BUYING AN INVESTMENT PROPERTY?

Some things to consider when looking for an investment property

  • BUYING IN THE RIGHT LOCATION  
           Do your research and look at market cycles tested over time to evaluate the market growth for the area you are considering.  Selecting the right area can underwrite your future capital growth.
  • BUY WITH LOGIC NOT EMOTION
           Buying for investment is very different to buying for yourself.  Personal taste often differs from what the market is looking for.  Demand, shortage of a product, infrastructure, rental yields, population growth are things to look at and should influence your decision for investment.  
  • WHAT IS THE TRUE MARKET PRICE
           Most investors use borrowed funds to buy their investment property.  Positive & Negative gearing should be discussed with your financial advisor.  An independant valuation may save you some unnecesary interest over many years.
  • HOW SHOULD I FINANCE THE PURCHASE
           There are many ways to structure your loan so be aware of all your options and consider what is best for you.  Consult your accountant and/or financial advisor.  Ensure you understand clearly any taxation implications, exit fees, early replayment options etc.
  • WHAT OWNERSHIP ENTITY SHOULD I USE
           The entity you choose to purchase your investment is very important.  The ownership of the property determines who gets the tax deduction.  Consideration needs to be given to things like land tax and Capital Gains.  Consult your Financial Advisor as some options would include single name ownership, Partnership, Company, Trusts or Super Funds.
  • SHOULD I BUY FROM A MARKETING GROUP
           If you are looking at a Maketing Group ask for a full disclosure of all fees and commissions to ensure you aren't paying for things you shouldn't and you know where your money will be going.  Use Independant Valuers, Finance Brokers and Solicitors.  Beware of rent guarantees and the reason why they are being offered.  
  • WHAT PRODUCT SHOULD I BUY

           Look at the demand in the area and what your own investment needs are.  Build into a unit purchase your Body Corporate fees, sinking funds etc.  A newer property will genreally have better depreciation deductions than an existing property.  A property in a newer area may not have the same short term capital growth over an existing property.  Ensure you do your own research thoroughly.

  • OBTAIN A DEPRECIATION SCHEDULE
           Once you have purchased your investment propety ensure you obtain a Depreciation Schedule for your accountant to claim your deductions.  These will be spread out over many years and even a much older home will have some deprecation items.