What to consider before buying an investment property.
Here’s what you should consider before purchasing an investment property.
It’s important to consider the reasons why you want to buy an investment property.
It could be something you’ve always wanted to do, a strategy to save on tax, a place to relocate to in future, or to rent out to family members.
Whatever the reason, knowing and understanding why you’re buying is the first step to ensuring you’re making a good financial decision.
If property is your first investment, consider whether you’re putting all your eggs in one basket by investing your money in the one asset. After all, if an emergency arises you can’t just sell off the garage to recoup money and selling property can be timely and costly.
We’ve all heard the saying “location, location, location”, and this still rings true.
Where you buy, and in what market, will help determine whether the purchase is profitable and the type of tenants you may attract.
The area you choose needs to see some growth opportunities or increase in value over time to ensure a profit when you sell.
Take time to research the area, rental returns and weigh that up against the outcome that you’re looking for.
As with any investment, there are risks you need to consider:
Buying, managing and selling an investment property can be costly.
It’s important to understand the extras costs involved in purchasing property:
Once you’ve purchased an investment property you’re responsible for a number of costs in addition to mortgage repayments.
Ongoing costs including rates, water bills, insurance, body corporate fees, land tax, maintenance costs and property management fees.
If your property is positively geared you may have to pay tax on your rental income.
When you sell your investment property you’ll have to pay real estate agent fees, advertising costs and legal fees.
You may also have to pay capital gains tax if the property has increased in value.
If you decide that you would like to invest in property, be wary of groups offering to double your money, share financial secrets to make you rich or use high-pressure sales tactics.
These offers are usually too good to be true and have unnecessary high investment risk.
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.
The information in this article has been prepared for general information purposes only and is not intended as legal advice or specific advice to any particular person. Any advice contained in the document is general advice, not intended as legal advice or professional advice and does not take into account any person’s particular circumstances. Before acting on anything based on this advice you should consider its appropriateness to you, having regard to your objectives and needs.