People invest in property to create wealth!
This is different to buying a home that you will live in for the next 5, 10 or 20 years; it’s about buying property that makes you a return on your investment.
The main reason people invest in property is that they realise their superannuation isn’t going to support their current standard of living… even though they’ve been contributing to it every day of their working lives.
To receive half your current annual salary (on average) to live on once you retire, you will need to contribute 12% of your income into your superannuation fund every year of your working life.
To make up for this difference, a lot of people decide to invest in property to increase the amount of money they can retire on.
As little as 3 years ago only 7% of the population were property investors, now almost 14% have some form of direct investment in property.
Today’s retirees are providing a sobering lesson for future generations.
Poor retirement planning has cost them their lifestyle and if you want to retire comfortably you may need to put aside money and built up a nest egg to “top up” your superannuation and this is where property investment can help.
Isn't property investment for rich people?
Statistically speaking, more than 70% of property investors currently earn between $45,000 and $70,000 a year.
Do I need to have a 20% deposit to get into property investment?
If you have owned your first home for a couple of years, you may have built up a reasonable amount of equity that can be used as security for your investment property purchase.
The other benefit is that banks will allow most of the additional fees such as establishment fees, solicitor’s fees, stamp duty and such to be rolled into the cost of the loan for your investment property…so it is possible that you can start investing in property now based on your current equity without having to save thousands for a deposit and initial costs.
What can I do to make sure my property investments do perform?
Property investment performance refers to how much a property may grow in value while incurring minimal costs to you and some issues to look out for include:
- Structuring your loans correctly
- Ensuring the loan is in the right name
- Avoiding the purchase of high maintenance/expense properties
- Ensuring you maximise the amount you can claim in tax deductions
- Rental strategies to assist in minimising vacancy periods
- The lack of potential for capital growth in some properties
- Not paying too much – you don’t have to love it, it’s an investment property!
What if we can't find a tenant for our investment property?
Vacancy can be the result of two things:
- The amount of rent being asked; or
- The location of the property.
If you can't find a tenant at the advertised rent, you may need to consider lowering the rent until a suitable tenant is found.
Additionally, your property should be in a good location where there is a demand for rental properties.(e.g.close to transport, shops, schools and employment)
What is the rental property market like?
Everyone still needs a roof over their head whether they rent or own!
This trend provides stability and reliability in the rental property market and forms a buffer against substantial down-side in the market place.
Historically, what happens with residential real estate as an investment?
Property value increases with a compound effect and as each year passes there is the potential for growth to occur on top of growth.
Property wealth is slow at first but eventually with well thought out property investments, time, the right information, and patience will see growth in your portfolio.
We've only got about 9 years to retirement, have we "missed the boat"?
Definitely not! No matter what stage of life you’re at, by setting goals now and planning ahead you can prepare yourself for whatever opportunities and obstacles that may present themselves along the way and for most sensible people the greatest fear is that they will live longer than their money.
What about Investment Finance?
Finance options can dramatically change the way you invest in properties and getting your finance strategy right first is just as important as finding the right property, getting the best tax advice and protecting your assets… after all, if you don’t make any money, you won’t have any assets to protect, and there won’t be any tax to save either!
Property investors are not in the business of property, they are in the business of making money and finance strategy is a money-making strategy; how you can safely make the most money while using a minimum of your own money.
Not all mortgage brokers or bank lending managers have been trained to act as finance strategists and a good broker or lending manager shouldn’t just look at the best interest rate for you… they should also look at your potential as an investor and plan ahead for your financing needs.
Here are just a few examples of financial strategies that may be considered:
- Based on the investor’s equity base in relation to their income, the correct information can help you make an educated decision to choose between income based finance and equity based finance;
- Investors understand that the leverage capacity of a property can greatly affect the return on their investment. Correct information assists the investor in working out this critical element by increasing their understanding of the lending criteria that Banks use and deciding appropriately;
- Not all lenders are the same, especially when it comes to their lending attitude towards investors. A good investor will need to know what lenders require and how to work their systems to get the maximum funding;
- For the investor that is building a large property portfolio careful selection in the order of lenders that they use serves to ensure that the investor gets the best possible financing options within their capacity;
Finance Strategies:
We are not finance brokers but we are able to help with your overall property finance strategies by identifying and assisting you to set up the best finance options for your strategies.
We can coordinate and work with your accountant, lawyer, quantity surveyor, finance broker, etc, to ensure that your overall objective is achieved.
Financial progress of any kind requires a sound base from which to work regardless of your experience as an investor and we can design individualised strategies which improve your financial situation today and assist in securing a lasting income for retirement.
We believe that only through a successful partnership can you achieve your goals.
Our commitment to you will be to:
- Support you throughout this process and work to provide the education you need to become an efficient and astute investor.
- Provide you with a plan showing how and when to acquire positively geared cash flow investments and eliminate your debts.
- Assist you to plan for a financially independent retirement using a system which monitors and prepares for future property investments.
- Provide ongoing assistance from committed and professional individuals who have a high degree of expertise.
- Assist in accessing finance and advisors to ensure that your loans are structured tax effectively and with range of services including Property Investment Education and regular monthly newsletters.
We are Property Investment Advisers, not finance brokers or property salespeople and can help you to work on a strategy which involves acquiring property through your own sources while using our support to assess its viability and financial feasibility.
Our service is comprehensive and ensures that all of the necessary details for your investing success are taken care of.
Most of our clients elect to access our full support which provides complete assistance in their endeavor to reach financial independence and if required, we can assist with management of your property portfolio, strategic financial
structuring and planning for the various aspects of your financial life.
"We can, and will, provide the support you require to succeed"
