Property investment is a popular way of planning for a comfortable retirement. Many Australians understand the need to supplement superannuation schemes, especially after recent experiences during the global financial crisis. Although the property market also sees its fair share of ups and downs, long-term trends show that investing in property, whilst not a sure thing, has provided comfort for many Australians in their retirement.
Investors in property benefit from favourable taxation considerations and any rental income received can assist in paying for the finance required to fund the purchase in the first place. At the end of the cycle, the capital gain over a long period of time can be quite substantial and, even after paying a fair share of tax, investors are left with a healthy return which makes their retirement even rosier.
This article will highlight the need to be careful however when choosing investment properties and emphasise the need for astute planning and obtaining professional assistance in developing appropriate strategies.
Before you start on any investment strategy, you need to obtain specialist advice. This adage applies to all forms of investment, not just the stock market. Although you might think you have a good idea of property values and how they may have risen over time, there are other elements you need to consider and only a specialist can give you the right advice and information. In the first place, every area has its own real estate history, this needs to be closely examined to establish positive trends that may be an indication of future growth potential. Looking at the past is helpful, but almost more importantly it is critical to obtain independent 3rd party research on the further growth of property. Also, the property you choose may need repairs or refurbishment to make them unattractive rental possibility and if you do not provide for this contingency in your funding, your investment plans can fall flat before they even start. New properties provide better tax deductibility, less maintenance and your attention. This can be valuable when you have a methodology of acquiring a number of properties and do not want the grief of continual issues. The message here is loud and clear, make sure you do your homework, seek out advice or find a property sourcing service.
Some first-time property investors fall into the trap of listing to their friends and family who have had success in the property market before. They think they can link into the same network and duplicate the results they have seen their friends enjoy. In today’s market, this is a flawed strategy because, even though a real estate agent or mortgage broker might be able to assist you with certain aspects of a particular purchase, you still need to develop an overall strategy that suit your individual circumstances. Areas change, your personal situation is unique and it is critical to ensure you do the calculations on what you can afford on each particular property you consider. Each property will have different cash-flow projections based on rental yield, depreciation, your tax rate and how much deposit you have. It’s wise to know up front what you investment property will cost you before you buy it, not afterwards.
These simply stated points are clear evidence that you need to carefully plan your financial future before starting any property investment strategy.
Direct Property Network (DPN) provides clients with an end-to-end property investment solution from selecting the right property, all the way through to settlement and beyond. We help clients establish affordable and profitable investments by researching and sourcing wholesale property.
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