Get into the Property Market quicker by Investing in Rentals now
Buying just any property to rent out can be a hit and miss affair. You need to be well informed and have a targeted approach as to what you should buy.
You need to research all the variables thoroughly.
Most people who buy an investment property buy within 7kms of where they live. That is not a high recommendation because obviously they all can’t be right about the best place to invest. It’s not just a matter of investing in an area you are familiar with but where your dollars will get the best return.
The fact is that most people buy where they feel most comfortable or in the areas they know best but if you want to take property analysis to the next level then you need to look outside of these narrow constraints.
What should you buy?
- Established home on a large block
- Any home with a good rent return
- City apartment for international students
- Quality home within 10km of the CBD
- Outer suburb allotment with potential for future subdivision
- Inner suburb allotment with potential to knock down and rebuild?
There are so many variables; so what is the right and wrong in all of this?
If you want to see a general summary to investments have a look at our;
To determine what investment is best for you it is important to understand what your goals are. They will be determined by what sort of property you should buy as characterised by the 4 categories below;
- Quality new or near new home with higher purchase price with potential for capital growth and positive or near positive rent return
- Older home with lower purchase price potential for capital growth and negative rent return.
- Older home with low purchase price with some potential for capital growth and highly negative rent return but some possibility of improving the property to increase rent and tax depreciation claim.
- Old home with higher purchase price on a large block with highly negative rent return but potential for subdivision and future development.
Of all these 4 categories only Option 1: will give an immediate low cost, neutral or slightly positive rent return. All of the others will cost the owner money each year until the full potential of the property will be realised either by development, subdivision or renovation.
So if we analyse Option 1. we need to explore the full potential of buying a new or as new property.
The benefit of this type of property is;
- Being in such good condition there will only be a small amount of maintenance and most of that would be paid for by the builders warranty or product warranty of the fixtures or fittings that might fail.
- An owner’s tax will be minimised by a claim for depreciation of the buildings, fixtures and fittings because they are so new.
- Any property in this condition will be highly sort after and so will attract the best tenants and highest rent.
- Once set up a tenancy here should be almost, ‘Set and forget’, with little or no ongoing upkeep and maintenance for the first few years.
This is the ultimate no fuss investment property for those who want the minimum of problems with maximum profit. Purchased for around $450,000 in a good suburb in Adelaide with a projection of future growth it should also sell for more especially if it is maintained to the same standard.
As many first home buyers are quickly realising that home ownership is becoming an impossible dream, especially in the eastern states, they should consider that here is a solution …
If they were to purchase the right house in the right suburb that delivers the right rent and when combined with all the government incentives and tax benefits available they could become home owners for what might be as little as $20 per week or it may even be cash flow positive. As a rental any good bank should take into account the extra income from rent when assessing the affordability of their loan and this should make all the difference and tip the scales in favour of them becoming home owners and landlords.
Bought in the right suburb with anticipated future capital growth their equity should increase every year so that one day they will be able to sell this investment property with enough profit to buy a home to live in themselves. Or they could continue to buy more properties using their increased borrowing capacity and positive gearing.
We can assist you to investigate the multitude of variables involved and all the ways you can maximise your dollar return.
You might like to attend one of our Property Investment Seminars or just ring to find out more on (08) 8186 2777