Tag Archives: property investor

Buying an Investment Property?

Invest In a Unit or House?

 

Why are you exploring the possibilities of buying investment property? In Australia, the reality is the more you invest, the less tax you pay. Ultimately…the less tax you pay, it means you’ve got more money in your pocket to help drive your debt down.

Are you with me? Do you understand what is going on? 95% of what I am going to show you, you already know. The key distinctions about what makes buying investment properties is how you can put the property investments to work in your own life.

So if we apply this to your life, why would you limit yourself to one investment property? When you buy property/real estate today you are buying at a discount in relation to the future as this increase is called capital growth.

These are core structures for financing all of your property investments and wealth creation. In principle, it really doesn’t matter if you buy a house, renovated and sold it, if your investment money comes from business or wherever…

Buying investment property means you get your money working harder for you. The more you positively leverage you investments, the less tax you pay. Less tax…more you can drive your debt down, and more you can drive your debt down the more you can invest!

Why use equity to buy investment property? If you are already a home owner you may not need to provide a deposit to fund the purchase of an investment property because equity is the difference between value of your home vs how much you owe or borrowed from the bank against it

Want to understand what equity is and find out how to access equity in your own home and use it to purchase an investment property? Simpy push the play button and watch this video.

There are several ways to make the most of your existing equity buying an investment property without actually tapping into your savings. Unlocking the equity in your home can be an effective way to assist in purchasing a rental property to help build your wealth.

Buying an investment property…why invest in units is a common question asked by property investors regarding tax depreciation, so why does a unit get more depreciation deductions than a house?

buying an investment property
Are you watching others around you build their property portfolios and wondering how to buy your own investment property?

When investing in units you need to determine depreciation deductions available in a property, factors which affect
calculations include:

(a) Purchase price of the property
(b) Date which construction commenced
(c) Settlement date
(d) Land value
(e) Value of fittings and fixtures within property (where relevant)…

The overall cost to build residential units increases due to the amount of infrastructure involved in walls, services, etc by comparison to the less compact layout of a house or residential property which can make a significant difference to overall tax claim.

Units as investments often contain more fixtures and fittings than a house which means owners of a unit not only can claim items within strata unit (i.e. lights, carpet and dishwashers, etc).

Unit investors are also entitled to claim their share of the common property. Common property has been identified by the Australian Taxation Office (ATO) as areas within a complex or development which are shared between owners.

This includes areas and items such as:

  • Driveways
  • Pool and pool pumps
  • Outdoor furniture
  • Lifts/fire stairways

The following example compares a unit and a house (using same purchase price, construction date and settlement date), there is a difference of $15,000 in depreciation deductions over first five years of ownership.

Australian Taxation Office tax benefits: The ATO’s legislation recognises quantity surveyors as qualified to estimate construction costs for depreciation purposes.

As a building gets older its items wear out and depreciate in value. The ATO allows property owners to claim this depreciation as a tax deduction. Depreciation can be claimed by any property owner which receives income from their property.

Most investors are aware they can claim deductions on building structures of a unit (subject to age) including plant
and equipment items within such as:

  • Blinds
  • Carpets
  • Ovens
  • Range hoods
  • etc…

Many investors are unaware they can claim on common areas as well. Is it worthwhile for investors to consult a professional quantity surveyor to calculate the most accurate and financially returns for the property investor?

Accountants and real estate agents may on occasion estimate depreciation figures, although these professions lack construction cost knowledge and the capability to accurately determine depreciation deductions available in an investment property.

Most importantly the ATO does not recognise their figures in a tax return.

That’s why consulting a quantity surveyor which specialises in depreciation guarantees you…the investor to get the maximum legitimate deductions available.

A site inspection allows the quantity surveyor to establish maximum number of plant and equipment items within the property which includes measurements, photos and notes are taken to enhance the depreciation report.

If an investor is audited by the ATO, their depreciation claim will be supported by evidence documented at the time of inspection.

A quantity surveyor can determine correct proportion a unit owner is entitled to claim for common property based on criteria such as size, position within development (eg. penthouse or ground floor) and even its view based on relevant building plans.

If you decide to engage a quantity surveyor to complete a tax depreciation report on an investment property, any fee associated with the production of that report is 100% tax deductible.

Buying investment property means you would be in a position to pull equity out of your property(s) now and invest again. Why? Because you can…you also understand the process of paying less tax, plus how the chain reaction happens by continuing to invest.

Buying an Investment Property

Property Investing – How To Avoid Devastating Costly Mistakes

Does property investing revolve around buying property or selling  property?

Sometimes a problem can feel too great to overcome which threaten to hold-up or kill a deal. As property investors, $10,000 as a property investment maybe a small mistake in context to total costs involved in buying or selling property with a price-tag of $500K plus.

There’s a way to avoid losing money in your property investing transactions and key is to educate yourself first.

Real estate is by no means risk-free property investing, because so many people ignore basics which ends up being a problem.

Want to avoid the most costly and devastating pitfalls property investors would want to avoid at all costs:

Only fools rush in: A buy-at-all-costs mindset is one of the biggest mistakes a property investor can make.

Not only does it allow emotion to have a free rein, a buyer could be counting the costs for years to come by paying too much.

Property investment should be a calculated decision that combines extensive research, quality advice and a proven product in a popular area where demand exceeds supply.

Not being informed because information is power:  2008 Australian Securities and Investment Corporation report about investors found that only 7% of investors surveyed could correctly state the official interest rate. And that’s only the beginning.

Half of the investors surveyed use media (internet, magazines, newspapers, TV and radio) to identify opportunities. Just 36% of investors follow this up by consulting a professional.

At its simplest, property investment is purely about numbers, not about a cool address for holidays. Yet correct advice is paramount to ensuring numbers work now and long term.

Going it alone: Leading the top three recommendations made by experienced investors in the ASIC report was the advice to deal with reputable, well-known companies (18%).

An equivalent percentage of investors recommended that you do lots of research, and 17% warned that you check what you are investing in.

Interestingly, only 47% of investors had a long-term financial goal or plan, and almost half had only one type of investment. Most felt they were not serious property investors and were saving for their future and/or retirement.

Be guided by experience and a proven formula for results and you can be the winner.

Delaying your decision: There’s no such thing as a good or bad time to buy an investment property, and especially when you’re young.

It should be clear once you have studied the fundamentals and conducted due diligence that it’s only a matter of the figures adding up for you, with a contingency fund factored into the equation.

Not relying o capital growth, the results can be immediate as the average Australian can save between $8000 and $10,0000 on tax every year.

Buying in the wrong areas: The holiday home syndrome is perhaps the most common lapse in judgement.

It’s easy to get carried away with the good life when you’re far from the 9 to 5 lifestyle, but a quick analysis of the usually volatile rise and falls of the local market can soon turn your notion of paradise into a sobering reality.

The Gold Coast property market is a prime example…

Riding high in 2008, the collapse of the global economy has resulted in apartment prices falling up to 40%, with the market only now emerging cautiously from the pain. Look for consistency in price growth, growth prospects and demand.

Likewise, cashing in on a boom area is also likely to end in less-than-favourable results. Unless the reason for the boom, such as a mining project, is deemed to be generational, any short-term gains are sure to be followed by long-term market stagnation.

Borrowing too much only a small fraction of property investors can afford to spend more than $500,000 on an investment, which is why it is recommended to start small.

A recommended option is buying a new house between $300,000 and $450,000 in an area where demand outstrips supply.

What’s the risk of being lumbered with other people’s problems in established homes?

Off-the-plan come with the bonus of stamp duty savings, depreciation benefits and the peace of mind of builder’s warranties.

The biggest bonus is these properties can be positively geared from a loan perspective, allowing the investor a strategy of requiring little or no ongoing payments.

Again, consult a financial adviser and set up a brighter future. Just remember, from little things, big things grow.

No strategic plan: The ASIC report found 65% of investors aged 18-24, 48% of those aged 25-34 and 45% of young couples were unlikely to have a financial plan or long-term goal.

It found the most common triggers to make an investment decision were divorce, inheritance, redundancy and retirement.

Being pro-active can only enhance your long-term prospects.

Creating certainty by meeting a financial planner and putting in place an achievable plan can bring structure to your life.

Being prepared for a pension-free future means you start focusing on the joys of living instead of what you’re missing out on.

Get rich quick: Property is a proven method of providing a sustainable future. But like any investment, the higher the return offered, the higher the risk.

Property is a long-term investment strategy that should be employed for at least 10 years. Anything shorter and it’s unlikely to work as well as it should. The proof is in the pudding.

Since 1900 there has only been 13 years of negative growth in Australian property. This includes the Great Depression, World War I and II, the 1990s “recession we had to have”, and the Global Financial Crisis.

If You’re a New or Savvy Property Investor In Need Of Fresh Ideas and Proven Strategies…This Is For You!

Everyone talks about investing, where to invest, where not to invest, the Warren Buffet secrets to invest, etc. Not everyone talks about under-investing and that can hold you and your investing back even more than bad or risky investments.

Let me be the one to shine light on this phenomenon. Why wouldn’t you get guidance from a proactive property investor who has walked in your footsteps?

The short answer is talk to a property mentor with industry specific skills and experience.

You want to always make sure you get at least 95% probability or greater results because you get more focused and get better results.

Start with a property mentor who helps you handle advanced areas of your investing and your profits breakthrough to the next level at a speed you never thought possible…

Property Investing

How to Find Positive Cash Flow Properties?

Which property investing strategy do you focus on as an investor?

What if you’re starting out or you’re a more experienced property investor wanting to accelerate the growth of your property portfolio? Do you use a positive cashflow property investment strategy? Why positive cash flow properties?

Firstly a positive cashflow property investment strategy is one where the rental income from property exceeds all costs of ownership, including interest, council rates, insurance, property management and any other holding costs.

In other words, positive cash flow properties can actually put money in your pocket each month and as a result is paying you to hold the property. Get enough properties like this and you could replace your income and retire, if that’s your plan?

Positive cash flow properties sound almost too good to be true, right? Many property investors can’t believe positive cash flow deals exist in today’s property market. They believe cash flow property can’t be found as property prices went up faster than rents.

positive cashflow property investment strategy
Why positive cashflow property investment strategy?

In fact, great positive cash flow properties can be found right now. If you understand how to look, what to look for and the secret to choosing the right positive cash flow property in the right area, you can get positive cash flow and capital growth in the same time…

Positive cashflow property investment strategy…are you an investor worried about what’s happening to the value of your properties?

Are you stuck or hitting a financial brick wall with you portfolio and can’t seem to move forward?

Fortunately there is a positive cashflow property investment strategy for making significant money which doesn’t rely on market-driven growth for success, and actually allows you to keep borrowing more to get multiple properties.

Understanding how to find and invest in the right kinds of positive cash flow deals allows you to buy literally dozens of properties, and effectively get paid to hold property regardless of what direction the property market goes in today’s property market.

Because in a flat or falling market, which is the market we are in today, do you want to see real-life current market examples of deals where you can buy properties with rental returns above 10 per cent, delivering substantial positive cash flow?

Property Investors Strategy

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P.S. Would you want a massive instant equity gain? How about buying into a fully rented property, which delivers positive cash flow from day one? What if you can even subdivide the property to add more value…

Positive Cashflow Property Investment Strategy