Over the long term, property is recognised as a stable and reliable asset for wealth creation. Property is a store-of-wealth asset.
Whether you are looking to buy your first investment property or add to your current portfolio, property is a popular way to invest money by many Australian investors. One of the keys to property’s effectiveness as an investment is that owners tend to stay the course and don’t jump in and out of the asset based on whims and tips at barbecues! This ensures that a property owner remains invested in highs and lows taking advantage of the long-term trend of real estate which is to increase in value.
Consider these important tips before your next investment:
- Crunch the numbers!
Whether you are looking raise your deposit and associated purchase costs by borrowing, using the equity in an existing property (either your home or another property asset), using cash reserves, or selling down other investments, it is important do your sums and understand your cash flow.
Owning an investment property can be expensive and there are always hidden costs, like Stamp Duty, Capital Gains Tax, Land tax, Strata fees etc that can throw out your initial calculations if not factored in correctly.
Our team at Locumsgroup can help with your investment plans. We will consider your situation and advise you on the most appropriate debt structure to obtain the most appropriate, tax-efficient borrowings.
- Choose the right property for the right price
First time investors make common mistakes such as acting on emotion and not on research; or buying a property of a style that would like to live in; or acting too quickly or too slowly. Other errors include speculating, or not managing their cash-flow properly. These are all the types of mistakes that can make the vision of building a property portfolio fall apart at the seams – right from the start.
It is critical you seek advice and invest in areas that have strong research that supports capital growth and future potential returns. So do your research! You will need to find out what the benchmark is for other properties selling in the area of interest. Once you have a benchmark, you’ll be able to realise if your property is selling at the right price.
Another important factor to consider before purchasing your investment property is to ask the question: does the investment property suit the demographics of renters in the area?
- Your Property Manager is King
Find a good property manager to help take the pressure off you! They can help you manage your tenants, give advice on property law, your rights & responsibilities as a landlord and give you tips on how to get the best possible value for your property.
A good property manager can also take the hassle out of finding the right property tenants by doing the necessary reference checks and make sure they are paying their rent on time.
We do recommend, making regular inspections to visit your investment property and the good news is that you get to claim a percentage of Property Manager fees as a tax deduction.
- Make the property attractive to renters
The biggest tip is to paint your investment property. Never underestimate what a fresh coat of paint can do to the appearance of a property. Minor cosmetic changes can significantly increase interest in your investment property.
- Assemble your team of advisers.
Ensure your debt is structured correctly and the anticipated cash inflows and cash outflows from the property are reasonable and fit into your current budget.
If Locumsgroup play a role in the process, we will assist you with advice regarding the structure of the transaction and your borrowings, and also if required advice on the tax effects of your investment choices and the preparation of your income tax returns.
