Investing in a Warrnambool property can offer all sorts of benefits – additional income, capital growth, tax deductions… the list goes on.
With spring now in full-swing and COVID restrictions on the cusp of lifting (making inspections and auctions easier to attend), you might be considering purchasing an investment property.
If this is you, we have put together a simple guide, that might help get you started… or at least thinking about getting started.
Step 1: Formulate an investment strategy
Work out what you want to achieve by investing in property, and how you’re going to achieve that end goal.
For example, consider whether you want to:
- Buy in an area that is showing strong capital growth potential – so you can hold on to the property as the value rises
- Negatively gear the property. This is when the expenses associated with owning the property are greater than the rental return, which means you can claim the losses against your tax liability
- Positively gear the property. This is when the rental return covers the expenses and provides a surplus cashflow
- Renovate the property to potentially add value, increase the rental income, then hold on to it
- Flip the property. This is about giving a ‘renovator’s delight’ a facelift, with the intention to re-sell for profit down the track
- Buy off the plan
Each approach comes with its own pros and cons – and tax implications. So be sure you speak with one of our Accountants or Financial Planners who can help you determine which approach best-suits your situation and future plans.
Step 2: Set your budget
Before you start browsing the real estate websites, you really need to have a good grasp on what you can afford.
It’s not just about the ticket price, either. When you are setting your budget, you also need to factor in:
Initial costs
- Deposit
- Loan establishment fees
- Lenders’ mortgage insurance (if you have less than 20% deposit)
- Stamp duty (calculators are available here)
- Conveyancing and legal fees
- Building and pest inspection reports
- Quantity Surveying fees – to create your depreciation schedule for the fixtures in the property, so you can maximise your tax deductions (after purchase)
Ongoing costs
- Rates/government taxes
- Insurance
- Mortgage repayments
- Body corporate fees
- Utilities not paid by the tenant
- Property management fees
- Repairs and maintenance costs
Step 3: Do your research
The key to buying the right investment property is to spend plenty of time researching.
You’ll want to consider the capital growth potential (the growth in the property’s value) and rental yield (the income the property will generate from the tenants).
These factors are driven by supply and demand, so try to find a property that will be in high demand by tenants and future potential buyers, that has amenities close by.
Speak to us about our complimentary property market reports – these have plenty of useful information that will help with your research – or even give you an idea of other areas and opportunities to consider.
Step 4: Get a building and pest inspection done
Trust us when we say building and pest inspections are worth the money. The last thing you want is to discover your investment has a structural issue or termites once it’s all yours. If you aren’t sure who to engage, we can help; we work with a lot of different contractors and can help find one that’s effective and reliable.
Step 5: Finalise your finance
This step is straight forward – that’s our task, to find you the right loan for what you want to achieve.
Ready to get started?
We’re here to provide expert guidance about investment loans and structuring your finance. Talk to us today!
