There are often many questions we are asked by people considering Investing in Property. We have provided some solutions to the most common questions that we are asked.
Of course if you want any more information or to discuss your situation feel free to contact us.
How do you select Investment Properties?
At Success In Property we are a part of the NPA Property Group, who are have a national presence. We believe that thorough research is the key to making a sound investment decision. Every property approved by NPA has passed our strict criteria to allow our clients to invest with a high level of confidence.
We have found that the key success factors to safer property investing are investing in properties that provide strong cash flows (rent) together with strong potential capital growth. Therefore clients can be assured that our researchers have ‘ticked off’ these criteria prior to the properties being made available to our clients.
All properties sourced nationally by NPA are sourced through quality developers and builders. We are not a developer and therefore we maintain a high level of independence in the properties we source. The role of our researchers is to continually source suitable property for our client’s using NPA’s strict investment criteria. They liaise and negotiate with developers and builders to ensure secure, and great investment opportunities for clients.
Some of the Key Criteria we follow includes
- Economic and employment growth for the area
- Population growth
- Infrastructure and industry forces
- Supply and demand
- Value for money
- Transport and location to services
What type of properties do you recommend?
The best type of property for you will be the one that moves you towards achieving your financial goals. So that means that all types of properties may be considered.
However we have found that there are some types of properties and locations that make it difficult to to generate the types of returns that we would like to achieve for our clients.
We will discuss the ideal property for you in our meeting with you, once we know your financial goals.
Do I have to have a High Income?
One of the most amazing statistics about Property Investing in Australia is that over 70% of property investors are on incomes between $35,000 and $40,000 per annum. Maybe that explains why over 90% of all millionaires become so through investment in real estate.
“It’s not how much you earn that counts, it’s what you do with what you earn”
A major consideration for anyone considering investing in property is how secure is your income. Now days no income or job is 100% secure and the precautions you take with your investment properties need to be commensurate with the degree of risk you attach to your current income and employment.
A self-employed person should take all the steps such as disability insurance, income-replacement insurance, landlord insurance and possibly mortgage repayment insurance. If you let the prospect of losing your job prevent you from undertaking a loan for a rental property you will never own one.
Simply take all the necessary precautions in case the unexpected happens, and you can get started as well.
Do you recommend Overseas properties?
No. Investing in properties overseas is a huge risk. There has been a lot of talk recently about investing in distressed US properties. They are cheap for a reason, usually the population is declining in these towns as businesses move out. That makes finding tenants pretty difficult. So no matter how cheap you may be able to purchase at, if there is no income there is no return.
There are so many great opportunities in Australia, which are easier to analyse.
When is the Best Time to Invest in Property?
If an investment in direct property is appropriate for your personal circumstances, and you are educated and are able to find value in the right areas for capital growth potential, then yes, now and anytime is a good time to buy quality property as a long term asset.
It depends on the overall market trend, current interest rates and the particular property you are looking at. There are good times to buy property and there are even better times. Likewise there will be times in certain locations when you should not be trying to get it, and other areas should be considered.
Do you recommend Properties in other States?
We have an association with NPA Property Group, which has a National presence of local property experts. Thier role is to identify opportunities in the various locations around Australia.
We know that the property cycle moves at different times in different city/towns. As a consequence the best opportunity at the moment may be interstate or a location in another town in your own state.
So yes we do recommend interstate properties if they are the best options for you.
I’ve heard stories of Tenants destroying properties
Yes we’ve heard these horror stories BUT we believe the key to stress free property management is good tenant selection, firm property management and insurance.
If you (or your property manager) check out your tenants past history, check up on their references and generally interview them, you will usually sort them out fairly quickly.
The next key to success in this area is to carry out regular property inspections as often as permitted by law (or have you manager report to you in depth). If your tenants do not look after your property properly, do not pay the rent on time or cause lots of complaints, it’s time to be firm and move them on.
Just to make sure that you have taken every other precaution, you need to insure the property and recognise that if things go wrong, you can always fall back on your insurance.
At Success In Property we can make some recommendations of approved Property Managers for you.
What name should I purchase a property in?
This is one of the most important questions that needs to be answered. Getting this wrong can have a large negative impact on the outcome that you could achieve. Some of the considerations that will depend on, are how many properties you want to own and your particular family and tax circumstances.
We advise you to speak with your tax specialist to structure your portfolio, minimise tax and pass on your wealth to your loved ones as effectively as possible.
Can I buy property in my SMSF?
Yes. You have always been able to own property in a Self Managed Superannuation Fund. SMSF’s can now directly invest in property without the need to have accumulated the full purchase price. We can enable you to purchase property through a structure that promotes excellent tax efficiency and heightens the power of leverage.
At Success in Property we have a relationship with SuperShift who provide a ‘turn-key’ solution to assist Australian’s in shifting to better super, lower tax and into a much brighter future.
Your SMSF can borrow up to 80% through a special limited non-recourse loan The SuperShift process integrates legal, tax, lending, SMSF advice, conveyancing and insurance, seamlessly managed through one client contact.
If you already have a SMSF then you understand the benefits that you get. If not, the reasons that people want a SMSF is that it can provide you tax advantages and really assist you to set yourself up for retirement.
What is Land Tax?
As you build a portfolio of Investment Properties Land Tax may become an issue for you. Land Tax is a state tax that is applied to the value of the land that you own. It varies from state to state. Some states have an exemption threshold which applies before land tax is levied. Thresholds may be different depending upon whether you buy the properties in your own name or in an entity.
Larger portfolios will generally attract land tax and it is your responsibility to find out if you are liable for land tax.
It is best if you consult your accountant for specific advice regarding your particular circumstances.
A strategy that can help you to avoid paying Land Tax may be to purchase properties in different states.
Where do I get the money to Invest in Property?
Too often, we think of an investment property like our first home. We only see what the interest payment will do to our cash flow.
Your contribution to the interest bill though is after the tenant and the taxman have paid their share, and what’s left may be as little as $50 a week in the first year. Also remember this decreases over time as the rent rises.
If you own your own home or any other piece of real estate, you may have equity in this property that you can use to purchase one or more investment properties.
If you don’t own any real estate and have a well paying job, you may be able to start on your investment portfolio straight away. It may depend on how much you have in savings or what type of loan you can get and the type of property you want to invest in.
So you might be closer to getting started than you think.
Can my investment fall in value?
Most certainly! Anyone who tells you otherwise doesn’t know what they are talking about. Property is no different to other markets that go up and down with supply and demand and the desire (or need) of particular vendors to sell quickly.
The good news is that property is not as volatile as some other markets and even though values may pull back a little for a while they often tend to stabilise rather quickly. The other point here is that if you don’t need to sell at that time, it won’t really affect you.
Here’s another important distinction to be aware of.
The types of properties we advocate are in regions with massive government spending and intrinsic value through build up demand, mining, infrastructure, industry and development. These are the biggest factors in the markets we look at. This is the sector that experiences the smallest impact in an economic downturn.
It’s the top end of the market that gets hit first because tenants scale back their accommodation expenses in a financial squeeze and look for something cheaper. That means that the demand for average properties actually increases!
They may not be as glamorous as some of the higher priced properties but they are certainly more solid and predictable and you can own more average properties for the same investment that you would need at the top end of the market.
What is the benefit of using Success In Property?
We respect that each client’s current financial position and future needs is different.
For this reason, we take the time to get to know your requirements before making any recommendations. Our team then work closely with you throughout the process to ensure they are kept fully informed every step of the way.
To learn more about our Property Investment Process click here
Do I need a Property Manager?
The answer for most people is simply yes. A quality property manager will take all of the headaches out of the property investment process.
Here’s a guide to help you understand what your property manager should do for you. When you employ a professional property manager they should maximise the return on your investment by providing the following services;
- Find prospective tenants
- Prepare the lease documentation
- Organise bond documentation
- Give you up to date advice on rentals
- Administer rent reviews
- Pass on the rent payments to you promptly
- Provide Regular Statements
- Regularly inspect the property
- Handle arrears
- Pay authorised account and statutory charges
We can advise you on great property managers in all areas.
I have an Accountant, do I still then them?
When you are a Property Investor, it is wise to have a team of specialists around you to help you achieve the best results that you can.
So yes we recommend that you use an accountant, but not just any accountant. We would like to see you with someone that understands Property Investment. Someone that can ensure that you gain all of the entitlements that you are allowed.
Your accountant will form an important part of your Investment Property team.
What happens if Interest Rates rise?
Property Investment is generally undertaken as a longer term investment. That means that it is highly likely that Interest Rates will change during the time that you hold the Investment Property. They may go up and they may go down. One thing is for sure, you can’t control what happens to interest rates.
What you can do is ensure that your finance is structured correctly. One thing to consider is Fixed rate loans. This is where we ask the finance experts about the opportunities and consideration is then given to locking in. The major benefit is peace of mind that you know what your loan repayments will be.
Interest rates can be used as a bit of a guide to how the property market is going as well. When Interest rates are rising, we often see property prices rising as well. So there can be a benefit to your portfolio in these situations.
If rates are low you should fix them when setting your finance up so you can protect yourself from rising interest payments. If they drop consider it the cost of an insurance policy and if they rise smile.