can be challenging, but with BSP, having an established banking relationship helped me to further explore other options like opening a Business Account. It is through this Smart Business Account that has paved way for us to take out a Smart Business Loan.”Another success story, Rossica Salika, who owns Rossal (Tual Immess) Limited, a tailoring business in Port Moresby shares similar sentiments to Ms Siaguru. Rossica admits that it was difficult to seek additional finance to purchase new sewing machines to increase productivity. She had operated through her personal bank account. Things changed for the better, when she was introduced to the Small Business Package and Loan products.“The business was in operation for over 12 months, and my bank statements were easily obtained and supplied when I applied for a Smart Business Loan. BSP staff were helpful and assisted me in completing the application and ensuring all requirements were provided,” she said.Rossica used the Smart Business Loan to purchase two new sewing machines, hired two more seamstresses. Her business is growing. And with her business growing she is able to give local women an employment to “earn some money and support their family”.

Receive a FREE insurance health check and you will go into the draw for a luxurious dinner for two! 3 x Lucky Winners will be taking a break from their busy Pacific Games schedule to enjoy the superb surroundings of an International Hotel. Call now on 321 6808 or click here to contact the team at Trans Pacific Assurance Limited.In Papua New Guinea there are low penetration levels of insurance – among the lowest in the world. This results in risk and insecurity. Recent major fires in Lae and Port Moresby have caused tremendous damage to property and businesses not to mention the hopes and dreams of those worst affected. This article will explain how a free insurance health check on your home or your business can provide great security and peace of mind.The health check process aims to summarise your insurance profile. Many property and business owners in the past have discovered too late that their coverage did not include what they thought it included. Greg Peck, General Manager of L.J Hooker agrees “Some property owners ignore the risk of not being insured and a lot of property owners are under-insured or are even sold the wrong policy to start with”.To avoid this situation you should be asking yourself very basic questions about your exposure across the entire range of possible problems. Let’s talk through an example: if a 3 bedroom home in Tokarara valued at K450,000 was damaged by fire or storm – it would use all of your life savings to rebuild. An appropriate policy covering you against this might cost less than a packet of biscuits and a can of soft drink! Now though, your life savings would be free from the burden of rebuilding your home.Investment properties, businesses and their buildings are also open to the insurance health check process. This recently resulted in a new TPAL customer saving money and greatly increasing the level of coverage.Workers’ Compensation and Public Liability insurances are an absolute must as accidents do happen in and around workplaces and your risk really needs to be managed. “Don’t pretend for a minute you don’t need insurance” says Peck “as it is only after the event we hear from property and business owners and we see who’s been careful and thoughtful with risk and who has been ‘unlucky’!”.Call 321 6808 now or click here to arrange a meeting with the team at Trans Pacific Assurance Limited.To receive news and updates about New Developments, Free Land Titles News, Real Estate Trends and other programmes to help PNG home buyers, CLICK HERE to receive the Hausples.com.pg Newsletter!

Since April BSP has been giving away tickets to randomly selected customers who have successfully conducted mobile banking transaction. In June, BSP is giving away tickets to customers who download and activate the new BSP Mobile Banking App. 20 customers were selected each week for general admission passes and + 1 lucky customer gets selected for the major giveaway, which is an all access Event or Venue Pass.Over 150 tickets have been given out to randomly selected customers who purchased Top up via BSP Mobile Banking in April and in May 3rd Party Account transfers.  n June, customers still have the chance to score Free Tickets to the Pacific Games but this time, BSP is giving away four (4) tickets to each of our selected customers. This is a chance to share the games with your family or friends. You can be selected, by simply downloading the BSP Mobile Banking App and Activate.There will be 20x family pack (General Admission) and 1x Family (Major Giveaway) to be given away  in the next few weeks, in the lead up to the 2015 Pacific Games. Get the word around and get registered for the weekly draw. All successful Mobile Banking App activation will be registered, and random selections will be made each week. BSP ticket giveaway winners will be contacted directly by BSPClick HERE for more information on BSP ticket giveaway. What can you do with the BSP Mobile Banking App?The BSP Mobile Banking App can be downloaded at the Google Play Store, Windows Store and the Apple App store. All you need is data and a reliable internet connection through your Smart phoneIn one application, you can sign in and:Have access to your account anytime, anywhereView your balances and recent transactionsSend Wantok Moni, to anyone through their Mobile phone number.Pay your Bills or schedule paymentsTop up prepaid mobile phones and easiPAY electricity units (and someone else’s)And much more! See HERE for more information. Get Started!If you’re an active Mobile Banking customer and have a smartphone! Then you’re ready to get mobile. All you need is your BSP Customer Identification Number, 16 digit BSP Issued card number plus your Mobile Number.Download the BSP Mobile Banking Application fromActivate UserSelect the BSP Mobile Banking app iconTerms of Use – Select Accept to proceed or Reject to ExitSelect Sign In iconSelect Activate UserEnter your CIF (User ID) number, Card Number and Phone NumberSelect Submit buttonYour One Time Password (OTP) will be sent via SMSEnter Your One Time PasswordCreate your PasswordRe-enter your PasswordSubmitHaving problems? Read HERE!How the BSP ticket giveaway worksIn June Customers with Smart phones can now Download and Activate their BSP Mobile Banking App. Only successful Mobile Banking App Activations will be registered and are randomly selected to get Free Tickets. The draws will be done weekly.Data is collated weekly.Selections done weekly.Selected Customers will be contacted directly by the BSP and their names be posted on BSPs Social Media and website.Tickets will be sent to nearest BranchTo collect tickets customers must present VALID identification: Driver’s License, Employer ID Card, Passport etc.To receive news and updates about New Developments, Free Land Titles News, Real Estate Trends and other programmes to help PNG home buyers, CLICK HERE to receive the Hausples.com.pg Newsletter!

Well it’s come to that time of the year again where we’re all called to care and share more. As exciting as the festive season may be, it doesn’t come quite cheaply. But before you get all worked up into a frenzy about digging deeper into your pockets, Bank South Pacific (BSP) is here to save the day with its products focus of the month. That is, the Personal Loan and the Savings Secured Loan (SSL). BSP’s two products are beneficial during this time of merriments as they offer Papua New Guineans a chance to save while at the same time splurge. Be it giving your loved one a thoughtful gift or organising a memorable trip for your family this Christmas, the Savings Secured Loan and Personal Loan have got you covered. These two products have different features but what sets them apart from other loans is that they have been developed to assist Papua New Guineans in saving. BSP Savings Secured LoanThe notion behind the Savings Secured Loan is to secure one’s nest egg by borrowing against it. For example, let’s say you have been putting aside money into your savings account but then an urgent family emergency arises. You don’t have any cash on hand except the kina in your savings account. Instead of going straight to the bank and withdrawing all that money, you can acquire a loan that is twice the amount of your savings. Your savings will then be used as collateral during the period of the loan. As an example, if have saved K 600 and would like to obtain a loan under the Savings Secured Loan, you would then be eligible for a loan of K 1,200.The beauty about the loan is that you can earn a higher interest while paying off the loan at a sound rate. Other benefits of it include a quick turnaround time, fast disbursement, a competitive interest rate and same day approval of 24 hours. As for the requirements to apply for the a Savings Secured Loan, it is quite simple really. You would need to be a BSP customer with a regular income who’s displayed a savings pattern over a period of time in either a BSP Kundu or Plus Savers accounts.Now that we have established the gist of the savings secured loan, you’re probably thinking that it does not get any better than this. Well, you would be wrong because the Personal Loan is also a cause for celebration! BSP Personal LoanBSP’s Personal Loan is pretty much self-explanatory. Basically, you can get a loan for whatever personal reasons you may have. Whether you need to purchase a headstone for a relative who’s passed away or you need to lend financial assistance to a bride price, the Personal Loan will be of great aid to you. Apart from its flexibility of purpose, the Personal Loan requires minimal documentation and no security whatsoever.The plus side of the Personal Loan is that it does not call for security. Therefore, you do not need to provide any collateral. Like the Savings Secured Loan, the Personal Loan’s eligibility criteria are verified by BSP depending on an applicant’s income, credit history (in terms of any other loans acquired by the applicant) and repayment history. As far as any other loans offered out there, BSP’s Personal Loan and Savings Secure Loans are trump cards. So if you’re concerned about saving a lot of Kina but do not want to touch your savings this festive season then head on out to your nearest BSP branch!Copyright Hausples.com.pg, article by Pauline Mago-King

Threats that can end our dreams are all around us – but they can and should be planned for and avoided. On the night of the 24th October this year, fire ravaged the Mt Hagen trade center causing millions of Kina of damage. Lae has also seen many homes, businesses and lives destroyed by intense heat and flames – only to be reduced to ashes. These losses are occurring countrywide and right throughout the year. Every year. And this is damage caused only by fire – one of many risks here in PNG. Accidents, theft, extreme weather events, loss of income or business, the cost of medical problems – these are all risks that can impose deep hardship and financial ruin. You can and should take control. These risks can and all too often do destroy the greatest investments we make in our lives. It is up to each of us to take advice from experts and manage these risks. They will help to identify where risk exists, quantify and analyse its aspects and components and help to develop risk response strategies providing the best insurance plan. Also, monitoring these risks continuously to determine how they change over time is greatly important.  These are all concrete steps you can take to protect your greatest investments. Lives, homes, businesses and vehicles – invested and protected.  Papua New Guineans are increasingly active in business as the country’s formal economy continues to expand and it is up to each and every one of us to take steps to protect what belongs to our families for the future. Like a breath of fresh air, Trans Pacific Assurance Limited are reviving the insurance industry in PNG since their opening on the 29th April 2014.  And now it is the public of Papua New Guinea who can reap the benefits by relying on the efficient and effective insurance expertise on offer. After all, the tremendous personal benefit gained through understanding and using insurance products is still not understood by too many – all this is set to change with the arrival of TPAL – experts at managing risk. Trans Pacific Assurance Limited is located on the 3rd floor of Defens Haus, Downtown Port Moresby. They provide general insurance products such as motor, business, medical and home insurance products.  Professional risk management services are delivered by a team of highly skilled professionals who continually showcase their dedication to the all-important customer providing that “extra mile” service across the whole of PNG. Call TPAL today to make sure you protect your part of PNG’s economic prosperity. The wealth of the nation is improved when each of us does well – we all benefit because there are more jobs and more money and more customers and more sales. To fail to protect our investments in businesses and homes and vehicles is to risk the wealth of us all. Copyright Hausples.com.pg

Following the announcement last Wednesday that the Bank of South Pacific and the Government of Papua New Guinea  have formally signed an agreement to make First Home Ownership Scheme Loans (FHOS) available, BSP have now announced the eligibility criteria and application forms for people to apply for a loan. Key details of the FHOSEligible borrowers will have access to heavily discounted interest rate and preferential loan terms. Below are the key terms of the FHOS:Maximum loan amount of K400,0004% fixed rate of interestUp to 40 year loan termNo bank charges of feesNil penalties for early repayment of the loanCertain restrictions on the resale or refinancing of the loan Eligibility Criteria and how to applyEligibility Criteria for a First Home Ownership Scheme LoanBe a citizen of Papua New GuineaProvide proof and evidence of a 10% contribution to the equity of the home purchased (for example in the form of a deposit)Be employed and earning a regular incomeNot have previously owned a homeIntend to live in the home (home must be owner-occupied)Documents that must be provided in support of the applicationBank statements if you are BSP customer3 months of prior bank statements if accounts are not held with BSPStatement regarding current or prior debts owed to banks or other lenders for the preceding 3 months3 months of prior payslipsEvidence of current employment or a copy of your employment contractHow to apply for a First Home Ownership Scheme LoanComplete the BSP Loan Application Form or visit the FHOS page of the BSP WebsiteSubmit copies of the Title Deed confirming ownership of the land or the lease if State ownedStatutory declaration confirming this is your first home and you will live in the homePlease note: Further eligibility criteria and loan conditions will apply, please seek clarification by visiting the BSP website or a BSP branch.Commercial terms of the loanMaximum loan amount of K400,0004% fixed rate of interestUp to 40 year loan termNo bank charges of feesNil penalties for early repayment of the loanCertain restrictions on the resale or refinancing of the loan How does the FHOS compare to a standard loan?The following is a comparison of the commercial terms of a First Home Ownership Scheme Loan versus a typical home loan from one of the major commercial banks in PNG such as BSP or ANZ:4% fixed interest VS current interest rates of approx 8.45% – 9%40 years for repayment VS typical repayment terms of a maximum of 30 yearsNo bank fees VS a variety of fees and charges levied on the typical home loanNo penalty for early repayment VS  charges or ‘break costs’ associated with a standard home loanOn the basis of the above, the First Home Ownership Scheme Loan provides a large incentive for people searching for their first home to buy in PNG.However, people considering First Home Ownership Scheme Loans should also bear in mind some of the important terms and conditions attached to the loan. For example, the restrictions on the sale of the property or refinancing of the loan is designed, amongst other things, to keep the house in the family for enjoyment by future generations. In addition, it is expected that this restriction will also prevent people speculating on property price rises and selling homes at a profit.In addition, the requirement that the home be owner occupied will restrict borrowers from renting the property and this must be borne in mind in case a purchaser anticipates future career moves or other lifestyle changes that might require them to move home.Finally, borrowers should be aware that the First Home Ownership Scheme Loans are still a commercial arrangement between the borrower and BSP, and are not a form of grant, tax break or other concession by the Government. As such, borrowers will still be expected meet their loan obligations. What do you think of the FHOS? Are the eligibility criteria fair? Will you be applying? Tell us in the comments below

First Home Ownership Scheme Loans Formally Announced by BSPThe Bank of South Pacific in conjunction with the Government of Papua New Guinea (the “State”) have formally signed an agreement to make First Home Ownership Scheme Loans (FHOS) available.Following an initial announcement in May this year, the scheme is a direct response by the State to PNG’s chronic shortage of “quality and affordable housing”. In particular, the State has recognised the fundamental impact this crisis is having on the lives of many Papua New Guineans, particularly in the larger cities of Port Moresby and Lae. Whilst benefits will also flow regional areas which are  experiencing significant rises in the cost of houses and other accommodation.BSP Group CEO Robin Fleming said of the scheme “BSP believes that home ownership is a means for ordinary Papua New Guineans to establish an asset base that can be passed onto their children.  So it is with pleasure that we here today with the Prime Minister to announce this joint initiative, the First Home Ownership Scheme,”. Key details of the FHOSEligible borrowers will have access to heavily discounted interest rate and preferential loan terms. Below are the key terms of the FHOS. Commercial terms of the loan:Maximum loan amount of K400,0004% fixed rate of interestUp to 40 year loan term Analysis – is the First Home Ownership Scheme Loan for you?For home buyers eligible for the Scheme, the loans terms are very favourable when compared with standard home loan terms.The following is a comparison of the commercial terms of the FHOS versus a typical home loan from one of the major commercial banks in PNG such as BSP or ANZ:4% fixed interest VS current interest rates of approx 8.45% – 9%40 years for repayment VS typical repayment terms of a maximum of 30 yearsOn the basis of the above, the First Home Ownership Loans provide a large incentive for people searching for their first home to buy in PNG .However, borrowers should be aware that the First Home Ownership Scheme Loans are still a commercial arrangement between the borrower and BSP, and are not a form of grant, tax break or other concession by the Government. As such, borrowers will still be expected meet their loan obligations. Reaction from the real estate industryThe PNG real estate industry and in particular real estate agents and property developers have welcomed the launch of the First Home Ownership Scheme Loans. The Port Moresby real estate market in particular has experienced somewhat flat growth over the past few months and agents are expecting this initiative to drive increased interest in houses in the K200,000 to K700,000 range.Similarly, the scheme bodes very well for large scale housing developments such as the housing development at Edai Town in the National Capital District. Edai Town has a range of accommodation options starting at K280,000 for townhouses and ranging up to K498,000+ for freestanding houses; this places the project squarely within the reach of those considering the FHOS. The official launch First Home Ownership Loan Scheme is expected to see a flood of interest for this project and others similar to it throughout PNG. Want more information?To be informed about the full details of the FHOS when it becomes available click below. Provide your details to receive more information!And to see properties between K100,000 – K500,000 Click Here and happy house hunting!