When property will work – and when it won’t! Quick tips to help when investing in property

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Quick tips to help with making successful investments in property When property will work – and when it won’t! It is two-fold – How well the property works, and then what your own personal situation is like as well

Situations that will work – essentially, doing well in property compared to not doing well

Property

Paying fair value or undervalue for the property - The first step is making sure that you don’t lose from the get go Don’t overpay – New builds can have the FHOG built in Or at least pay the fair value in an area that will grow Remember for a place where land values will go up – The property price will technically go down (remember to watch out for maintenance costs) Potential zoning and subdivision – future capabilities of the property What is the ability to increase prices? Zoning – growth of land value from high density zoning What are the limits on your ability to change the property? What is the ability to increase yields? Sub division – 2 incomes for one Duel occupancy

 Your situation

Stable cash flows – Don’t get caught out The ability to have long term ownership and maintain payments is important Can hold for the long term Future plans are important – Property is great for growth – But you have to wait Limit your outgoing – $50 or $100 p/w – Don’t get in a hole The worst case is to be in a position you are paying more than you earn long term

Situation that won’t work!

The property

The hidden costs – the things that kill the profitability of property Sinking Funds/Body corporates – Seen $6,000 on a place renting for $28,600 Leveraging too high Price declines can lead to banks increasing your repayments – LVR too high Interest rate rises – too much debt against value = Bad yields Repayments may be unaffordable if too much debt and rent declines

Your situation

Family/income situation changing Maternity leave or starting a family – Additional costs plus lower incomes Needing to buy a new home for yourself – bank may not lend if existing investment debt Property is a wealth trap Worst property in best street is a good buy – but not if it is going to cost $300,000 to make it habitable Title searches – Flood zones, major highways (Moving to Brisbane, places in Kenmore) Negatively geared – with no income to offset or low marginal tax rates MTR of 21% means that 79% is being lost Loan or ownership structure incorrect Joint owned but one person has no assessable income – bad for deductibility

Thanks for listening!