Moving Ahead - Choosing the Best Investment Property
"Don't wait to buy real estate, buy real estate and wait" T. Harv Eker
The economics are simple when it comes to investing in property, borrow from the bank at a long term average interest rate of 5% p.a. and hope that the property goes up by 10% per year of more (capital growth plus net rental return).
And when it comes to a property strategy, there are many ways to go about it. Do you buy a home to live in or do you follow a 'rentvest' strategy. Both have their pro's and con's.
Some people may value the lifestyle aspect of owning a home as well as benefit from the capital gains tax free status when the home is sold. While others prefer to be more flexible where they live by renting and use their available cash flow to build up a portfolio of investment properties.
Then next is what structure do you use to purchase a property? Personally? In a family trust? Family investment company? Using a self managed super fund?
One that is sorted, identifying the metrics of the property is important, do you go for high passive income, strong capital growth, negatively geared property and so on.
Stress testing to ensure if circumstances change (loss of rent due to poor tenants, or if you lose your job for instance) that you will be able to retain the property and not be forced to sell.
And finally, where are the right places to buy to not overpay and get strong capital growth, while keeping an eye on the outlook for interest rates.
As part of our financial advice to you, we put in place a crystal clear property strategy if this is something you wish to pursue.
