Tag Archives: investment property advice

Tips for Buying Investment Properties

There is a lot of money to be made in the property world. Property is a great investment for many reasons and all it really comes down to is a lot of good research, planning and smart finances.

There are a few things to consider with property investment: your strategy, the type of property, the location and the timing.

First off, let’s talk about strategy. How do you actually plan on making money from your investment? Are you aiming to get high capital growth or high rental yields? Or maybe you are more interested in redeveloping your property to make your returns?

Once you figure out where you want to make your money you can start looking at the properties and areas that will work for you. Of course this is the part where you really have to do your research. If, for example, you want a high capital growth then you will want to try and find an area that is yet to “boom”.  If you are going to make money from doing renovations then be sure not to overcapitalize and plan out a strict budget. There is nothing worse than spending a whole heap of money on renovations and not getting it all back.

Your aim is to find a property that will have the smallest amount of risk for you but the greatest amount of reward at the end (unfortunately though it’s often the big risks that get the big rewards).  For example it may seem genius to buy in a speculated mining town but this may end up falling through so there is a big risk. If you are starting out in property investment you are probably better off with smaller risks to start off with.

If you don’t know much about property investment then it will be a big help to you if you have mentors to help you along the way and good financial planners to give you advice. There are some good financial tips at mortgagechoice.com.au to give you a bit of info to start with.

Earning money from investment properties will probably seem complicated at first but with a bit of help and once you know how everything works you’ll be building up a portfolio in no time.

Obviously having a good working knowledge of the area you are looking into always helps too, so if you are looking into areas around Fairfield, get in touch with us and we will be happy to share our local knowledge with you.

What deductions can you make from your investment property?

It’s tax time again and that means that it’s time to start thinking about your finances and what deductions you can make on your tax.

If you own an investment property then there are a number of tax deductions that can be made, and it’s very important that you claim on all of the deductions that are applicable to you so that you maximise the earnings from your investment property.

If you have incurred expenses over the last financial year from any of the following categories, then you may be able to claim these expenses back when you submit your tax:

  • Accounting Fees
  • Advertising
  • Agent Fees & Commissions
  • Bad Debts
  • Boarder’s Costs
  • Body Corporate Fees
  • Borrowing Expenses
  • Building & Structural Improvements
  • Cleaning
  • Commissions & Management Fees
  • Gas
  • Insurance
  • Interest
  • Land Tax
  • Lease Incentives
  • Legal Fees not associated with eviction
  • Mortgage Insurance
  • Municipal Rates & Taxes
  • Office Supplies
  • Postage
  • Depreciation
  • Electricity & Connection Costs
  • Bank Charges
  • Gardening
  • Water
  • Repairs excluding initial repairs
  • Security
  • Solicitor Disbursements
  • Telephone
  • Travel

The above is a non-exhaustive list, but as you can see there are a number of items from which you can make tax deductions if you have an investment property.

Tax laws change every year though, so it’s important that you get the most up to date advice on your investment property, before submitting your tax. You can check www.ato.gov.au for more information, but it may also be a good idea to talk to a tax professional.

Should You Furnish Your Investment Property?

A common question we get asked by investment property owners is whether or not it is a good idea to furnish their rental property.

Furnishing your rental property does seem to offer some benefits – you can charge higher rent and you may be able to get extra depreciation allowances. But whether or not furnishing is a good idea depends on the type of property you have – sometimes furnishing a rental property can be more trouble than it’s worth.

First of all adding furniture can actually put-off some tenants. When there is furniture in a rental property, the furniture is getting judged just as much as the property itself. If the television isn’t big enough or the furniture isn’t new or trendy enough, it can turn potential tenants away.

With a furnished property you may need to keep updating your furniture if you want to attract tenants, which will take money away from your investment.

Another big issue with furnishing rental homes can be the types of tenants you attract. Furnished rental properties have gained a reputation for attracting transient tenants who may not be looking for somewhere long term. It is much easier to pack up and go when you don’t have to take your furniture with you.

Having furniture shows some level of responsibility on behalf of the tenant. It is good to know that they’ve managed to save up enough money to be able to afford their own belongings.

There are instances where furnishing is recommended though. If you have a short term rental property you will probably want to furnish it, but this is a different kind of market to the average rental home. The short term rental market generally applies to serviced apartments and holiday homes where there is normally a property manager onsite to help maintain the furniture.

Before you go to furnish your rental property, weigh up the pros and cons and decide whether furnishing is the best option.

If you would like advice for a particular investment property then please feel free to leave a comment or get in touch with us at Professionals Fairfield Real Estate.