How to get started in property investment
Did you know that less than 6% of Australians own an investment property, even though property is a national past-time.
It’s not surprising. A lot of people get overwhelmed by the process and quit before they even get started. But property investment doesn’t have to be stressful.
To help you begin your journey, here’s five steps to starting a successful property portfolio.
1. Define your financial goals
The first step is to understand your financial goals and the reasons you’re looking to invest in property. Do you want to use property as a retirement savings option, earn an income from rent in the near future, or sell down the track and benefit from capital gains?
Being clear about what you want to achieve and the timeframe around these goals will help you make informed decisions around what property to buy and how you should structure your investment home loan.
2. Work out how much you can afford
The cost of owning an investment property can be very different to owning your own home, so it’s important to understand how much you can afford before you buy. You’ll need to consider repayments on your investment home loan (for times where rent doesn’t cover the mortgage), repairs and maintenance, advertising for tenants and more.
3. Access your existing equity
If you already own your own home, you may be able to access the equity you have in your home to use as a deposit for an investment property. Finding out how much equity you have can help you decide how much you want to spend on your investment property.
4. Understand gearing and taxation
Borrowing to invest in property offers a range of potential tax benefits, including expenses associated with the property and interest paid on your investment home loan. If your expenses are greater than your income, you may be able to offset these losses against other income as a tax deduction — known as negative gearing. Understanding how gearing and taxation works can help reduce your tax and grow your wealth.
5. Property Investment Seminars
Education is key to your success as a property investor, so it would be useful to attend some property investment seminars and courses to gain an understanding of the basics of property investing. Note that not all seminars are created equal, however: do your research and only sign up for educational courses and programs with repeatable organisations that are in the business of helping you succeed as a property investor.
Successful Ways offer adult education seminars for First Home Buyers and Property Investors.
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