Buying an investment property is one of Australia’s most popular and talked about investment strategies. It has been a great wealth generator for some but it has also been a nightmare for others.
As with all investments, you should approach a property investment purchase with a clear investment strategy in place.
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Decide if you’re looking for capital growth, income or both.
Your answer to that question should give you the first clue as to what type of property and where you should be looking to purchase. Understanding your investment objective and doing the research to find a property that best fits that goal is critical if you want to increase your chances of having a successful outcome.
Generally investors have one of two goals – capital gain or cash flow. It is possible to achieve both – but you should decide on a primary objective as this is the foundation on which you can build your investment strategy.
Capital gain is the growth in value of the property from the time you purchase the property until the time you sell the property.
It stands to reason that the longer you own the property before you sell it, the greater your chance of high capital growth. If you choose not to sell you can hold onto to it and generate an ongoing rental income. With good rental returns it is not unusual for a properties rental income to exceed all expenditures and be positively geared.
In summary – consider your long term objective and make sure you do your research on a property before you enter into a contract to purchase. Discuss your lending options with your adviser – as important as it is to find the right property you should also have a loan and repayment structure that suits your investment goals.
KEITH MARSHALL | DIRECTOR
AUSTRALIAN MORTGAGE AND FINANCIAL ADVISERS
The information provided in this page is general in nature and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information you should consider the appropriateness of the information with regard to your objectives, financial situation and needs. You should seek independent advice from your financial adviser before making any decisions.
AUSTRALIAN MORTGAGE AND FINANCIAL ADVISERS (AMAFA)
Phone: 07 3378 2056
Fax: 07 3378 2069