Are you looking to invest in the Australian property market? If so, then you must follow some important steps to make the most out of it. First of all, as you are making a huge decision on buying a property, then you must have saved a considerable amount of money over a longer period. And as you have come across such a long period, you must have come to know many key aspects of the business.
One thing you should never forget is that property elements can go through major ups and downs and you will get prior warnings. So, you should accept the fact that you may have to face loss but that will depend on how you will handle the property and for how much time you will hold it. Here are the tips that can be helpful for property investments:
You must set a budget within your limitations
Are you considering taking an investment loan for 25 to 30 years? It will entirely depend on the amount of money you have saved so far. This will one of the largest debts you will need to clear and so it is crucial to make a priority list of other financial targets that you may have to bear before you make the final investment. If you have already the owner of a property, then you may access the equity you hold on it to get the additional money from your lender.
Some of the upfront costs you will have include deposit (an amount equivalent to 10% to 20% of the buying price), loan-application fee, government charges like mortgage registration, stamp duty, legal costs, building and different inspection fees, lender’s mortgage insurance, etc. In addition, there will be some ongoing costs like loan repayments and interest charges, council rates, water rates insurance, fees for property management, repair costs, maintenance charges, land tax, strata fees (for mostly communal properties), and vacancy costs if there is no tenant for a specific period.
You must check your credit reports
Your name must be present on the file of a credit reporting agency if you have a credit card or a utility account or a mobile phone plan. Credit reporting agencies usually get essential information from credit providers. This information is used to figure out whether they want to grant the property to you. Therefore, before you start your inspection of the properties, you should make sure that you have checked your credit history. Otherwise, if there is any discrepancy, you may not get your loan approved.
You should make research about what you will buy and how you will buy
The key decisions that you will take in this case will have an effect on the money you will get in both the long term and the short term. So, when you will do the research, you have to look into some important factors. First of all, you have to look at the types of properties you are eyeing to purchase in the suburbs. Then, you must see whether there is potential for price growth in these areas.
After that, you must see if there are any developmental works going on that can affect your prices. Does the property need renovation? Then, you must check whether you can bear the costs. You have to take the rental returns and vacancy rates of these areas into serious consideration. Last but not least, you should check the availability of local amenities like schools, transport, and shops.
You should think of hiring a property manager
Do you stay very far from your investment property? Then, you should think of hiring an efficient property manager. One thing to note here is that this cost will be around 7% to 10% of the total rental income every week. The property manager will look after a number of things that include advertisement of the property, potential tenant screening, how and when the tenants have to pay the rent, repair issues, maintenance issues, and reports on before and after property condition, routine inspections, complaint or eviction responds, etc. There are many websites you can find on the internet, which can provide necessary assistance to find property managers in the local area. You can also get a clear idea about their experience, fees, and services.
You should investigate potential tax deductions
Do you know that you can claim tax deductions on various property expenses during the time of rent? These costs include charges to print advertisements, property management fees, council rates, and strata fees, land tax, borrowing expenses that include both loan interest fees and charges, building and landlord insurance, accounting and bookkeeping charges. In addition to all these expenses, you can also claim tax deductions on other costs like building depreciation costs or loss of value in fixtures and fittings like ovens, carpets, hot water systems, repairs and different maintenance costs, costs for gardening, and even phone costs. A Property Tax Accountant may help you in this regard.
But, according to the current ATO rules and regulations, you cannot claim tax on travel costs needed to inspect the property.
Maintain all the legal obligations
Property managers do take responsibilities in various areas of work, but as you’re the landlord, you have to maintain all the legal obligations. There are a lot of responsibilities that you have to take before, during and after the termination of the tenancy. The obligations will vary depending on which Australian state your investment property is situated in. To know about all the legal requirements in detail, you should check into the suitable state government website or Fair Trading website.
You should be aware of the different other tax implications
If your investment property produces more than what is spent, then it will be termed as positive gear, where you will need to pay the tax. And if you generate less than what is spent, then the tax will automatically get reduced. If you make a profit from selling the investment property, capital gains tax can be payable. The property buying price including buying and selling costs, legal fees, stamp duty, will minimize the amount that is termed as profit.
You will certainly need a professional account ant for all accounting purposes. For that, you may contact accounting services Perth.