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When you’re looking at buying an investment property, there’s a few things to consider to make it pay off, big time! We’ve got some handy hints to help all you first time property investors build your property portfolio.

Finance

Your lender can help you with the best way to finance your investment property. There’s a few different options - like using equity in your existing home, get a mortgage and pay interest-only, or even use your superannuation. Have a chat to your lender to find the best option for you.

Tax tips

Negative gearing

This means you’re paying more on your investment property than what you’re receiving. So, if your loan repayment is $1500 per month and your rental income is $1000 per month you’ll be adding $500 to make up the repayments. This means you’re making a ‘loss’. This loss then reduces your taxable income – saving you money at tax time!

Positive gearing

If you’re after an additional income during the year, positively gearing an investment property could be the way to go. Same scenario as above, if your loan repayments are $1500 per month and the rental income you receive is $2000 a month – you’re making an additional $500 on the property each month. This is additional income and you’ll be taxed on it, come June.

Capital gains

If you’re selling your property and have made a capital gain – you’ll pay tax on the profit. Although this tax isn’t charged on the home you live in, just be aware of this if you’re looking at selling your investment property rather than holding on to it.

Property management

If you’re after a low-stress investment, it could pay getting a property manager. A property manager will find tenants, organise the bond, rent, inspections and answer all tenant requests. You’ll still need to organise the repairs – but the property manager will advocate on your behalf. If you want to use a property manager you’ll just pay them a fee which comes out of the rent each week.
If you’re handy and want to save a few dollars, you can manage the property itself. You can build a close relationship with your tenants and have a harmonious investment. You’ll get to have a little more control by attending inspections, setting the rent and seeing if they’re paying each week.

What to get in your investment property:

  • Growth suburb – look at realestate.com.au and find out the vacancy rates/demand in that area
  • Low maintenance
  • Handy features like second bathroom, garage, close to schools/amenities etc.
  • Know rental yield to determine tax gearing
Paper house stacked coins 

Our lending specialists can help find the right way to finance your investment so you can build your property portfolio. Have a chat to us, 24/7.

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The information in this article has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in the document is general advice and does not take into account any person’s particular investment objectives, financial situation or needs. Before acting on anything based on this advice you should consider its appropriateness to you, having regard to your objectives, financial situations and needs. You should obtain and consider the Product Disclosure Statement or terms and conditions relating to the products mentioned, before deciding whether to acquire any products.

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