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6 Fundamentals of Property Investing

August 21, 2012

Along with shares, property is one of the most widely used vehicles for investment. Tens of thousands of properties are bought and sold in Australia every year, many of these for investment purposes. While no single strategy is right for every investor, these six fundamentals are can be adapted to enhance any property investment strategy.

1. Obtain Professional Advice

Any type of property investment strategy requires some level of input from professionals, whether it’s a conveyancer, accountant, or agent. An agent can assist with sourcing appropriate properties, and your accountant will provide essential advice on tax strategies and purchase structures. A conveyancing professional can assist you throughout the entire process, arrange important checks and inspections, and ensure that you comply with all the legal requirements for a valid contract and sale.

2. Conduct Necessary Research and Checks

Conducting in-depth research is the best way to obtain an accurate valuation, and to ensure that you’re getting what you pay for. Property is best viewed as a long term investment and investors should be willing to take plenty of time to research the property. Some of the things to look at may include:

  •  Capital growth in local area
  •  Historical and current rental yields
  •  Tenancy history
  •  Local amenities and infrastructure
  •  Local development projects that can impact on the value
  •  Checks, such as strata scheme, building inspection, and pest and termite inspection

3. Make a Business Decision

It’s often said that property investment should be a business and not an emotional decision. Unlike shares, our connection with property can form in a number of different ways and investors can be tempted to make an emotional decision, especially when choosing residential property. Setting out a written valuation report is one way to view any prospective investment more objectively.

4. Co-ordinate Your Financing, Tax, and Purchase Strategies

The right loan can enhance your returns and help you reach your investment goals more quickly. You may wish to pay off your loan more quickly or plan your investment strategy according to a low interest rate loan.

Similarly, choosing right purchase structure and proactively working out a tax strategy can help investors protect their assets, minimise tax liabilities, and take advantage of tax concessions.
Accounting for and co-ordinating these factors from the very start will help you avoid costly pitfalls and grow your portfolio more quickly.

5. Leverage the Property Cycle

In most cases, leveraging the property cycle is the safest approaches to investing in property. Historical data for Australia’s property market confirms that property does tend to double in value once every seven to 10 years. Structuring your loans, purchase structure, and tax strategy to facilitate buying property with a view to holding it for the longer term is probably one of the few foolproof ways to property riches.

6. Tenants and Property Maintenance

As the typical investor is likely to hold their property for the longer term, property management and maintenance are also vital elements for successful property investing. Many investors choose to engage the services of a property manager who can manage tenants and any property issues that can arise from time to time.

We at Conveyancing Solutions provide excellent service to our every customer. Please call us @ (02) 9387 2111 or (02) 9572 7400 to get a quote!

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