[ARE YOU CONSIDERING PURCHASING AN INVESTMENT PROPERTY?]
Buying investment property can be a smart and effective way to enjoy tax advantages and generate rental income. It’s also a potential means to fund your retirement via a self-managed super fund (SMSF).
Property investment is a proven strategy for allowing the average Australian to build their wealth over time, but surprisingly, less than 6% of Australians own an investment property. Anyone can buy an investment property, but before your purchase an investment, make sure you consider the following questions.
[WHERE IS THE INVESTMENT PROPERTY LOCATED?]
Look for investment properties that are in areas of high demand, but low supply. Choose a property that is near the CBD and public transport, shopping centres, schools and childcare facilities, and other services and amenities. Areas that have a high rate of owner-occupiers, a high income demographic, and are close to expensive, exclusive suburbs are usually the wisest choices. Together, these factors will help to ensure there is ongoing market demand for your property, which in turn should result in higher rent and occupancy levels for you; not to mention greater success on resale.
[WHAT IS THE RENTAL POTENTIAL?]
If you wouldn’t want to live in your apartment, it’s unlikely to appeal to prospective tenants either. That means it’s important to ensure that, in addition to selecting a property in a great location, you choose an investment property that has:
| Plenty of natural light and good ventilation
| Spacious and adequately sized rooms and a balcony that can be furnished (open-plan living is always a good idea)
| Quality kitchens and bathrooms with superior fittings
| Secure car parks and lifts
| Lots of storage space
| Air-conditioning and fans
| Quality fixtures, fittings, and finishes
| High speed internet connections, optional cable TV, and security systems
[HOW EXPENSIVE ARE THE ONGOING FEES?]
When buying investment property, always consider the ongoing fees. Avoid properties with high Body Corp fees. To ensure lower fees, choose a boutique property (avoid high rises) without a pool or gym or other expensive and high-maintenance services. Such services rarely improve your rental return, and are also rarely used. By choosing boutique, well located and designed apartments without these extras, you will be able to save money over the long-term.
[ARE THERE ANY TAX BENEFITS?]
Talk to your accountant or financial planner to learn about any tax benefits you will be eligible for. There can be tax benefits for real estate because of the costs inherent in maintaining, replacing, or repairing the building, fixtures and fittings. Always engage a professional to calculate any potential tax depreciation as well, as this can mean more money in your pocket at tax time.
[IS THERE LONG-TERM CAPITAL GROWTH POTENTIAL?]
Capital cities are a great place to buy, as they have an unequalled track record for consistent, high, long-term capital growth. Over the past twenty-five years, the average value for properties in all Australia’s capital cities has doubled every 8-10 years. Particularly consider the highly desirable city fringe locations, in the most affluent suburbs where supply is constrained and high rise density generally doesn’t exist.
[THE BEST WAY TO BUY]
There are many potential tax and other financial benefits to buying an investment property. It’s important to decide whether you should purchase a property in your own name to be used as a deduction off your taxable income, or whether you want to buy the property in a trust or SMSF, where you can benefit from having your employer contributions pay off part of your investment for you, with low to no capital gains tax. Never make these decisions alone, however. Speak with your accountant or financial adviser so you can enjoy the benefits of professional advice tailored to your personal situation.
Regardless of whether you buy investment properties in your own name or in an SMSF, we encourage that you always buy directly from a reputable developer. Buying from the developer helps cut out any “middle man”, potentially saving you money. You will also be able to look at examples of a developer’s past projects and their previous track record, so that you can choose a developer that provides the perfect fit for you.
[YOUR INVESTMENT JOURNEY]
Are you ready to embark on your investment journey? Give us a call today – (07) 3171 2270, or register your interest for property opportunities with Mosaic online. We look forward to helping you.