5 property commandments for investors to live by
Although there are various strategies which can be implemented to build a property portfolio, there are some factors which are a must. Maximising tax benefits, being wise with purchasing decisions, and choosing a property that is a strong strategic move, will pay dividends in the long-term. We’ve narrowed down five property commandments to follow throughout your investing journey.
Make the most of tax benefits available to you
If your investment property is new or old, an apartment or a house, commercial or residential, there are an abundance of tax breaks available to you. The key is knowing how to maximise these opportunities. Seeking advice on negative gearing, mortgage structures and depreciation will help structure your investment portfolio to it’s full potential.
Invest in assets that require minimal input
There will always be economical and environmental factors that prevent your property from being a set-and-forget investment. But as a long-term strategic purchase, it’s ideal to make decisions that won’t significantly impact your time or cash flow. In addition to purchasing a property that requires little maintenance or upgrades, a property manager will maximise your return, offer up-to-date information on the property market and act as a good intermediary when negotiating rental increases with tenants.
Choose a property that will attract tenants
When purchasing a property, a smart investor will think like a tenant. A property in a good location close to amenities, that is in reasonable condition and structurally sound, offers off-street parking, and away from noisy roads or transport will be desired by the majority of tenants. These key property features will help attract quality applicants, ensuring your property is always tenanted and therefore offering a stable income stream.
Choose the correct portfolio structure
If your aim is to grow your investment property, it’s important to have the correct structure in place from the outset. If your portfolio isn’t structured correctly, it won’t give you adequate asset protection or the ability to significantly improve returns. You could end up paying too much tax or run the risk of diminishing your potential profit.
Land tax, income tax and capital gains tax should be considered when finalising your portfolio objectives or making an investment decision. Furthermore, many investors toss up whether to put purchases in a personal name, business name or a trust. In most cases, trusts offer the highest amount of protection for individuals should they encounter a legal proceeding.
Build a team of professional advisors
The property market is a highly active environment where taxes, laws, and processes can change periodically. Investing in the right team of advisors will save you money in the long-term. Your team of trusted professionals may include an accountant, mortgage broker, financial advisor, valuer, building inspector and, eventually a property manager. Having the right team around you will assist in achieving your objectives while giving you peace of mind that your investments are compliant and generating as much growth and return as possible.
For assistance or advice on your next investment purchase, contact CPS Property today.
