Property investment in Australia continues to be the best way to build wealth for oneself. After all, there is nothing better than property investment that does a better job at securing your financial future. However, some people believe that property investing always delivers positive returns, while this is true for the most part it is far from a straight line. 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. And, the key to effectively managing your property investment lies in the right questions you ask yourself at the right time.
WHAT IS MY OBJECTIVE?
Different property investors will have different properties to invest in based on their financial goals and needs. A property investor needs to know from the start if they are looking for capital growth or an alternate income stream because while it is easy to get one over the other it is a whole new set of challenges to target both.
Those whose cash flow is a little tight may look for a cash-generating property with a higher rental yield, such as an inner-city apartment. If cash flow isn’t an issue, you could shoot for the bigger prize of capital growth. You can do this by selecting a property with a greater land component. Well-chosen houses typically cost more than apartments and generate a lower rental yield, but they show better long-term capital growth.
WHAT DO I NEED TO KNOW ABOUT THE PROPERTY?
While there are those investors who have a keen eye for renovations and will use it in an attempt to give a boost to their capital growth there are also those who will constantly be on the lookout for something less time-consuming.
This is why talking to a Property Strategyst can be a good idea as they can help you identify what type of investor you are and then spot the right investment property for your profile.
Once the correct property has been identified, the checklist starts to see if that particular property fits within Amenities, distance to transport and good education hubs.
Another point to consider is maintenance costs long and short term.
WHAT BENEFITS DO I GET?
If you’re living in the property as an owner-occupier, you’ll enjoy an exemption from capital gains tax when you sell. Plus, you may find it easier to get a mortgage. You might even be able to access the first home owner grant if you are a first home buyer.
If you are buying as an investment, then You may also be able to secure an interest-only loan and claim a range of deductible expenses on investment properties like interest, maintenance costs and rates.
Negative gearing can also help you maximize your tax return. Make sure you make the depreciation deductions you can to maximize the advantage of negative gearing.
WHEN IS THE RIGHT TIME?
A degree of boldness is necessary for successful property investing, but property investors should also be comfortable with the sustainability of their income. Rise and fall in the value of the property is the common footing for all in real estate. While the indicator of a good property is its ability to bounce back at a higher value the indicator of a good property investor is his or her ability to hold it as an asset long term.
At the end of the day, successful property investors are those who are aware of affordability and not just housing affordability but whether their cash flow is able to sustain their investment. Timing the market well can bring forward the day when you start to enjoy a large equity cushion. This brings freedom and flexibility.
Smart property investment means making informed choices. There are many resources available today for property research that can put you in a better position to negotiate. Online services can tell you a property’s sales history and give you a list of similar properties in the area and what they sold for.
