Real estate is an excellent long-term investment. Over the years, it has been the source of returns that match diversified portfolios. Investment in real estate is different compared to investment in stocks. But just like all types of investments, it is advisable to know a few things before jumping in. A carefully planned strategy can offset even surging interest rates. Choosing the right property in times of increasing market prices and rental property shortage will definitely prove rewarding.
- THINK ABOUT THE TYPE OF AREA AND PROPERTY YOU’LL PURCHASE
A property located in a badly chosen area is not a good investment. As an investor, you could have problems in the future should you decide to sell the property. Combining your personal preferences with a little market research could help you avoid future problems.
- LOOK AT PROPERTY INVESTMENT AS A LONG-TERM STRATEGY
Generally speaking, the housing market is almost a decade-long cycle of ups and downs. Lay down specific financial goals and only borrow a comfortable amount. Planning pays off in the long run. You might encounter long-term tenants as well as those that come and go. You must have a stable financial cash flow to cover your mortgage and other expenses while the property is vacant.
- POSITIVE AND NEGATIVE GEARING
Interest and other expense like maintenance and repairs are tax deductible. Negative gearing refers to the event when your expenses and loan repayments cost more than your actual rental income. The excess expenses can be offset using another source of income, which then reduces the payable tax of the other income. On the opposite, positive gearing pertains to the event where the yearly rental property income exceeds the yearly mortgage repayment costs and other expenses. What’s good about positive gearing is the extra income, which is still subject to tax. If you decide to sell the property, take into consideration the capital gains tax you have to pay. Consulting a tax advisor could prove necessary. Manage your investment by keeping track of housing trends, property values and the situation of the home loan market. Information can come from the Real Estate Institute of Australia, companies that perform property research and even articles about real estate properties. You need time to study and familiarise yourself with the home loan market. It could spell the difference between success and failure of your future investments.
- LOOK INTO OTHER SOURCES OF FUNDS
You can ask your friends and family members for help in getting into the market. Pool resources and buy properties together. It doesn’t matter if the earnings aren’t equally spread among everybody or if one is more liable than the others. The important thing is you can comfortably pay the loan. However, one issue that might come up at the end is the unequal ownership rights to the property. This could be sorted out early by consulting a solicitor and creating a contract that designates how much each member of the party would pay and own after the mortgage is settled.
- LOOK FOR A LOAN PACKAGE THAT FITS YOUR NEEDS
The market is abundant with hundreds of options that you can choose from. Compare product features and choose the one that will cater to your needs. Refinancing is always an option. The emergence of better loan products and experienced brokers like Cash Back Mortgage, you will never run out of options.
- SEEK THE HELP OF EXPERTS
It never hurts to get advice from experts. By doing so, you will be able to maximize the potential of your property investment. For example, buyers’ agents are one of go-to guys when it comes to the property market. An accountant or financial adviser on the other hand can help you manage your financial situation and give you advice regarding your investments. After all, your goal is to make the most out of your property investment.
Cash Back Mortgage simplifies the process of buying your First Home.
Call us for your FREE Investment Property Buyers E-book on 1300 640 988
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