A real estate agent is more than just a “sales person.” They act on your behalf as your agent, providing you with advice and guidance and doing a job – helping you to buy or sell a home. Due to the fast changing market, the data on available listings is not 100% accurate. There are times when you need the most current information about what has been sold or is for sale, and the only way to get that is with an agent.
Smart property investment can offer a steady ongoing income and/or the potential for capital growth. Property investment is traditionally considered a good long-term investment strategy.
If you have equity in an existing property, for example your family home or another investment property, you may be able to use this to increase how much you can borrow and more quickly build a substantial property portfolio. Ultimately it will depend on your personal financial situation and investment goals.
The property market is cyclical in nature, meaning that it experiences periods of growth, often followed by falls in property prices or at least periods of flat prices. Property is generally considered a long term investment; the shorter your investment timeframe, the greater the risk you are exposed to. If you are borrowing money, it is good planning to budget for an increase in interest rates of up to 3 per cent.
There are other costs in addition to the purchase price of a property. These may include: building and pest inspections, survey report, strata inspection report, loan application fee, valuation fee, mortgage registration fee, stamp duty, legal fees, disbursements, lenders mortgage insurance, and sundry fees like refinancing or switching fees. Speak to us for a full overview of the costs that will apply to your situation.
A property is negatively geared when the cost of owning it – interest on any loans, bank charges, real estate agent costs, maintenance, repairs and capital depreciation – exceeds the rental income it produces. You may be able to reduce your personal taxation liability by using this loss to reduce your taxable income. Long term capital growth of the property is necessary to offset these short term losses. Always consult your accountant or financial advisor before launching into a negative gearing investment strategy.
Interest only loans suit investors who focus on achieving capital growth in the short to medium term, and often go hand-in-hand with negative gearing. These types of loans will have lower repayments than a principal and interest loan and may be available as a fixed rate or a variable rate product. Interest only loans may work to reduce your total outgoings, with any savings potentially available to be put towards paying down any personal debt.
Flexibility can include the ability to make extra repayments, to redraw on your loan, split your loan between a fixed and variable interest rate or even transfer the loan between properties. Some options may be standard and some may cost you money, so you need to be clear about your investment strategy before choosing an investment loan and always compare loans with similar features when looking for the right loan for your situation. Beware of choosing a loan with costly features you are unlikely to use.
When selling an asset like an investment property, any profit on the sale of the asset may be subject to capital gains tax. Always talk to your accountant or financial advisor about your specific situation.