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McKinley Plowman’s Top Property Investment Tips
We all want to get the most from the things we spend our hard-earned money on. Whether it’s looking good in a designer outfit you just bought; enjoying the expensive steak at a classy restaurant; or enjoying your brand-new car, it’s natural to want to know that our spending is not a mistake. In few places is this more relevant than property investment. For all the hard work and financial input this sort of investment strategy demands, it is so crucial that you do yourself as many favours as possible in the lead up to buying your first investment property and in the time you own a property.
Set up Appropriate Financial Structures
A mistake that some people make when purchasing an investment property is not considering the most appropriate ownership structure. The options available could include your personal name, your partners name, joint names, a superannuation fund, a trust, a company or a combination. When deciding on the most appropriate ownership, it’s important to consider asset protection, short-term goals, long-term goals, income tax, capital gains tax, cash flow and succession planning.
Finance and Security
Property specialists often see a person or couple purchase investment properties all from the same lender, and are therefore allowing the lender to hold most or all of their valuable assets as security. Ideally, different lenders should be engaged to purchase different properties, thus spreading risks across the portfolio more evenly. Another point of consideration is that family homes are often the easiest to sell, which can be a huge burden if circumstances dictate that something must be liquidated. Although borrowing power can be diminished, in order to mitigate risks, borrowing from a variety of lenders is ideal where possible.
Know your financial limits
At times, even the most experienced investors can get a little over-confident. An inaccurate and superficial feeling of certainty about the security of property investment can motivate them to snap up as many properties as they can, without leaving themselves enough room to move if the economic climate or personal circumstances change.
Do your research
Simply being well informed should be the first step in any investment decision. Being aware of all the potential benefits and risks associated with your financial commitments is necessary to promote positive outcomes in the future. While engaging with professionals in property investment and strategy, it is vital that you do your own research and take the initiative to be as well-informed as possible. Even simple things like researching future development in a suburb you’re looking at, checking out the demand for houses in that area, and historical growth data are all useful pieces of information that can form the foundations of a successful investment.
Have a Strategy (or create one as soon as possible)
Financially speaking, you know where you are now, you might know where you want to be in the future, but how do you get there? Filling in the gap between these points is where a solid strategy comes in, and takes into account your current life circumstances, economic climate, income and other expenses; and far too often people jump into the property investment game without taking the time to plan it out. Getting in touch with property investment specialists, like those at McKinley Plowman, will help to visualise the path to your financial goals and outline what needs to be done in order to turn it into a reality.
Understand depreciation & deductibility
First-time property investors are not always aware of potential tax-reducing measures that can really affect the bottom line. As an investor, you are entitled to claim depreciation on plant and equipment (i.e. the items within the home such as ovens, carpets, blinds etc.); and on the building itself if it was built after July 1985. Quantity Surveyors are able to inspect your home, note anything down that is depreciable and provide the foundations for a depreciation schedule. Such a structure has the potential to save you thousands of dollars in tax every year, so it is wise to investigate your options.
Get Support from the Start
Having a team like McKinley Plowman on your side makes every step of the way easier. Our experience in property, accounting, finance and tax means we can help you maximise the benefits of your investment, and ultimately leave you better off in the long run. Give us a call today on 9301 2200 or visit www.mckinleyplowman.com.au.
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