Plan first. Invest second.
The best property investments are well planned.
Before you do anything, you need to develop a
sound plan for your property
investment that
includes;
- your current financial position
- where you are currently headed
- where you need to get to
- how much you will need
- how much you can borrow
- a cash flow forecast
- a comprehensive property
investment proposal.
Once you have a clear picture of your current
position and what your goals are, you are ready
to start building (or adding to) your investment
property portfolio. To assist you in this process,
McCarthy Group has developed a Lifestyle Planning
Workbook. Please call McCarthy Group should
you need assistance.
Ensure affordability
There are two points to consider here. Firstly,
the investment property needs to be affordable
for you to hold on a monthly basis, particularly
in the first few years where the project could
well be negatively geared, i.e. where you have
to actively support the costs of the property
relative to the overall income and allowances.
This means that after the tenant's rent has
been received, and after the income tax contribution
from the government, you must be able to afford
the balance of the finance charges (largely
mortgage costs) in the early years.
Secondly, the property
investment must be
attractive and affordable to the mainstream
rental market. Typically this means a suburban
home in areas characterised by strong demand.
Such homes are seldom vacant, with almost
continuous occupancy, and if positioned in
suburbs where there is a waiting list and a
backlog of rental homes, the investment pays
off in terms of increases in capital value
and rentals.
So while it might be tempting (and self- indulgent)
to build a McMansion as your investment property,
remember that the more expensive the house,
the more limited the demand. And the lower
the demand, the higher the potential risk in
terms of rental vacancy.
Make sure you research your options
thoroughly and make an informed and objective
decision without letting emotions cloud your
judgment.
Need help with your property investments? Contact
us now
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