What to Consider before Purchasing an Investment Property

| October 22, 2013 | 0 Comments

Investment Property

People consider buying an investment property for many reasons; a nest-egg for the future, to build a property portfolio or to use the equity in their current home. A good investment property can give purchasers financial freedom through property. Look at long term capital growth and consider buying an investment property in an area where demand will exceed supply. When choosing a property, think of rental appeal and what a tenant will want. A good floor plan, close to lifestyle amenities, does it need a spruce up, is rental demand high, public transport, the demographic of the area; these are all things to consider when negotiating a reliable rental return and increasing the rent periodically.

What is your goal

Acknowledging what you hope to achieve through the purchase of an investment property is the first step. Formulate a plan to decide whether your end goal is wealth, financial freedom or an owner of multiple real estate assets.  It is important to understand what the end result of your investment property journey will be.

What type of investment property

It is important to buy the right type of property so you can reap the monetary rewards. Purchase in an area that has a continual high demand for rental properties. Ascertain whether there is a demand for a house with a backyard or is apartment-style accommodation the preferred abode for renters.

Location

In order to gain long-term performance, location is crucial. Lifestyle suburbs close to the CBD and close to all amenities usually perform well.  Once you have chosen the suburb, choose a definitive spot within that suburb.

New or old investment property

Many apartment investors like to buy off-the-plan.  A model of a lustrous new high rise in an inner city area is like a lure to investors. You will have to pay a premium to the developer and may miss out on the capital growth in the first few years. If your desire is to buy an apartment, you could look at well-established apartments in popular areas close to transport and shops. A family friendly house in the suburbs is another option.

How to set up your purchase

Always remember to protect your current assets and take advantage of tax benefits for investment properties. Seek advice on whether to make the purchase in your own name, a trust, a super fund or a company name. This may have an effect on capital gains tax and selling the property in the future.

When you feel investment savvy enough, you can move on to your next investment property.

Homeloans specifically tailored for investment properties are available through lending institutions

Singles, companies or mum and dad investors are all delving into the investment market. Before any purchase, make sure you ask the right people the right questions. Seek the help of real estate agents, a solicitor, an independent property strategist, a finance expert and ask advice from other property investors

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Category: Estate Plan Trusts

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