We sat down with Director and Financial Adviser at Hello Wealth, Noni Crawford to chat about finance and property investment.
Noni reveals the top 5 tips for property investment success.
Q: Property investment seems like a complex process, are there any tips you would recommend for new investors starting out?
A (Noni Crawford): Absolutely! There are five tips I recommend to investors to get the best chance of investment success.
Tip 1: Know Your Goals
Understanding your financial objectives is key to finding the right investment property.
The actual property itself is rarely the end goal when it comes to investing – the financial elements should be your key focus. We recommend defining a plan and reviewing it regularly as your situation and the market changes.
Some examples of goals include:
- A tangible asset to grow your wealth with the view to move into it later
- A way of entering a property market for a more affordable price than in capital cities
Remember to be clear on timeframes for your goals.
Tip 2: Research, Research, Research
Understanding which property is going to work best for your situation is key.
Preferably it will be in a location with a low supply of similar property types yet with a high need for housing. It also needs to be one that will be in demand, while also having low ‘rental days on market’ to ensure it is leased quickly to avoid high ‘vacancy rates’ (and therefore reduced profitability).
Tip 3: Location, Location, Location
Location is critical to performance.
Some of the things to consider include:
- How far is the property from the CBD or business areas?
- Are there good schools nearby?
- Is there accessible shopping? Can tenants walk to local shops or will they need to drive?
- What and where are the public transport options?
- What other amenities are close by? Are there cafes, a medical centre, a pharmacy, a gym?
Tip 4: Do Your Sums
Always check your finances before deciding to purchase an investment property. Get pre-approval and make sure you can cover repayments as well as extra upfront costs such as conveyancing, inspections and taxes.
There are also ongoing costs to consider including:
- Landlord insurance
- Strata and property management fees
- Property maintenance
- Council rates and utilities
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Tip 5: Leave Your Emotions At The Door
Remember, you won’t be living in this home, so there doesn’t need to be an emotional connection to the home or the area. Your decision should always be about which property will give you the best return, not which one is most suited to your own tastes and lifestyle.
Q: Do you have any tips for choosing the right entity and structure to purchase in?
A (Noni Crawford): When it comes to investing, it is important to ensure the current and future legalities are organised carefully, as this can have an enhancing or detrimental effect on your finances in the future. When it comes to selecting the right entity and structure to hold your property it comes down to the complexity of your situation and needs. The insights mentioned below are general in nature.
Where possible, the ‘entity’ you hold the property in should be tax-effective while also protecting your family’s circumstances and any existing assets you own.
You can purchase in your name, through your super or through a trust, in which expert advice can assist in maximising your benefits.
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Noni Crawford
Director and Financial Adviser at Hello Wealth
Disclaimer: This advice is general. Investments are complex and require individualised strategies. Start on the right foot – get educated on the basics, then when you are ready to take it to the next level, why not speak with a Financial Adviser for personalised guidance?