Real Estate

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3 Things You Need to Know as a Property Investor

Entering the world of investment property is certainly exciting, but it’s important to get your head around the nitty-gritty. There’s a lot of jargon thrown around, so it’s worth taking the time to understand it. From vacancy rates to capital gains, there are various factors at play. They can influence the success of your property investment, so it’s essential to know what to expect and look out for.

Knowledge is Important

Entering the world of investment property is certainly exciting, but it’s important to get your head around the nitty?-gritty. There’s a lot of jargon thrown around, so it’s worth taking the time to understand it.

From vacancy rates to capital gains, there are various factors at play. They can influence the success of your property investment, so it’s essential to know what to expect and look out for.

Steer Clear of Empty

It’s essential to understand vacancy rates so you can make a sound investment decision.

When you choose where to buy a property, there are a lot of things to think about. One of the arguably most important factors is an area’s vacancy rate.

The higher the vacancy rate, the more properties in the area that are sitting empty without tenants. Of course, there are always going to be some properties that are vacant between tenants, but this should be for as short a time as possible.

An area with a 2 per cent vacancy rate may well be a better place to buy in than a suburb with a 5 per cent vacancy rate. In the first instance, two out of every 100 properties are vacant, but the figure jumps to five in 100 in the latter example.

You should aim for as low a vacancy rate as possible, notes the Australian Securities and Investments Commission. Vacancy rates aren’t just important when it comes to finding tenants. If you buy in an area with a high vacancy rate, you could find it difficult to sell your property in future years.

Get the Money. Honey

In order to invest, you’ll likely need to borrow money from a bank or non-bank lender.

There are various options available to you, from coming up with a deposit to using the equity in your existing properties to enter the investment market.

If you’re borrowing money to invest, this is dubbed gearing. This can be positive or negative, depending on how much income the rental property generates against your ongoing costs.

Your lender can explain the finance options available to you when you’re choosing to invest. We buy houses in West Palm Beach.

The Ups and Downs or Capital Gains

You have to pay capital gains tax (CGT) in Australia, so it’s important to understand this concept if you invest in real estate.

If you choose to sell the property, you’ll have to pay tax on the difference between the cost to purchase the asset and the amount you sold it for, notes the Australian Taxation Office.

You can offset any capital losses against capital gains during the same income year, too. Subject to specific exemptions, CGT is not payable on your family home, but it is on rental properties.

10 Top Tips For Property Investing

There are rich rewards to be reaped from property investment, especially in the current market. Follow these tried and tested tips to help you get the most out of your investment. From doing your homework, to getting pre-approval through to understanding what your future tenants are looking for, these tips will help you start building your property portfolio.

Rich Rewards

There are rich rewards to be reaped from property investment, especially in the current market. Follow these tried and tested tips to help you get the most out of your investment

Do Your Homework

Nothing makes for a better investment platform than solid research and a sound understanding of the property market. Start perusing property magazines, get along to seminars, and keep your ear to the ground for any hot property trends.

Get a Loan Pre-Approval

This is a key way to ensure you won’t miss out on the right property at the right time. A pre-approved home loan is a green light for buying and will also give you a realistic idea of your borrowing capacity.

Do the Rounds

When it comes to becoming a seasoned investor nothing can boost your proficiency more than experience. Visit as many properties as you can before putting cash on the table so you know how to spot a bargain – and a rip off.

Apartment Vs House

Decide whether you want to invest in an apartment or a house. There are pros and cons for both options; what may be a better investment will also depend on the area.

Old Versus New

Once again there are pros and cons for investing in new and established properties, so take the time to think about what will be best for you.

Location Location Location

A golden rule for a solid investment is to choose a property close to amenities: transport, supermarkets, schools and hospitals – the more nearby facilities, the better.

Think Tenants

Carefully consider the type of tenant you want to attract before deciding what and where to buy. So, for example, if you’re looking to attract professional tenants you’ll need to make sure your property appeals to that segment.

Maximize Your Finances

Your investment choice will depend on your own personal finances and financial goals, so speak to us about what might be the best strategy for you; also visit an accountant to learn about tax efficient investing – if you don’t have one we can help point you in the right direction.

Keep Some Cash on Hand

Once you’ve bought your property it’s crucial to maintain a slush fund for general maintenance as well as any surprise repair work that may pop up.

Keep Your Cool

While it may be tempting to snap up a bargain, it pays to take some time to negotiate. Don’t take the sale price without haggling – you’ll be surprised how far some sellers may come down.

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