For most Australians, the largest purchases that they make are property-related. Whether a first home or investment property, the thrill of the purchase is always there. Whilst the emotional connections to your home continue to develop every day, the purchase of an investment property can become a distant memory and throw up uncertainty once it simply becomes an investment.
That’s where the quality of the advice you receive is imperative.
What are the big-ticket property investment items that need to be considered and understood:
- Rental Yield: Whilst the 3 bedroom apartment with the northerly aspect on the top floor may have your heart, the head needs to consider that the percentage return on that apartment may be well under that of the other apartments in the building.
- Capital growth: Whilst the capital growth in Australian properties over the past 25 years equates to an annual growth rate of 6.8% for houses and 5.9% for units, this is never linear. You need to consider where in the growth cycle your property is and remember that property is generally a medium to long term investment. There are no guarantees of capital growth at the time of sale.
- Cashflow: The incoming rent on an investment property along with the outgoings need careful review and stress testing; including potential changes to interest rates, rental values and vacancy periods.
- Structure: How you hold a property is vitally important. Not only can different structures such as trusts and self-managed super funds give you different tax outcomes, but they can also help protect the property from risks and ensure that the property stays within the family for years to come.
- Tax advantages: Negative gearing means that you can get a tax reduction for the losses on your property. These are largely driven by interest, depreciation and capital works costs. Often these costs put a strain on the investor’s cash flow, so Nexis can lodge variations to the ATO to get your refund in each pay packet, rather than at the time of lodging your income tax return.
- Completing the circle of trusted advisors: We can introduce you to trusted professionals that we use ourselves for finance, property management, conveyancing and financial advice.
If you are keen to discuss how Nexis can help you to love your property investments, get in touch with our friendly team today.