For generations, the preferred choice of investment for many Australians has been residential property – real estate. People often feel more comfortable with the tangible nature of a ‘bricks and mortar’ investment rather than alternatives such as shares or bonds. Once you’ve bought your own home, a property investment is often the next logical step. As the value of the family home increases and some equity is gained, the start of what is a good investment becomes apparent. In fact, a good portion of the average Australians’ net wealth is found in the family home. Aiming to replicate this solid investment is a ‘no brainer’.
Property tends to be a more stable and predictable investment compared with other options, not having the same big ups and down you might experience on the stock market for instance. It means you can sleep at night!
There are several reasons people choose to invest in residential property, as it can:
• generate wealth
• reduce tax (negative gearing)
• boosts retirement income/superannuation
• helps to set up their kids
• diversify an investment portfolio (shares/super).
You might be getting close, or perhaps you’ve decided you’d like to invest in a property. What’s next?
Here are my four simple steps to help you get going:
1. Research and get advice
Invest in yourself. Get hold of books, magazines, read blogs/newsletters and perhaps attend a seminar on property investment. Think about it as if you’re developing a toolbox of knowledge, ready to build that first investment property. This will not only help to answer many of your questions, but it will help you ask the right questions of your solicitor, bank or property advisor. Getting professional financial advice is also a good idea. A trained professional can help you look at the big picture, look at your financial goals and can often spot the financial ‘blind spots’ we all tend to develop.
2. Get the right loan
Most people use a loan to invest in property, either by necessity or by choice due to the tax advantages associated with negative gearing and leveraging returns. Talking to your existing bank is a good place to start but don’t forget to shop around to get the best overall package (not just the best rate). Talking to a lender/broker experienced in property investment will also help you set up the loan in the best possible way to work for you—not just now but into the future.
3. Choose a property investment type that suits you
Renovate and rent, renovate and sell, long-term hold, Defence Housing Australia (DHA), subdivision, development etc. There are lots of choices. But which one? Do you have the skills and inclination to complete a major renovation or do you think you’d be more suited to a ‘set and forget’ type investment? Picking the right type of property investment that matches your skills, personality and available time is very important. The last thing you’ll want if you’re a time-poor person is to be stuck with a time-consuming and complex renovation. Picking the right type of investment that you can successfully see through to the end will mean a better overall outcome and a happier and more sane you!
4. Get started
It’s now time to act! Do something today that helps you towards your goal of owning that property investment. Even if it’s a small step, do it! Oftentimes, taking the first step is the hardest, but as we learn and develop our toolbox of knowledge, talk to knowledgeable professionals and start to narrow down your options, the steps get easier and easier. Before you know it you’ll be researching your second property investment!
Feel free to get in touch for a chat about how we can help you with your first/next investment. Drop me a line at email@example.com or call 0421 040 082.