Status Updates From Property Fit: Get your prop...

SHORT-STAY ACCOMODATION

Think Airbnb. Things to consider:
- Have a financial buffer to get through low bookings season
- Manage your cash flow as income inconsistent
- Aim to double your annual rental income

PROPERTY DEVELOPMENT

Difficult to get right unless you know what you’re doing.

PROPERTY DEVELOPMENT

Difficult to get right unless you know what you’re doing.

Flipping property is for cash flow only. Long term wealth is accumulated by building an asset base, and by selling the asset you can never make money from it again.

Flipping is best suited to investors who have other assets and financial buffers to fall back.

FLIPPING PROPERTY

1. Renovate and sell
Quick cosmetic fix eg painting, landscaping, carpets.

2. Adding rooms
Turn 3 bed, 1 bath property into 4 bed 2 bath. Can take longer as need council approval.

3. Secure planning approval
No renovation work, rather sell with development approval. Applies to older properties only.

4. Rezone
As above, sell with approval to rezone from commercial to residential or vice versa.

RENOVATIONS

Always ask your tradespeople for copies of their licenses and insurance cover before they start any work on your property.

A good rule of thumb is to only spend your capital on items that will improve the livability of a property.

Never get emotionally attached to the property. Treat it like a business from start to finish!

PART III - THE HIGH-RISK

COMMERCIAL PROPERTY

Fitting a commercial property into your portfolio is something that should only be considered after building a rock-solid residential portfolio first.

NEW OR OFF-THE-PLAN RESIDENTIAL PROPERTY

Benefits include:
- Tax deductions such as building depreciation
- 6 to 10 year warranty
- Fewer repairs and maintenance
- More desirable to tenants who are typically willing to spend more

Australia is shifting towards ‘rent for life’. Tenants expect quality amenities that new properties provide.

Mentor tip - Don’t get too emotionally attached to the property itself. Focus on the numbers.

ESTABLISHED RESIDENTIAL PROPERTY

Properties that are 20 to 30 years old can slow down your investing due to ongoing repair costs.

The federal government is supporting new construction and investing in new infrastructure to provide jobs and encourage money to flow through the economy. They’re disincentivising buying older properties by reducing tax benefits, and the compliance side of things has now stepped up.

NEGATIVE GEARING

Focus on keeping the balance right between managing the cashflow outcome and the capital growth of the property.

Crunch the numbers. You could be better off with two negatively geared properties, rather than one positively geared property.

When I buy property, one of the first things I know upfront even before I start looking is exactly what I want that property to do for me.

I’ve always said to myself, ‘ How can I make this happen?’ rather than, ‘Oh, I can’t afford that,’ or, ‘This will never work.’

PART II - THE EASY FIT

Take a layered approach:

- landlord insurance
- income protection
- financial buffer in savings

Only the top 5 per cent of investors can produce stellar results. And even fewer can build long-term sustainable wealth that provides income for life.

Your expert team:

Mortgage Broker - choose someone who primarily deals with investor loans and is a property investor themselves.

Tax Accountant - you want the correct tax minimisation strategy including asset protection and super.

Financial Planner - offers investment advice including insurance.

Having the right team of experts around you, regardless of the investment strategy you ultimately choose, is fundamental.

Mentor tip - Setting up the appropriate structures before you buy your investment can save you a small fortune in the future!

You could be paying more land tax if you owned three properties in your own name, rather than if they were owned as separate entities. Why? Because land tax is calculated on total value, not individual properties.

The mistake - buying in an area that you know.

Successful property investment is a game of numbers and statistics rather than heart and soul.

The mistake - ‘Buy and hold, and pay off your debt.’

NO, pull equity out.

I was always surprised that being self-employed made it difficult to get a loan, but my staff could qualify for a loan after three months of employment.

Disappointment is the difference between expectation and reality.

PART I - GETTING MATCH FIT

There are eight popular property investment strategies.

What I thought I wanted wasn’t actually what I wanted.