Do your homework: Research = Results. This is true in all aspects of property investing and leaves you with the assurance that you have done the best that you can to ensure a good return on your investment.
Adding extra features to the property benefits both you and the tenant. Extra features such as air conditioning, ceiling fans, dishwashers, garage remote controls, etc can be used as leverage when it comes time to review the rental amount on your property. Make sure you retain your invoices to get the tax benefits from your purchases.
When seeking a property management agency, remember that the agent that offers the cheapest rate and promises the highest rent may not always be the best choice. Ask for a list of inclusions and services that are included in their management fees. Also request evidence that supports their appraisal and be sure that they are taking your personal circumstances into consideration.
Generally, when looking for an investment property, look for an area that:
- Has consistently achieved strong capital growth
- Has high rental population (for example government sites or universities)
- Has easy access to amenities such as shopping, schools, transport and hospitals.
- Is reasonably close to major centres (city or larger towns if regional areas)
One or more of these factors make the property more attractive to renters (and lenders in terms of securing the loan against the property). Based on the current interest rates and property market, positively geared property investment may also be a possibility.
Lenders generally require a stable employment history, proof of savings and no defaults on credit history but there are exceptions to these rules with different lenders.
Owning a rental property can provide significant tax benefits mainly by the use of Negative Gearing.
While the eventual ultimate aim for most investors is to have a portfolio of positively geared properties, initially it is through negative gearing and the associated tax benefits that investors are able to purchase real estate at minimal cost to themselves. The difference between the amount of rental income from your property and the expenses related to the property are (assuming there is a loss) tax deductible.
There is also provision for non-cash expenses - for example depreciation on items such as light fittings, carpet, building costs, etc, which may increase your available deductions. These non-cash deductions help increase your loss, and consequently increase your tax benefit.
Calculation of depreciable items on your property is very specialised, we recommend that the services of a Quantity Surveyor (QS) should be used to ensure you maximise your depreciation deductions. In order to maximise your tax benefits and minimise your out of pocket costs, it is essential to keep all receipts for tax deductible costs for your property.
Some examples of deductions are as follows:
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It is important to contact your accountant prior to purchasing a property to ensure you setup your investment in the most tax effective way because once the contract is signed there is no going back.
There are many factors to consider when selecting your property and one of them is new or existing.
By the way, the answer here is NEW.
This ensures that you maximise your rent (in the same situation, newer properties tend to rent for higher amounts than older properties), less turnover of tenants (helps your maximise income with less vacant time and less letting fees from your managing agent), maximise your tax advantages (higher depreciation claims) and to reduce the out of pocket costs (reduced/no maintenance) which all helps you to fund the property.
Statistically in Australia, over 70% of property investor households are on combined incomes between $50,000 and $80,000 per annum. Many millionaires become so through investment in real estate.
In plain terms, gearing allows people to borrow money to purchase an income producing property, to claim a tax deduction for many expenses they incur running that income producing property ... including loan interest. Your tax rebates, along with your rental income are used to pay off your loan, with the tiniest in amounts coming out of your own pocket.
The end resultis that the tax man and your tenants will have paid most of your running costs for you and your property will have more than doubled in value, so you can now sell it and earn a tidy profit, or use this system to accumulate multiple properties to use the rental income as part of your retirement portfolio.
Central Apartments is a strategically well located, newly built development of high quality, attractive and functional residential apartments, that will attract the cream of the available tenants, achieve the greatest possible rent and the lowest vacancy possible in this market.
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