10 Rules for Successful Property Investment
Many of our clients are asking us about property investments, and the best way to structure these in order to reduce tax.
Buying the right property is the key. Recently we read an awesome list put together by property consultant Michael Matusik, and his 10 rules for successful property investment really make sense to us.
Here’s what Matusik said:
“My rules apply to “passive” investors – the “set and forget” types (which is the vast majority of the market – more than 90% of investors, according to recent survey results) and not to the “renovator junkies”, as I like to call them.
The property must be:
New, or at least recently renovated, to maximise depreciation/tax return and gross rental returns.
In a small or multi-staged development. Preferably under 50 dwellings. Large properties should not be ruled out. They must, however, have substantial points of difference, i.e. well-proportioned and well-appointed apartments; quality facilities and finishes; and good access.
In a strong location – “infill” highly favoured, with high existing amenity; a great “walk-score”; and more importantly, potential for above average mid- to long-term capital growth.
In an area with five or more pillars of economic support, including cumulative demographic/rental demand and high employment/wages growth.
Within five minutes of “hard-core” infrastructure i.e. major work nodes; secondary schools; entertainment precincts and public transport, especially rail.
Delivered by a proven development team.
High quality in terms of design, materials and construction. It must require minimum maintenance.
End prices under $600,000; better still, less than $500,000; and they must yield more than a 4% gross rental return.
Limited new dwelling supply when compared with underlying demand.
Sold with independent API registered valuation support and within an acceptable range of sales/marketing commission.
So, stick to the 10 and you’ll make millions? Well, short answer – there are no shortcuts and no guarantees. But by following the 10 rules we believe you can, with a little effort and knowhow, convert a modest deposit into a sizeable nest egg. But (yes, there is always one) don’t do it blind-folded – seek independent investment advice, have at least a 10% deposit, and have a truly spare $100 per week available to afford to buy that investment property.”
Talk to the HID Group team today if you are interested in property investing. We can provide you with independent advice about the best name to put on the contract, the best loan available for your circumstances, how to maximise tax advantages, and the cashflow outcome for you when buying an investment property.