FAQs
- Rental return - you want a property with a good return on the value of the property and a low vacancy rate.
- Capital growth - unfortunately investors sometimes focus on rental return at the expense of capital growth. After 12 months you only pay 50% of the tax rate on capital gains, compared to 100% tax on revenue, so high rental returns are costing you more in tax. Also, the capital gain is only taxed when the property is sold. That means that the benefit you get from capital growth is based on 100% of the current value. The same revenue re-invested is first reduced by the tax payable each year, so there’s less to re-invest. The cumulative benefits over the long term are dramatic as this graph shows.
This depends on a number of factors, such as what you can afford, and how long you plan to hold the property. Generally properties with more land component are regarded to increase in value more than properties with very little land such as apartments. But location, rental demand and lifestyle factors, all have an impact on the rental return and capital growth. We have structured decision process that will help you find the right property for you.
Usually you can borrow up to 90% of the value of an investment property. So you have to find the remaining 10% of price, plus the purchase costs, such as transfer duty and conveyancing costs. This can be funded from savings, or if you have an existing property, you may be able to borrow against that to pay for all the remaining cost. In this case, you wouldn’t have to use any of your personal funds. We have a calculator that will give you an indication of what is possible both funds required and likely cash flow.
There are two answers to this question …
- Before tax - this is simply the rent less all costs, such as loan interest, management fees, maintenance costs, and rates.
- After tax - if the before tax result is negative, then the loss can be deducted from other revenue. The result is that the losses are reduced by your lower tax liability (refund). But hold on there’s more. Depreciation against your building and fittings - this costs you nothing but the tax man let’s you claim this against your revenue, further reducing your tax liability and increase you refund. This non cash flow deduction can often turn a negatively geared property into an after tax cash flow positive result.
Each property will have a different ‘cash flow’ answer depending on the rental return, the amount borrowed and costs related to that property.
We can work out cash flow result for you or you can use this calculator to get an estimate of the likely result. Link for calculator here
Once you select a property we can also provide a detailed Property Investment Analysis Report which will give you projected capital growth and cash flow over 30 years. Link for PIA report example here
If you have a limited cash flow budget, we can select your property using cash flow as one of our selection criteria.
Building wealth over the long term, most of which can be paid by the tenant and the ATO. Over the last 30 years the average rate of property growth across Australia has been 6% per year. (Read the Russel long term index for more information about this.)
Any costs that exceed your revenue are deducted from your other income, which reduces the tax you have to pay. If you have a loan, the repayments generally stay the same, but over time rent will increase, making your property cash flow positive, before tax.
The big benefit is the depreciation tax deduction for new property. It actually doesn’t cost you anything, but increases your tax return, often making your investment property cash flow positive after tax.
Like all investment markets, property prices rise and fall depending on demand. The good news is that over the long term, property prices increase. The main risk is having to sell when the property market is down. If your property is cash flow negative before tax, there’s also a risk if your income diminishes, then you may not be able afford the repayments.
Yes. Ask your financial adviser about this to see whether this strategy is right for you. We can recommend an advisor if needed.
We only offer new properties to investors for a few reasons
- Fixed price which makes investment planning easier than if buying at auction, etc.
- Better appeal to renters
- Generally higher rental return
- Higher depreciation allowances can increase your tax return
- Lower maintenance
- No asbestos or other hidden remedial work
We get paid by the property vendors, but we work for you, to find the right property for your needs. We source properties from over 50 builders and developers across Australia to find what you need.
That’s a pretty good deal for you, as you get all our knowledge, experience and resources working for you, saving you time and stress, and getting you a great result.
Nothing.
We work closely with your financial adviser, mortgage broker, conveyancer and property manager to provide a co-ordinated service, to ensure you have a great investment experience.
Plus, not only do we consult, research and guide you through the property selection process, but we also support you at handover by organising pre-settlement inspections, depreciation reports, and finding an agent to manage your property … all at no cost.
Of course, you could find a property yourself, but why wouldn’t you use a free resource to do your research, who you could consult with at every stage and who has done it 100s of time before.
- We save you time and stress.
- We guide you through your property selection decision
- We co-ordinate our efforts with that of your other advisers to provide a seamless service