Three must-knows for property investors to prepare for End of Financial Year

Sameer S

Crunch time has come for property investors with June 30 fast approaching. If you are a property investor, you will know what a hectic time end of financial year (EOFY) can be. However, with a little forward planning, you will be well on your way to a smooth tax lodgement come EOFY.

Read on for the biggest must-knows for property investors this tax season, helping you stay out of trouble with the ATO and minimising your tax bill while maximising your long-term savings.

Must-know #1 Records you should keep 

From 1 July until 31 October, you will need to lodge your tax return for the previous income year. If you’re using a registered tax agent, you may be able to lodge later than 31 October. Whether you prepare your tax return yourself or use a tax agent, you need to have on record up-to-date correspondence, income and bills related to your investment property over the period you own it. This includes rental income, deductible expenses and documents relating to ownership of the property, including all purchasing and selling costs.

It is important to note that documents pertaining to rental income and deductibles need to be kept for five years from 31 October or five years from when the tax return is lodged, if after 31 October. Any documents relating to property ownership need to be kept for five years from the date you sell your investment.

If you have a property manager, they will likely provide you with an EOFY summary. If you misplace a receipt or invoice, the ATO allows you to substantiate your claims with a bank statement. Having these documents handy, whether in a physical or digital file, throughout the year means it will be easier to make accurate calculations come tax time.

Must-know #2 Not all accountants are created equal

According to the ATO, one of the common mistakes that investors make is choosing an accountant with limited property experience, as this experience is often invaluable come tax time. What deductions property investors are allowed are subject to change, and if you don’t have an accountant who understands property, you could be in for a shock. For instance, a landlord is no longer able to claim travel deductions for inspecting, maintaining and collecting rent.

Before settling on an accountant, take the time to find out what their experience or level of expertise is. Ask different accountants questions about property investing and gauge if their responses are thorough enough.

Must-know #3 To claim or not to claim

If you are DIY-ing your tax return, having a good understanding of the ins and outs of the tax rules is important. Even if you are working with an accountant, having this understanding will put you in a good position to make smarter decisions that could have a positive impact on your tax circumstances.

For instance, you might want to bring forward expenditure to before 30 June, if you’re planning repairs for your property. Before doing this, however, determine whether the job is deductible as a maintenance or repair, or if it is considered a renovation or of a capital nature. To help you understand the difference, the ATO publishes a guide on how rental property owners need to treat rental income and expenses at ato.gov.au.

As a rule of thumb, things you may be able to claim for immediate tax deductions include rates and taxes, including council and water rates and land tax, repairs and maintenance. Some tax deductions that may be claimed over several years include capital works or building costs and borrowing costs.

There are many deductible items which slip the mind of the savviest of property investors. For instance, around 80% of property investors don’t claim the depreciation of their rental at tax time1, despite it being one of the most valuable deductions property owners can claim.

Estimating declines in the value of assets is complex, so it might be worthwhile to engage a qualified quantity surveyor to create a depreciation schedule. This allows you to claim the depreciation of fixed items within your property including carpets, blinds and fixed appliances, reducing your taxable income.

Again, planning ahead is crucial. If you know you have expensive, depreciable purchases around the corner, the best time to buy is always early in the financial year to ensure you are maximising how much you can claim.

Despite being one of the busiest times of the year, EOFY also offers a great opportunity to review how your investment property has performed throughout the year with a property manager, if you have one. It is also a good time to check in with your mortgage broker to ensure your existing loan is still servicing your needs and discuss any future plans to expand your investment portfolio.

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Three questions to ask before you refinance

Sameer S

The home loan market is constantly changing, with new and attractive deals coming up all the time. Refinancing can help you secure a more competitive interest rate, access the equity in your home, add features (such as an offset account) or consolidate your debts, but there are some important questions to consider before you get the ball rolling.

1. Has my financial situation changed since I first applied for a home loan?

A refinance is effectively a brand new loan application. All of the personal financial data you had to gather the first time around will need to be produced again. The stability of your income stream, your assets, and your credit card debts and other debts and expenses will all be reviewed, and may impact the result of your application.

It’s important to think about your ongoing ability to pay off your loan, particularly if you’re planning on making big changes that will affect your financial situation, such as starting a family or quitting your job to start your own business.

Of course, if you’ve just received a big pay rise or are now an empty-nester, this may also make a difference to your loan application.

2. Will the refinance really save me money?

Negotiating a lower interest rate or consolidating debts may seem like a financial no-brainer, but the fees associated with switching loans can be hefty, so you need to look at all the costs to work out whether you will really be saving money.

Fixed rate loans can be particularly expensive to exit, and leaving your home loan early will usually see you pay some combination of exit fees, application fees, stamp duty or even legal fees. If you’re borrowing more than 80% of the value of your property, lenders mortgage insurance (LMI) may also be required.

Unfortunately, these fees and costs are not usually transferable from one loan to another, so you may need to pay them again even if you paid them when you took out your original loan.

3. Am I planning on keeping the property for much longer?

If you plan to sell your property within the next few years, refinancing might be a rather big investment of time and energy for little benefit. Similarly, if you only have a small amount left to pay off your loan, you may want to consider whether it’s really worth going through the process of refinancing for the marginal cost savings you may receive.

Refinancing can help you save some money, but it’s worth considering your plans and options before you decide to go ahead with it. If you need some support working out what’s best for you, contact your mortgage broker.

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Tips for choosing the right real estate agent to sell your home

Sameer S

Finding the right real estate agent to sell your property can be daunting. These tips can help make the experience and that final decision a whole lot easier.

Selling a home is a pretty big event, so you’ll want to do everything possible to get it right. Finding and selecting the best real estate agent for your particular property is a crucial step in the process. Here are some simple tips for making the right choice.

Unlocking the right research
The first step to finding the best real estate agent is to do your research. Make a list of agents in your area, then investigate which ones match with what you’re looking for. Do they sell more houses or apartments? Do they specialise in auctions or private sales? Are they a boutique agency or part of a national chain?
There are websites such as Local Agent Finder and Open Agent that property sellers can use to research agents. These sites give you information about each agent, including properties they’ve sold in the past and reviews from previous clients. This can be a very useful way of determining which agent is right for you.

Reputation, reputation, reputation
Checking if an agent is reputable is very important and these days it’s been made much easier thanks to the internet. Social media is a great way to get an idea of their reputation and standing in the marketplace, as well as how they compare to their competitors.
What do their previous customers say about them? Have they won any awards? What’s their auction clearance rate compared to the national average? What’s their average percentage increase on estimated sale price versus the final sold price? Get Googling as well as asking the agents themselves – if they’re ambitious and professional sales agents they’ll have the answers to these questions.

See the agent in action 
Before you decide on an agent, visit one of their open house inspections to see how they treat you as a potential buyer. How do they communicate and interact with people? Do they follow up with you after the inspection? Chances are, how they sell someone else’s property is how they will sell yours.
A good agent will find out what a buyer’s really looking for and match them to the perfect property. A not-so-good agent might just give a brochure spiel without really listening to a buyer’s needs.
If you engage a good agent, you’ll be able to trust they’re working hard to find buyers who really want your property and are prepared to pay top dollar for it.

Look for local knowledge
If you’re selling your family home, it’s more than likely you’ll know the area inside out: the good schools, the best places to shop, which cafe brews the tastiest coffee. Your agent needs to know this stuff too, so they can talk up your neighbourhood to potential buyers. Put a few questions to the agent about where they like to shop, go for coffee or send their kids to school and see how it compares to your own local knowledge. Their answers could be revealing. The greater understanding and passion they show for the area the property is in, the more likely they’ll connect with the buyers, selling the lifestyle on offer as well as the bricks and mortar.

The hard number 
Once you’re close to settling on an agent, you may want to consider having the three best contenders come in to pitch for your business. Sit down and consider their benchmarks – how will they position your house in the market? What kind of marketing and advertising do they propose? How will they handle negotiations with potential buyers? What’s their commission? Will they put furniture in your house or perhaps provide some styling expertise?
Afterwards, don’t just set and forget. Creating and using benchmarks will enable you to monitor the agent’s performance and put you in a good position to discuss anything you’re not happy with. Send a friend or family member to the open house inspections to get feedback on the agent’s performance.
Choosing a real estate agent shouldn’t be a lottery. By doing your homework and following a few simple steps, you can make sure you have the best agent working for you.

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When the auction is passed in – to you! What happens next?

Sameer S

The hammer falls, the auction has ended, the bidding’s all done… and the property is passed in to you, the highest bidder. You’re standing out the front of what could be your dream home, surrounded by curious neighbours, nosy passers-by and who knows how many other serious buyers. So what now?

What happens next?
With the property passed in, as the highest bidder you have the exclusive first right to negotiate with the seller. Only when you walk away can the agent start negotiations with someone else – so remember that you’re in the box seat.

At this point the agent will invite you to come inside and negotiate – don’t go! Once you’re inside, you’re in the seller’s territory and this may put you at a psychological disadvantage. Make the agent go back and forth between you and the seller to keep the power in your hands.

By staying outside, you can also keep an eye on what’s going on, so you’ll know if there really are any other potential buyers hovering. Remember that time is on your side – the agent may have another auction to get to, and the seller has invested money and emotion in the auction. They want to see a result.

A negotiating strategy
If you’ve done your research and checked recent sale prices of similar properties in the neighbourhood, you’ll have a rough idea of what the house is worth. This, along with the price the property was passed in at, should give you some idea of what the seller is hoping to get, not just the price range so often quoted by the agent.

You may also have done a little due diligence on the seller – if you know why they’re selling, you might get a sense of how urgent the sale is. Has there been a divorce that means assets have to be divided? Is the property a deceased estate, with the heirs anxious to cash in? Has the seller already bought another property?

Finding the right price
You know how much you can afford and how much you’re prepared to pay, and you now have some idea of what the owner wants. Somewhere in there is the price you’ll be able to buy the house for.

It’s not a bad idea to ask the agent how much the seller really wants if they haven’t disclosed the reserve. Stick to your guns here – tell the agent that you’ve already made an offer with your passed-in bid, and it’s now up to the seller to come to the table.

When negotiating, avoid telling the agent your walk-away price; they’ll try to get as close as possible. Keep it vague. Keep your emotions in check, too – real estate agents can smell emotional investment in a property at 20 paces.

And stay a little bit flexible – spending slightly more than you planned probably won’t seem like such a big deal in four or five years’ time if it helps you secure the home you really want.

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How to negotiate in a softer housing market

Sameer S

Seller expectations are high but buyers want low prices – what’s to be done? Two real estate agents detail how to negotiate in a declining market.

After years of rapidly rising house prices, the recent slowdown took many people by surprise – not least those with a home to sell.

“For a while we had a situation where buyers were aware the market was dropping while sellers still assumed it was strong, so there was a big gap between their expectations,” says Anton Zhouk, Director of the Buxton Real Estate Group at Boroondara in Melbourne’s eastern suburbs.

“Now people have had time to adjust so, when it comes to negotiation, the gap isn’t quite so wide.”

Whatever the state of the market, every negotiation is based on the same premise – vendors want to receive the highest possible price while buyers want to pay as little as possible. Both, however, need to give careful thought to how they approach a negotiation when the market is in decline.

Be realistic

“From a vendor’s point of view, it’s crucial that you price your property correctly from the start,” Zhouk says. “The most incredible homes in the world won’t sell if they’re overpriced.”

Jane Booty, Principal of Stone Hills District Real Estate in Sydney, agrees that vendors must be realistic.

“Some potential buyers are waiting for prices to fall even further so there fewer actively looking,” she says. “They have more properties to choose from so it’s harder to convince them to pay a premium price. And the longer a property stays on the market, the less likely it is to sell at a higher price – buyers can look up how long it’s been for sale and will use that against you.”

She suggests that vendors try not to think in terms of losing money.

“Unless you bought in the last two years or so, you’re probably going to get a higher price than you paid,” she says. “And, of course, if you’re selling to buy, you’ll be paying less yourself. It can be more helpful to think in terms of the changeover price, rather than fixate on the price you may have been able to achieve a few months ago.”

Take offers seriously

If a property is on the market now, it’s there for a reason.

“This isn’t a time to be testing the market or selling a property if you’re not in a hurry,” Booty says. “If you do need to sell you should be prepared to take every offer seriously, even if it’s not at the level you were hoping for. At least enter into negotiations to see how far you can get your potential buyer to go.”

When buyers have the upper hand, presentation is particularly important.

“You need to be clear about the attributes of your home – the unique selling points that make it desirable,” Booty says. “It’s also worth spending some time and money on minimising anything that would cause concern. You don’t want potential buyers to go away with the impression that there are another five homes they’d be equally happy with.”

A good agent can help you identify your property’s strengths and weaknesses then demonstrate and sell its strengths.

“In a softer market, it’s vital that you start by getting good advice on everything from pricing to presentation,” Zhouk says. “The right agent will also help you market the property effectively. This needs to be considered on a case by case basis – for example, advertising in print media may work well for some but, for others, it would be a waste of money.”

Be ready to act

As a buyer today, you’re well placed – but you shouldn’t be too complacent.

“If you see a property that appeals to you, it’s also likely to appeal to other people so you can’t afford to sit back and wait in the hope that the price will fall,” Booty says. “At least throw your cap into the ring and start the negotiation process.”

Zhouk believes that today’s buyers are in a fortunate position now that the market has settled – though no one knows for how long.

“The only way you can tell when the market’s hit the bottom is when it starts to come back up,” he says. “By then, you could be too late.”

Some tips to help get the best results from your negotiation

If you’re selling

  • Set a realistic price from the outset
  • Find a real estate agent you trust and act on their advice
  • Take extra care with presentation – you want potential buyers to fall in love with your property

If you’re buying

  • Do your research – be clear about a realistic market price
  • Let the agent know if you’re interested in a property
  • Don’t wait too long for a bargain – the market could turn at any time

© Advantedge Financial Services Holdings Pty Ltd ABN 57 095 300 502. This article provides general information only and may not reflect the publisher’s opinion.  None of the authors, the publisher or their employees are liable for any inaccuracies, errors or omissions in the publication or any change to information in the publication.  This publication or any part of it may be reproduced only with the publisher’s prior permission.  It was prepared without taking into account your objectives, financial situation or needs.  Please consult your financial adviser, broker or accountant before acting on information in this publication.

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Is buying to flip still viable in today’s market?

Sameer S

With the property boom of recent years and the popularity of TV renovation shows like The Block and House Rules, increasing numbers of Australians have been ‘buying to flip’ – buying a property, renovating it and selling it at a profit.

Buying to flip can be lucrative when property prices are rising rapidly, but is it still a viable option in today’s softer market? The answer is it can be. You will, however, need to:

• do your own research and due diligence
• be in a strong financial position
• consult a mortgage broker for the best finance arrangements.

What should potential ‘flipper’ be aware of?

Buying ‘the right’ property
What’s the right property for you to flip? The answer to that may come from research into the local area to work out exactly where good value may lie. Ask yourself questions like:

• What are the historical values for this property and others on this street?
• How much can you spend before overcapitalising?
• Is the property attractive to the demographic of the area?
• Is the property structurally sound?
• How long are properties sitting on the market for?
• What is the area the property is in zoned for – one-level residential only or multi-level dwellings?

You’ll also want to find out whether there is anything planned that could stimulate future demand. Are there any new developments – such as investments in infrastructure, or schools or shopping centres under construction – that could attract new people to the area and drive up property prices?

The costs involved in buying and selling
Property is typically not a short-term investment – it’s time-consuming and expensive to buy and sell. When buying a property to flip, the following costs need to be covered:

When buying
• Loan establishment fees
• Building and pest inspection reports
• Legal fees
• Stamp duty

While renovating
• Labour and materials
• Mortgage repayments
• Rates for holding period
• Accommodation costs (if you have to move out for a period)
• Storage costs (for any furniture)

When selling
• Marketing costs
• Real estate agent fees
• Legal fees
• Loan exit fees
• Mortgage repayments and rates

Therefore, it makes sense to be in a strong financial position and be confident you can add value quickly and easily.

What are the potential risks in buying to flip?

Timing the market
Property is typically a long-term investment. So, if you’re looking to make money on it in the short term, you’ll usually need to add value to the asset and benefit from a rapidly rising property market.
In reality, the market can cool quickly if changes to lending policies or higher interest rates come into play. These factors can be hard to predict. If you need to make a sale and your property sits on the market longer than expected, its perceived value can erode with each passing day.

Costs blowing out
Clearly you want your renovation completed as quickly and efficiently as possible, but sometimes there can be costly and time-consuming surprises to address. One way to limit this is by getting a comprehensive pest and building inspection. Unfortunately, you usually won’t add value through remedial work; buyers will pay a premium for lifestyle and aspiration – less so for a new roof!

Some things to consider

The work that needs to be done
Flippers need to consider whether simple cosmetic improvements and good styling will be enough to entice buyers. Will a paint job, new flooring, stylish lighting, a kitchen and bathroom refresh, and some garden work be enough to showcase the property and its lifestyle potential?

Financial and tax implications
As with any project, funding is what will keep it afloat. How will you cover all the costs you incur? Will you be financially stretched to achieve your goals for the property? And can you afford to hold onto it if you can’t sell it for what you’d like?

Another consideration is Capital Gains Tax (CGT). Given this will be payable on any profit you make, it may make sense to consider strategies to minimise the amount payable. These could include holding the property for at least one year to access a 50 per cent CGT discount, or selling in a low-income financial year. For more information on this, you may want to seek independent tax advice from an appropriately-qualified professional.

Advice from experts
Getting quotes from tradespeople to fully cost out the work is key to planning a renovation and running a project to budget. It may also be more efficient to get professionals to carry out the work, rather than trying to be the expert in all areas.
Likewise, it makes good sense to consult a mortgage broker experienced in financing buy-to-flip acquisitions. This will help you get the right loan for your needs – such as one that offers a honeymoon period of lower repayments at the start of the loan. Getting the right loan in place can help set you up for success!

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How to instil financial smarts in your kids

Sameer S

Worried about your kids not mastering the skills to manage their finances as adults? These tips for parents will help children develop good financial sense from a young age.

Most parents want their children to achieve the Australian dream of home ownership. The good news is that parents can actually play a key role in making this happen by teaching their kids the basics of finance and instilling good behaviours that will last a lifetime.

Starting from a young age

Children are sponges when it comes to learning, which is why starting their financial tuition from a young age makes perfect sense. Even in their earliest years, taking them shopping and paying for items with cash can allow children to quickly learn the basics of commerce and money handling. When they’re at the right age, get them involved by counting the money together. It should be fun and educational.

Saving, budgeting and spending

As children get older, parents can explain to them the concepts of saving and budgeting. This will help them understand how to save for something they really want. Involve them in opening a savings account in their name, and making regular deposits with their pocket money. Most importantly, recommend they have a savings goal in mind and explain how their balance will grow over time.

It’s also a good idea to talk about budgeting, because invariably they will be spending money at some point. A good strategy is to take them on a ‘financial tour’ of your home, showing them what particular things cost, including invisible items such as electricity. Show them the bills you receive for each, and detail how you budget for them from your own income.

The miracle of compound interest

Depositing money into a savings account is one thing, but explaining how that money can earn interest on its interest is one of the most powerful financial tools children can learn. Using ASIC’s MoneySmart calculator, show them how much they can save using a long-term strategy.

Allowances and jobs

Part of the saving process for children typically starts with them receiving pocket money, but rather than just giving them money it’s better for parents to encourage their children to get a casual job once they’re of an appropriate age. This is one way of instilling a good work ethic that can be carried forward into adulthood.

Financial transparency and investments

Older children, in their mid to late teens, can further improve their financial literacy by learning about more complex products and through practical experience. This can include teaching them about residential mortgages and how they work, and perhaps showing them data on how property prices have risen over time.

It’s also good to explain how financial markets operate, including how interest rates are set and why it’s important to shop around for the best deals. Their education may even involve following shares or investments in fixed interest products such as bonds. The more they learn, the more their confidence and experience will grow.

Being transparent and providing financial advice gained from your own experience will be invaluable to your children. Start from a young age, and continue the education process for as long as you can. Over time, involve them in what you do so they can build their own financial foundations for the future.

If you’re considering helping your adult child buy a home, talk to your mortgage broker about the options available to you.

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Five top online homeware stores

Sameer S

When it’s time to deck out your new home, make sure your laptop’s fully charged and you’re ready for some high-powered online shopping. You could bag a bargain, and maybe even get some design ideas in the process. Here are some of our favorite online retailers.

Big-name bricks-and-mortar stores like Myer, David Jones, Ikea and JB Hi-Fi have large online stores (especially worth remembering at stocktake sale time). If you’re looking to save cash by buying second-hand, browse other people’s unwanted items on classifieds site Gumtree and auction platform eBay.

But it’s not just the big-name retailers offering great products. Here are five of our favourite online stores selling products to make your home more beautiful and comfortable.

Temple & Webster

Temple & Webster is one of Australia’s more prominent online furniture and homewares retailers, with thousands of products and over one million members. It’s free to join, and you get access to daily sales – special collections of products at member-only prices. With everything from bathtubs to wall art and bunk beds to toasters, this is truly a one-stop shop for your home makeover. The blog is a great source of inspiration with style tips and how-tos.

Amara

When you’ve got the big stuff sorted, try Amara for high-end finishing touches. It’s ideal for the style-conscious and budget-relaxed, packed with luxury and design brands like Missoni, Orla Kiely, Alessi and Christofle. This site is where you’ll find that exotic Roberto Cavalli bedspread or slick Ralph Lauren drinks trolley to really bring the room together. Look out for their regular sales to bag luxury homewares for a steal.

Appliances Online

With the huge range of brands and products at Appliances Online, the keen pricing, the free delivery and connection of your new fridge, and the removal and recycling of your old one (depending on where you live), do you even need to consider bricks-and-mortar for your new whitegoods? They also sell home entertainment, heating and cooling units, small appliances and barbecues. The clear, comprehensive product descriptions give you all you need to make a well-informed purchase.

Society6

Breathing new life into the idea of affordable art, Society6 is a platform that allows hundreds of thousands of artists from around the world to upload and sell their original designs in the form of wall art, cushions, rugs, shower curtains and other items that add colour to your home. The options are so endless you’re sure to find a design that feels like it was created specifically for you.

Gray’s Online

If you love a bargain and relish a treasure hunt, you could save big on your refit by haunting the auctions at GraysOnline. Under the hammer: new furniture, appliances, whitegoods, home entertainment and more, direct from the manufacturer or distributor. You can get great deals on big brands like Smeg, Panasonic, LG and Sony if you learn how to play the game and win the auction. Know exactly what you want, and how much you’re prepared to pay.

Buying from online retailers is a great way to add variety to your new home. It’s also a useful way of comparing prices and delivery charges, while product reviews can help you decide between those two funky floor lamps. With every imaginable product and a huge range of local and overseas suppliers, your new home will be decked out in no time.

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10 tips for choosing an investment property

Sameer S

So, you’re thinking of buying your first residential investment property? There are a few things to consider before making the move. Here are our top 10 tips for avoiding potential difficulties and ensuring success.

  1. Know your goal

Understanding your financial objectives is key to finding the right investment property. The actual property itself is rarely the end goal when it comes to investing – the financial elements should be your key focus. First, decide what your investment goal is and then create a plan to achieve it within a realistic time frame.

Are you looking for a plan for retirement? An income-generator to fund your children’s education? Or building equity to gain a regular income? Define a plan and review it regularly as your situation and the market changes.

  1. Research, research, research

Understanding which property is going to work best for your situation is key. It needs to be one that will be of high demand from renters and, possibly, owner-occupiers down the track. Be sure to research which types of properties are in demand and rents quickly in particular areas, and those that don’t. Is this an area popular with families who want three- or four-bedroom homes, or with singles looking for studio apartments? Speak with property managers and check ads to find out what renters are currently looking for, and how their needs may change in the future. What developments are planned nearby? Get to know the neighbourhood you’re planning to invest in.

  1. Old or new?

It’s the age-old debate: should you buy a renovator’s delight or something you can rent straight away? It’s great if it can be rented out as is, but potential to renovate should also be considered. The ability to easily and economically add value to a property is a plus, as it could increase rental returns. Don’t immediately write off a property just because it needs a paint job or the kitchen cabinets need replacing, but at the same time avoid overcapitalising if it’s not going to deliver returns. It’s a balancing act, so consider your skill levels, the extent of makeover required, and your access to funds to pay for renovations.

  1. Location, location, location

Location is critical to performance. Some of the things to consider include:

  • How far is the property from the CBD or business areas?
  • Are there schools nearby?
  • How’s the shopping? Can tenants walk to local shops or will they need to drive?
  • What and where are the public transport options?
  • What other amenities are close by? Are there cafes, a medical centre, a pharmacy, a gym?
  1. Do your sums

Always check your finances before deciding to purchase a property. Get pre-approval and make sure you can cover repayments as well as extra upfront costs such as conveyancing, inspections and taxes. There are also ongoing costs to consider including landlord insurance, strata and property management fees, property maintenance, council rates and utilities.

You need to set yourself a realistic picture of a property’s cash flow, rather than vague idea of whether rent will cover expenses, so use a spreadsheet to calculate all foreseeable expenses. If cash flow is negative, can you afford to maintain the property? What happens if it’s vacant for a couple of months? Do your sums carefully and always ensure you factor in a financial buffer to avoid mortgage stress.

  1. Choose the right setup

When it comes to investing, it’s important to understand how to set up the purchase to receive the most benefit. The entity should be tax-effective and protect any existing assets. You can purchase in your name, through your super or through a trust, but always understand how the purchase will affect you and your family. Expert advice can assist in maximising your benefits.

  1. Pick the right features

You want to appeal to the highest number of tenants, so look for properties that offer that little something extra, like a second bathroom or a lock-up garage. Also, look at properties that appeal to many segments. For example, a lift may appeal to both retirees and a young family, as both will be looking to avoid stairs. Just make sure the benefits outweigh any extra costs.

  1. Check your emotions at the door

Remember, you won’t be living in this home, so there doesn’t need to be an emotional connection to the home or the area. Your decision should always be about which property will give you the best return, not which one is most suited to your own tastes and lifestyle.

  1. Timing is key

It’s a great idea to keep on top of the market’s movements and its dynamics. While there are investment opportunities available most of the time, some market conditions are more favourable. Do plenty of research and, if you don’t fully understand it, ask for help.

  1. Get expert advice

Your broker can put you in touch with experts when it comes to real estate and investment. This means accountants, real estate agents, lawyers and valuers. These people are immersed in the industry and will be able to guide you in your decision-making.

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