Tips to buying your first investment property
Plant & Associates, Certified Practicing Accountants (CPA’s) at Beenleigh and the Gold Coast, help many would be investors dip their toes into the world of property investment.
Property is a sought after investment, given the huge amount of capital gain that can be achieved if the property is bought for the right price and held over a long period of time.
For many years our clients come to us at Plant & Associates for expert advice on property investment, which is critical when it is their first purchase as not all property investment deals will deliver what is promised.
Here, Plant & Associates, share some important information for first time property investors as there is much more to property investment that meets the eye!
Seek professional advice
From the outset it is imperative you speak with an accountant who is well experienced in property investment.
Qualified accountants will be able to guide you on returns on investment, depreciation and any deductions you can make on your investment property, whether that be an existing or newly built property.
They can also advise you what type of structure to purchase the property under whether that be as an individual, as tenants in common if purchasing with another individual, as a company or a trust.
Talk to your lender
It is important to speak with your lender to determine if you are eligible for an investment loan before you make an offer on a property.
You will need to know the maximum amount you can borrow and if you can in fact afford it if the property if it is not tenanted for a period of time and you are solely responsible for coming up with the mortgage payment each week.
Research your market well
Once you have an idea of the price range you can comfortably afford for your first investment property, you need to understand and research the property market well.
Price may determine which suburb you are able to buy in but you still need to know and understand key factors such as rental yields, demographic and amenities.
If the suburb you can afford is not one you are familiar with, it is vital you are well researched before you commit to purchasing a property.
Buy well
Sometimes it is very easy to get carried away with your first property investment but you need to keep a cool head and take the emotion out of it. This is like a business transaction.
Just because you love a house with character doesn’t mean a tenant will. They often want a basic, clean and low maintenance home they can move straight into.
Buy only what you can afford and get the best property you can for your money.
Have it managed
It may be tempting to think you can manage your investment property yourself first time around but it is not recommended.
Tenancy laws can be complex and if you are not well versed in these laws, there could be issues arising from your lack of knowledge.
A good and reputable property manager is well worth their fee to take care of everything from collecting the rent to organising repairs and their fee is tax deductable.
Long term outlook
Property investment can be a great strategy to building wealth for retirement. Property investing needs to have a long term view though. The longer you hold the property the more likely you will realise significant capital gains and perhaps be able to use the gained equity to add to your property portfolio.
Property investment can be a very rewarding experience if you proceed with caution and are well informed.
For expert advice on property investment and to make sure you are claiming the correct deductions on your investment property at tax time, call Plant & Associates on 07 5596 5758.
We have fully qualified accountants at both our Beenleigh or Gold Coast offices readily available who are committed to helping you build your property portfolio.