Property investment in Alice Springs
When it comes to property investment in Alice Springs, research and having the right brokers to help you is integral to making the right choices.
It definitely pays to do your homework on the property market before you dive in and we’re thrilled to be on board to help you when it comes to financing your decision. Recent market share slides, tight rental markets in most capital cities and increases in property prices are seeing many mum and dad investors focus on property investment.
Generally, property in Australia is still considered to be a sound investment, due to steady and consistent increases over time.
But it’s not a quick win. Property usually has a 7 to 10-year cycle, with peaks, troughs and consistent periods in between.
Fortunately, an ongoing housing shortage in Australia and a tax system that allows negative gearing on property, (where any investment losses can be claimed as tax deductions), continue to favour housing as a solid, long-term investment.
But credit has tightened due to the Global Financial Crisis, so lenders are more cautious about who is able to borrow and how much they will lend. We are here to help you find the right lender and loan for your financial circumstances in this new environment. Our brokers can also assess the many investment loan options on offer, saving you time which you can dedicate to finding the ideal property. Call us now on (08) 8952 1400 for assistance with property investment.
Tips to help you find the right rental property offering the most rewards
House prices often increase faster than units, offering more potential for capital gain over time. But a rental home also comes with added responsibilities, including gardens, lawns and sometimes a pool to maintain.
A unit or townhouse may not increase in value as quickly, but these are generally easier to maintain and may even be easier to rent due to this reason, depending on location, condition and size.
Of course, you’ve heard this before, but location can mean different things when it comes to rental properties. Renters are often looking for maximum convenience so consider properties near schools, major shopping centres and public transport.
Spend plenty of time researching target areas, including recent property price movements and future predictions, rental vacancy rates and any proposed infrastructure improvements. You should also do some scouting, as if you were a renter, to get a first-hand look at the local market.
One of the worst mistakes you can make with any investment property is to buy with your heart instead of your head. Remember, your rental property is not your ‘home sweet home’.
A well-presented property is desirable, but think sensible, not luxurious, as the latter generally comes with a matching price tag!
Ideally, you want a neutral interior colour scheme, serviceable and resilient flooring and window coverings, a low-maintenance yard and good storage. Also, if you’re considering buying an older style unit, look for one with an internal laundry, a garage or car space and few stairs—unless the property offers a great view higher up which can add to the property value.
An investment property requires regular financial commitment beyond the loan repayments. Make sure you have the capacity to cover land and water rates and any maintenance and repair costs. Tenants are entitled to repairs or replacements as quickly as possible under their rental agreement, so you will need to have the means to pay.
Apartments or units also come with body corporate fees, which can often run into the thousands in more modern complexes with professional landscaping and shared amenities, such as swimming pools
Make sure you take out landlord’s insurance. This will cover you for damage caused by a tenant and unpaid rent if a tenant skips out, in addition to other standard risks, such as a house fire or a storm.
If you invest in a strata title property, make sure the body corporate has sufficient building insurance to cover the cost of rebuilding the complex in today’s prices. It’s often hard to work out what you need to cover, versus what the body corporate covers. A good rule of thumb is everything from the wall paint inward is yours and everything outside of that is covered by the body corporate.
Many property investors take advantage of interest-only loans because interest payments are tax deductible. That means you’re expecting the property’s value to increase over time, leaving you with a financial gain in the long run.
This is a good strategy for high income earners who are taking advantage of negative gearing. If you choose to positive gear your investment, (i.e. generate a profit from the rental income after costs), you might want to consider a principal and interest loan and use the profit to shave off the principal.
Just remember, you will pay tax on any income from your investment. Talk to your accountant about your tax situation so your broker can find the right loan.
Managing a property takes time and energy. If you don’t have much to spare of either, you should get a professional property manager to advertise the rental, screen and select tenants, collect and pay the rent, co-ordinate repairs and maintenance, provide condition reports and manage any disputes. Ask other local landlords for referrals for reputable managers. You should also conduct twice-yearly inspections yourself. Any associated costs, including travel and accommodation, are tax deductible. If you decide to self-manage, you will need to be well-versed on tenancy laws and prepared to organise repairs, including those that arise after hours. We understand every borrower has unique circumstances – and that some are more complex than others. We know from vast experience which lenders will work with investment customers who have more complicated requirements and will negotiate on your behalf.
The ATO will give you a discount off your tax bill for wear and tear on property. It’s known as depreciation, and can be a very handy windfall for investors, especially if you buy a new property.
The formula is quite complex and depends on the age of your property, building materials and the various fittings. That’s where a professional quantity surveyor comes in. For a fee (often around $600), they’ll assess the property and complete a Tax Depreciation Schedule, which your accountant will incorporate in your tax return.
If you need both incomes to be considered in the lending equation, speak with us to get the right advice on the best ownership equation for your circumstances.