PROPERTY INVESTMENT STRATEGY – HAVE ONE!

Before any property is purchased it is wise to have an overall strategy; an entry strategy, exit strategy, finance strategy. This forces you to stop and have a think about what your goals and needs are and then work out the best way to make it happen. You should review your strategy every two years to ensure your strategy is up to date and that your investment scenario is maximised at all times.

Overall Strategy

Consider what your goals are for the short, medium and long term. Some considerations could be –

Is anyone going to invest with you?  What are the tax implications of your investment direction? Are you more comfortable with negative or positive geared scenarios?  Will you invest personally or in SMSF or both? Can the “Bank of Mum and Dad” help in any way to get started? How does capital gains tax affect my investment? Are you looking to invest for 40 years or 5 years? How much income do I need for retirement? How many properties do you need?  Tip-most people will need to own more than one property in retirement to retire comfortably.

There are literally as many considerations as there are people looking to invest.

Entry Strategy

You will need to decide on which key growth area you wish to look at. This will allow you to decide on what state, region and suburb is the best for your strategy and budget; and why.  We will discuss the pros and cons of the different housing options so that you will be confident when you ask us to source the perfect property for you. We will discuss entry and holding costs so that you are confident in your budgeting. You will have an indication of rental return to assess cashflow.

Exit Strategy

You should consider how long you will invest for. You will understand how Capital Gains Tax will affect your property when it sells. You will have considered the reasons for selling.

Finance Strategy

With your Mortgage Brokers you will have considered what type of loan is best for your strategy. You will be confident that you require a variable or fixed interest loan. You will consider if interest only or a “principal and interest” loan is best. You will have considered how best to use your offset account to minimise interest and maximise your paydown of the loan.

Revision

The property markets never stay stagnant and as property ages there are different cost and taxation considerations. Every two years or so you should ask your accountant to revise your investments to ensure they are meeting your current needs and goals.  This would include rental return, growth, tax position.

 

DISCLAIMER – ANY INFORMATION ABOVE IS GENERAL IN NATURE AND DOES NOT ACCOUNT FOR YOUR PERSONAL FINANCES OR CIRCUMSTANCES. PROFESSIONAL ADVICE SHOULD BE SOUGHT FROM AN INDEPENDENT TAXATION OR FINANCIAL ADVISOR.  PANVEST PROPERTY ARE NOT TAXATION OR FINANCIAL ADVISORS, BUT CAN REFER YOU TO INDEPENDENT TAXATION & FINANCIAL ADVISORS.

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    Do you have $85K in Cash &/Or Equity?

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    Having at least $85K in Cash &/or Equity allows you to purchase property from approx. $500k, assuming a 10% deposit, stamp duty, LMI, legals etc.

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