What you need to know.
Property has the potential to generate capital growth (an increase in the value of your asset) as well as rental income. There are also tax advantages associated with negative gearing.
Why investing in property may be the answer
A property investment plan is one that works towards building your wealth and securing your financial freedom. For some, the future may seem a long way off, but the time to act is now because the future waits for no one. The housing market is generally a seven to 10 year cycle: there are always highs, lows and steady patches.
The decisions you make today will determine the lifestyle choices you have in the future.
The following factors should be taken into consideration when purchasing property as an investment:
The likely return – yield & capital growth
Buying and selling costs
Cost to borrow money ie interest rates
How attractive the property will be for likely tenants or future buyers
Do your homework
First you need to work out how much you can borrow. This is where our services will really help you. Make sure you have an accurate and detailed budget that takes into account all expenses associated with purchasing a property including stamp duty, council rates and other fees. Ensure you go to many open inspections and do your research on the internet before purchasing to ensure you have a good indication on property prices in your desired locations. Find out the area’s average rental yields and the service infrastructure in place and planned. Also research the property price growth that has been experienced and what is expected. Invest the time to fully understand the market – it could make a big difference to future investment returns.
Using equity to buy your investment property
Many Australians are now tapping into the equity in their home, allowing them to invest for the future and forge ahead financially.
Tapping into your home equity (or equity from another property), is a great platform for buying an investment property. Say your home is valued at $500,000, you owe $150,000 on your mortgage (thereby giving you equity of $350,000) you may want to invest a portion of the equity into another property.
Buying an investment property through a self managed super fund
Did you know that you can now use your self managed superannuation fund to buy an investment property? You will need to consut your accountant or financial advisor with regards to:
What you can and cannot do in a self managed superannuation fund (SMSF).
Benefits of using a SMSF to buy a property.
Challenges and pitfalls.
Using the correct trust structures.
How to correctly source and set up the finance.
How to buy an investment property through a superannuation fund.
Talk to us about how we can help you structure and build your property portfolio