Three Key Components to Maximise Residential Property Investment Returns
Why is residential property such a good investment right now?
There are three key components that continue to make residential property the ideal investment vehicle.
1. Interest rates are still at historic lows
2. Supply and demand factors favour investors
3. Residential is the most favoured security by the banks
We can see that these three components have obvious merit, but choosing the best investment property is a process that involves knowing your budget to purchase and your budget to hold a property. Also knowing what you want to get out of an investment and when is important in the selection process. Finding the right property that will allow you to reach your personal goals in the most time efficient and cost effective manner is the objective.
Residential investment properties come in several different types, for example, multi unit, dual occupancy, single dwelling, student accommodation, serviced apartments, high rise, low rise, luxury, executive, affordable, inner suburban, outer suburban. The property choice is often dictated by price and personal circumstances. Knowing the right budget for you is your key to correctly selecting the right property.
Once your budget and property type is selected then you need to consider ownership, as you can significantly improve your financial outcomes by correctly establishing the structure you acquire the property in. For example factors such as stamp duty, GST in the case of development, superannuation i.e. self managed funds utilising instalment warrant arrangements, deprecation taxation allowances, negative gearing and land tax, create a need to ensure the right entity is established at the point of acquisition.
In considering that the timing is correct based on the three components above we then set our objectives for our investment strategy.
If for example we concluded that we wanted a long term set and hold investment strategy for say ten years, then more options open up. For example a new subdivision which had some compelling future prospect or attraction may be considered.
Where as if your objective was to make money and sell within a year or two then this would possibly not be your investment vehicle of choice. Decisions around risk, leverage, personal time involvement and time to realise ones return are the factors one needs to consider in selecting the right property investment strategy.
So the message in this article is to suggest that whilst the timing maybe right, your returns can be significantly improved, simply by selecting the right vehicle for your personal investment objectives and the right entity and structure to place it.
If you are busy building a career, profession or business, then talk with a property investment consultant. This will potentially open up ideas that you hadn’t thought about, and if it doesn’t then there is a fair chance you are talking to the wrong consultant for you.
The key is to select a consultant who specialises in a location that you either understand or want to invest in. Also the sector of the market you feel comfortable with or wish to participate in. A good quality property investment consultant will not only ensure their fees are covered in their negotiations on the property but also you will be assured of getting the right property that fits your personal objective, and appropriate structures that maximise your investment returns. Employing a property investment consultant also removes any potential emotion from the equation which can creep in, particularly with residential property investments.
Seeking quality council makes good sense, learning from others saves time and you gain quality knowledge for your next investment.
Enjoy the process.