Getting started in property investment
Saturday, 31 October 2015
Almost two million Australians now own an investment property with the aim of creating long-term wealth through capital growth, generating rental income, and taxation and gearing benefits.
Purchasing an investment property is a major decision that carries a degree of risk like all investments.
If you’re thinking about buying your first investment property, there are some valuable steps you should consider:
- Establish your investment strategy: think about your financial goals and the length of time you will need to invest.
- Familiarise yourself with the financial and tax implications of property investing: know the difference between negative gearing and positive cash flow, and understand all of the expenses involved such as stamp duty, strata fees, council and water rates, and ongoing maintenance costs.
- Know your budget: many investors use equity from their home as a deposit for their investment property, so calculate how much equity you have – and how much you can afford to spend – but always leave yourself a financial buffer zone.
- Do your homework: decide whether a house, unit or apartment best suits your investment strategy, and then start researching and comparing properties on the market.
Choosing a property to invest in is different to choosing a home to live in, so be sure to remain focused on the economic factors of a potential purchase rather than on emotional factors.
You will also need to consider the right loan for your investment property, while hiring a quantity surveyor to develop a depreciation schedule for the property is a smart move that will help your bottom line come tax time.
Always remember to seek professional advice to guide your decision-making and ensure you commence your property portfolio on solid ground.