Are you thinking about investing in Australian property? Not sure where to start? We’ve answered some of the most common questions that we are asked by our real estate property investors and seminar attendees. If you have a question about property investment that you’d like answered, please let us know.
This is one of the most common questions we’re asked and the answer is that it depends on your investment goals. There are some investors who purchase their dream home as an investment and then rent it out. They have an eye on a future date and are happy for tenants to be paying off their home. But in our experience most investors don’t live in their rental properties at all. Viewing a property as a pure investment, rather than a future home, enables you to make smart business decisions.Back to top
In order to create a sound real estate investment strategy it’s important to plan for possibilities like losing your job, being made redundant or having your hours reduced due to ill health. While we all hope these situations don’t eventuate, it’s important to plan for them just in case.
Losing your job or having a reduction in income doesn’t necessarily spell disaster for your investments. Advanced planning and careful risk assessment at the outset means many of our clients can meet repayments if their income stops or is reduced for a time. We also remind investors to factor in rental returns and tax benefits.
ParkTrent’s EasyPlan Financial Services can assist when planning for possible financial contingencies. We can also put you in touch with insurance specialists who can organise protection in the event of a changing employment situation.Back to top
There are a few things you need to keep in mind regarding interest rates and your investment properties.
It is important to consider interest rates when establishing your property investment strategy. This is something ParkTrent can advise you on.Back to top
A successful investment property strategy involves finding good-quality tenants. By following the ParkTrent plan and purchasing the right property in the right location, you’re well on the way to achieving this.
It’s the job of your property manager to get tenants through the door. In some cases a reduction in rent or including extras like garden maintenance or monthly lawn mowing may be warranted. Your property manager is mindful that your goal is to generate as much income as possible, so they will always act with that in mind.
To be extra covered, some investors budget for a buffer of four vacant weeks a year as a worst-case scenario.Back to top
The great thing about partnering with ParkTrent to manage your investment property is that we take care of all the hard work associated with finding high-quality tenants.
Our property management team assesses applications, conducts the necessary checks into applicants’ renting past, checks and calls references and culls the list. We’ll then present you with the short list of applicants so you can make your decision.Back to top
Absolutely! A lot of people choose to invest in property while they are renting. Some property investors would rather be paying tax-deductible income on their investment property than non-tax deductible interest on their home.
Keep in mind that your financial capacity to invest is subject to a range of factors, including your income from your job and any other investments, your assets and your debts.Back to top
You may be surprised to learn that a deposit isn’t always necessary to secure an investment loan. If you have been paying off a mortgage on your own home for a few years, you’ve probably built up sufficient equity. This will eliminate the need for a cash deposit, making it easier to get a loan for an investment property.
It’s important to note that the structure of your loan is paramount to getting finance for an investment property. So it’s a good idea to speak to an expert first.Back to top
Many self-employed people are eligible for tax concessions depending on their financial situation and business structure.
Self-employed business people need to keep in mind that they have an extra responsibility for planning for their retirement because they don’t have regular employer contributions to a superannuation fund.
Even if the taxation benefits are reduced, it is the combination of rental income, capital appreciation and taxation concessions that make property investment a secure investment option.Back to top
According to property market experts (like George Tharenou, UBS Economist) housing is actually more affordable now than it’s been at any time over the past decade. In fact, the market is starting to show a slow, but steady, rise. The International Monetary Fund (IMF) expects that the Australian economy will outpace all major advanced economies over the coming year.
Unemployment is low and the population is growing. Interest rates are historically low and predicted to fall even further. There is a chronic housing shortage in many markets, meaning tenants are fighting for good properties and prepared to pay high rental prices. There is currently significant infrastructure spending around the country. All these factors combine to mean property prices are good value for the return you’ll receive on your investment.* (April 2015)
Please keep in mind that past performance is not a reliable indicator of future performance.Back to top
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