Investment properties have always been a favorable type of investment among Australian investors. If you are looking to invest through investment properties, here are some top tips to get you started.
Choose the Right Property
Like any investment, you have to evaluate the appropriateness and attractiveness of your asset. The housing market has been historically consistent in Australia, but some suburbs/areas pack much more growth potential than others.
Make sure you do comprehensive research on your list of desirable investment properties, including:
Basic property information (land size, type of title, years built, or any potential concerns in future resale)
Property price competitiveness
Surrounding neighborhood features
Surrounding neighborhood historical housing price growth
Rental market
Current and future government plan for the area
Opportunity for value-adding enhancements (refurbishment, land divisions, rebuilding)
Property market outlook for future resale
Inspect properties in person and order professional inspections on facilities and conditions of the property. Don’t lose big on your property resale just to save on some small expenses from due diligence
Run the Numbers
Run your investment property like a business, and have an organised ‘accounting’ system to evaluate and manage the property’s cash flows. You should prepare some budgeting calculations before buying the property to see how your return changes based on various inputs (purchase house price, rental income, ongoing expenses, mortgage expenses, housing price growth rate, etc.)
Consult Your Accountant
Investment properties are one of the best ways to generate tax concessions on your income. Consult your accountant to see how you can exploit this investment opportunity to reduce your tax liability, including taking advantage of negative gearing.
Consult Your Mortgage Brokers
Your mortgage expense is one of the largest expenses you will face on your investment property, so getting the right mortgage and loan products can significantly reduce mortgage associated costs and boost your returns.
Take advantage of various loan products that is offered:
•Low interest base variable rate mortgage
•Redraw and offset account facilities to reduce interest payment
•P&I repayment to increase property equity accumulation
•Interest-only repayment to optimise cash flows
•Refinancing to take advantage of decreasing interest rates and cash back promotions
•Cash-out or top ups to fund other investments
Consult Moremore Finance and let the professionals tailor the most appropriate borrowing strategy for you.
Choose the Right Property Manager
Managing the rentals of a property can be tedious work, it is probably worth it to choose a real estate property manager to handle these responsibilities. These professionals understand the local rental market better and will help you secure better rental yields with minimal vacancies.
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