Investings Tips: Top things to know when looking at investing in property.

Why Invest In Property?
People invest in property to create wealth. This is different than buying a home to live in for the next 5, 10 or 20 years; it’s about buying property that gives you a return on your investment.

The main reason people invest in property is that they realize their retirement plans aren't going to support their current standard of living, even though they’ve been contributing to it every day of their working life. On average, to receive half your current annual salary to live on once you retire, you will need to contribute 12% of your income into your retirement plan every year of your working life. If you’ve been working for 40 years and have only been putting aside 9%, you will need to prepare to live on less than half your current salary. To make up for this difference, a lot of people decide to invest in property for a few years to increase the amount of money they can retire on.

What can I expect in retirement?
Today’s retirees are providing a sobering lesson for future generations. Poor retirement planning has cost them their lifestyle. If you want to retire wealthy these days, you usually need to put aside money and built up a nest egg on top of your pension fund. This is where property investment can help.

Isn’t property investment for rich people?
Statistically speaking, more than 70% of property investors currently earn between $35,000 and $40,000 a year. Most millionaires (90%) become wealthy through investment in real estate.

Do I have to have a 20% deposit to get into property investment?
If you have owned your first home for a couple of years, you will have built up a fair amount of equity that you can use as security on your investment property.

The other benefit is that banks will allow most of the additional fees such as establishment fees, solicitor’s fees, stamp duty and such to be rolled into the cost of your loan for your investment property. So it is possible that you can start investing in property now based on your current equity without having to save thousands in a bank account beforehand.

What can I do to make sure my property investments do perform?
Property investment performance refers to how much a property will grow in value at minimum expense. Some issues to look out for include:

• Structuring your loan correctly
• Ensuring the loan is in the right name
• Avoid purchasing high maintenance properties
• Ensure you maximise the amount you can claim in non-cash tax deductions
• Try to use an average rent for that area and minimise vacancy periods
• Don’t pay too much for a property in the first place – you don’t have to love it as your dream home, it’s an investment property

Before looking for investment properties, contact us about any questions you have about the location and type of property most suitable for your situation.

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