Buying an investment property is a big decision, and it’s important that you have the information you need to make the right call. Taking the time to understand the basics of property investment will help you take the right approach to your investment from the outset and get the best return possible. Starting out in property investment can be overwhelming; however, with a solid plan in place from day one, you will have every chance of succeeding in this exciting industry.
Investing in property is typically viewed as one of the safest and most straightforward investment options. However, to ensure that your investment yields the return you are hoping for, you need to approach your investment with the right information. Owning a property will allow you to benefit from capital growth, have the potential to generate real income and offset your interest and expenses to lower your taxable income at the end of the year, saving you money in the process.
Let’s take a look at a few key things you need to know as a newbie to the property investment game.
Property Investor Tax Advantages
For most property investors, the main goal is capital growth. However, cash flow is also crucial in maintaining your property. To ensure that you have adequate cash flow, you must be aware of the different income tax incentives that are available to Australian property investors.
For example, creating a depreciation schedule allows you to claim a variety of expenses related to your investment property such as interest charged on loans, accounting costs and holding costs. Rental expenses such as council rates, advertising, gardening, cleaning, insurance, realtor fees, land taxes and water rates may also be claimed. And, you can also claim for depreciation to the building and fittings over time, in addition to other costs associated with any investment-related loans.
Understand Your Target Market
Property investment, ultimately, is a business proposition, and you need to be sure that you have taken your target audience into account. For property investors, the ‘product’ is the property for rent. When you are selecting an investment property, you need to ensure that your chosen property will meet a need in the market. If you are developing your property into apartments to rent, for example, then spend some time assessing whether one, two or three-bedroom apartments or most in-demand in the area. Understanding what your audience wants, and delivering it, is crucial to your success in the property world, especially starting out.
Secure Solid Financial Footing
Before you begin looking at properties to purchase, you need to go over your budget. When you are beginning your journey into the world of property investment, you need to ensure that you are secure financially. Be sure to plan ahead for emergencies, unforeseen events and a potential increase in interest rates so that you are prepared for whatever might happen in the future. Having a solid financial backing will give you more peace of mind and allow you to push forward with confidence.
Negotiate The Best Deal
When you’re beginning your career as a property investor, it’s important to remember that everything is negotiable. While you might have enough business savvy to know to negotiate on the property’s sale price, you can also negotiate other contract terms. You can strike a deal with the seller on all sorts of things such as the furniture, settlement terms, the deposit, fittings and more. Be clear with your terms and allow for some flexibility so you can come to a deal that will benefit your investment going forward.
Start Your Property Investment Journey On The Right Foot
As with starting any new venture, it’s important to learn as much as you can about what you are embarking on. Understanding all of the benefits and risks associated with property investment will help you to make better decisions moving forward and ensure that you get the best possible return on your property investment