It has been reported that Australian Property prices are at an all-time low so if you are looking to have an investment property, now is the best time!
An investment property should be about increasing your wealth and securing your financial future. There is however, a common misconception that property investing always delivers positive returns, while this is true most of the time it certainly isn’t an instant road to riches. You need to keep in mind that how effectively you manage your investment will determine whether or not the investment helps you reach your financial goals. The cost of owning an investment property can be surprisingly low after you take into account your rental income and the tax deductions you’ll be entitled to.
1. Choosing the right property at the right price
Investing in any real estate is about capital growth, so picking the right property that will more likely to increase in value is the most important decision you will make, so buying at the right price is critical.
The key thing for you is to do your research, work out what properties in the area are selling for and work out the medium price and then you’ll discover that soon you’ll become very good at working out what a property is worth – you’ll know a bargain when you see it. Never consider purchasing real estate in an area that you are unfamiliar with.
If you do find a property that you like and are unsure of its real value, we’d suggest contacting us – Stage Property 08 9325 9888
Whatever you do, never make a decision to buy an investment property based on getting a tax deduction – always focus on making the right investment choice.
Ensuring that you have a steady rental income stream is also vital because this cash flow will make the holding of the asset more affordable and provide income. We can provide rental appraisals so you have an idea of what you could receive.
Another important factor is that your property suits the demographics of renters in the area. For example, if it is near a university more bedrooms will be in greater demand than a big backyard for kids to run around. A family home that is close to schools and parks on a quiet street will be more desirable than a property on a busy road.
2. Make sure you do your numbers! Cash is top…
Investing in property is a proven path to long-term wealth, however you should consider it a medium to longer term type of investment, so you’ll want to make sure that you can afford to maintain your mortgage repayments over the long term. You do not want to encounter financial stress and then need to sell your investment property when you aren’t ready as forcing you to offload at the wrong time, you see a financial loss or no benefit at all.
Once you own an investment property it can be quite inexpensive to keep it and service the loan, that’s because you earn rent and get a tax deduction on many of the expenses associated with owning he property and remember that over time rents tend to increase as does your own income – so expect things to get easier over time.
Make yourself aware of taxes involved in property investing and add these into your calculations. Advice from your accountant is vital in this regard as these can change over time. Stamp Duty, Capital Gains Tax and Land Tax all need to be taken into account. Remember that interest rates can vary over time but the good news for property investors is that in times of rising interest rates you can normally expect to be able to increase the rent.
3. Find a good property manager and let them to do their job
At Stage Property, we have highly experienced property management team. Their job is to keep things in order for you and your tenant. They can help you with ongoing advice and help you manage your tenants and get you get the best possible value from your property, a good agent will let you know when you should review rents and when you shouldn’t.
Alisha will be able to give you advice on property law, your rights and responsibilities as a landlord – as well as those of the tenant. They’ll also take care of any maintenance issues, although you should approve all incurred costs (other than certain emergency repairs), in advance.
4. Understand the market and the dynamics where you are buying
Consider what other properties are available in the immediate area and speak to us as we’ll let you know if one side of a street is considered superior to the other.
You can access a lot of information on the Internet but if you want a free RP Data Report, contact us. It is also a good idea to find out what changes may be happening in your suburb and our project marketing agent or investment consultant and local council can often help here. For example, a major construction next to your property could make it harder to find a tenant at the right price or a planned by-pass may mean traffic will be reduced and this may increase the value of your property quicker than expected.
5. Pick the right type of mortgage to suit you There are many options when it comes to financing your investment property, so get sound advice in this area as it can make a big difference to your financial well-being. It is surprising how many people spend too much time researching mortgages in an attempt to save a few dollars a month, rather than spending that time on researching their local real estate market where much bigger gains can be had.
So it is very important to find the right Finance Broker to help pick the right mortgage that is suitable for your circumstances.