The Secret to Successful Property Investment
Monday, August 2nd, 2010
Successful property investment requires two critical components, the right property funded with carefully structured finance.
The Cost of Getting it Wrong
Purchase the wrong property and it could cost you tens of thousands of dollars to replace it with the right property. Poorly structured finance blunts the performance of even the best investment property; slashing your tax refunds, crippling your cashflow, eroding your returns and exposing your home to unnecessary risk.
“Intrinsic Value” is the key
Professional property investors know the right property has one key quality, “intrinsic value”. Intrinsic value is found in quality properties located within a short commutable distance from “highly paid” work. Highly paid work is located in the CBD, Docklands, South Bank and St Kilda Road. A short commutable distance includes the inner suburban areas like Armadale, Toorak, Malvern, St Kilda, Elwood, South Yarra and Hawthorn.
Where to Look
Many investors look past these blue chip suburbs believing that they can’t afford to buy there because they are focused on houses believing them to be a better investment. In fact over the past 12 months, quality boutique flats soared by 17.9% while houses rose slightly less at 17.8%.
Turning Negative into Positive
Other investors look past inner suburban property because the lower yield produces negative cashflow which they make up from ‘after tax’ dollars. However, finance can be structured to neutralise your cashflow and in doing so increase your tax deductions leading to faster home loan elimination and enhanced returns.
Growing your rent
It’s also important to remember that while the initial yield in outlying suburbs might be higher, inner suburban tenants typically have greater capacity for rental increases created by lower vacancies.
The Professional Investor’s Choice
The inner suburbs are the professional property investors’ choice because its yields can surpass their outlying counterparts within a few years and command faster capital growth for the best performance of any market segment.
Asset Protection
Now you have the right property, neutralised your cashflow and optimised your tax position, it’s vital to protect your most important asset, your home.
The most common mistake investors make is using the same bank for your home and investment properties. Should your bank ever consider you have encountered an ‘adverse change in circumstances’ it can withdraw all finance and probably foreclosure. Isolating your investment debt adds greater protection for your home.
.
The Warren Buffet Philosophy
The world’s most successful investor, Billionaire Warren Buffet says, “Investing is easy, it just isn’t simple”.
The key to success is getting quality advice from competent, experienced industry professionals. Financial Architect and founder of Investors Edge Finance, Andrew Gardner provides finance structuring, property investment mentoring, education and support, you can contact Andrew on 1300 88 55 96.
.
If you would like help with any of the topics covered in this article, call 03 9822 3256 or email us on info@investorsedgefinance.com.au to book your consultation with Investors Edge Finance today.
April 21st, 2011 at 3:11 pm
Thanks for your post. What I want to comment on is that when you are evaluating a good internet electronics shop, look for a site with total information on important factors such as the level of privacy statement, protection details, payment procedures, along with terms as well as policies. Always take time to investigate the help plus FAQ pieces to get a far better idea of how the shop functions, what they can perform for you, and in what way you can make the most of the features.