How to build a Mount Gambier Property Portfolio
Getting started in property investing in the Mount Gambier region is an exciting prospect – that may be easier than you think.
Property investment can be an effective way to build your wealth and achieve your long-term financial goals.
If a property portfolio is part of how you want to build your wealth, we’ve put together some tips that we think could help you work towards building your property portfolio.
Set your goals… then work backwards!
Not sure where to start? A simple tip is to work out what your ultimate goal is… and then work back from there.
If you know what you want to achieve in the long run, you can strategise (with our help, of course) about how you’ll reach that ultimate outcome.
Perhaps you want a passive income of $2,000 a week steadily flowing into your bank account? You’d like to be able to live off an annual amount when you retire.
Once you are clear on the end game, you can then determine what you will need to do achieve your goals. We can help you with this. For example, we can devise how many properties you will need to own, at what price point you’ll need to purchase them at, and what rental income you will need to attract.
Define your investment strategy
There are all sorts of strategies when it comes to property investment. It’s best to talk to your Financial Planner or Accountant about the right strategy for you, based on your financial circumstances and aspirations.
Fortunately, we have both on-hand at Sinclair Wilson to ensure that building a strategy like this runs smoothly. Ask us to introduce you to our colleagues!
Rental yield vs capital growth
For some investors, rental yield is the primary goal.
There are two types of rental yield:
- Gross rental yield is your annual rental income divided by the property value, multiplied by 100.
- Net rental yield is your total rental income, less any expenses incurred in owning the property, expressed as a percentage of the purchase price.
For other investors, capital growth is the ultimate goal.
It can be tricky to achieve both solid capital growth and a high rental yield, so often investors have one or the other in mind.
One investment strategy is to aim for a portfolio with certain properties that deliver high rental yields and some that offer strong capital returns.
Positive gearing vs negative gearing explained
Positive gearing is when the gross rental income is greater than the costs associated with owning a property. In other words, the property generates a positive cash flow.
Negative gearing is when the rental income is less than your outgoings. One of the drawcards of negative gearing is that you can offset losses against your salary, thereby reducing your total taxable income and tax payable.
Again, it’s recommended to speak to a professional about whether positive versus negative gearing is right for you. If you’re not sure, please let us know, and we will make sure we introduce you to one of our experts to help you work it out.
Get your finances in order
Once you’ve defined your goals and investment strategy, speak to us about how to fund your property investment.
You may be able to use the equity in your home for the purchase. Equity is the difference between the current market value of your property and how much you owe the bank. If you’d like to explore how much equity you have to work with, you can talk to us.
We can also help you create a budget for all the costs you’re likely to incur as you build your property portfolio, such as council rates, management fees and insurances.
Start the property hunt
The final step is to start looking for the right investment property in the right location.
Your investment strategy and what you’re trying to achieve will ultimately impact what and where you buy.
Generally speaking, if capital growth is your motivator, consider to go for suburbs that appeal to a large demographic – ones that have plenty of amenities like schools, public transport and shopping precincts.
We have a large amount of information that can – and does – help our clients consider everything from rental yields to comparative sales. Get in touch to find out more about what insights we can share.
A word about diversification
Diversification is the practice of spreading your investments around to mitigate risk of loss.
In terms of real estate, that might mean investing in different geographical markets, investment strategies and property types (residential and commercial, for example).
As you build out your property portfolio, it’s a good idea to keep this in mind.
Get in touch
With the right support, you too can enjoy the benefits of property investing. The sooner you start the better, so speak to us today.
Your full financial situation would need to be reviewed prior to acceptance of any offer or product.