Understandably, low interest rates are giving many investors an added incentive to look at investing in property – either directly or through their SMSF. Australians have always had a love affair with property. This affair could be about to get even steamier as historically-low interest rates reignite people’s appetite for borrowing.
Here are some of the dos and don’ts of property investing you should discuss with your financial adviser:
Do – Define your goals
A ‘successful’ property investment depends on your goals. For example, are you looking for a high level of rental income? Or are you more interested in long-term capital gains? A clear strategy of what you are hoping to achieve can help you decide where to look, and what types of properties suit you best.
Do – Reassess your insurances
Increasing your level of debt is a good reason to reassess your life insurances. This particularly applies to death and total and permanent disability (TPD) cover, as one of the main goals of these insurances is to extinguish debt if you can no longer service it.
Do – Diversify
If you already own a home, putting of all your resources into property could leave you more exposed to a downturn in the property market. Make sure you discuss your diversification strategy with your financial adviser before you invest.
Do – Talk to your financial adviser
While property can be an important part of a diversified investment portfolio, you need to be careful about how you go about it. Ongoing advice from your financial adviser is essential to ensuring your property investment meets your long-term goals.
Don’t – Over-borrow
When interest rates are low it’s easy to fall into the trap of over-borrowing. But property is generally a long-term investment, and it’s likely you will experience a range of interest rate scenarios over time – something your budget needs to cater for.
Don’t – Invest for tax reasons alone
The lure of tax deductions can be a distraction when you’re investing in property. But don’t get too caught up in the tax savings to realise how much you’re actually spending on things like stamp duty, legal costs, renovations etc. It may take many years of capital growth to recover those costs.
We have invited property expert Tal Eloss to present on the Do’s and Don’ts of Property Investment. At our event, we will also look at some of the things you should look out for before you make a decision about investing in property.
Important considerations include:
- Cashflow and impact on lifestyle
- Market considerations, location and property type
- Tax effective structuring of the property purchase and lending arrangements
- Flexibility and alternative investment options
click here for the full details of the event, along with registration details!