Investors

Residential and commercial property

Many people choose to invest in residential and commercial property as a wealth creation strategy. It is important to use the services of a professional, such as your accountant, to ensure that you take full advantage of all benefits that are afforded to the investment property owner.

The home buying process is much the same whether it is for your own occupation, or as an investment. However, there is much more that you should become aware of before proceeding to purchase an investment property. Some questions you may ask your advisor, in particular, are:

• How will the investment affect your day-to-day cash flow, before and after tax effect? Can this be easily calculated?
• How does the age of the property affect the investment? 
• What are the benefits of using a quantity surveyor to prepare a depreciation schedule specific to your property?
• What additional costs can you expect upon the purchase, and throughout the period of your ownership of the property?

These days, the loan interest rates available to investors are generally the same as those offered to the owner-occupier. However, Government transfer stamp duty is more expensive, and there are fewer concessions allowed in relation to other costs.

It is important that you discuss your plans with a finance specialist early in the process to discover just how much you can borrow in your particular circumstance. Many clients have been pleasantly surprised to discover that can enter the property investment market well before they expected! Others are surprised that they may be able to purchase multiple properties!

Shares, managed funds and other equities

A popular wealth creation strategy is to access equity from property to invest in the equities markets. Again, it is essential to use the services of a qualified financial planner or share broker, and it is highly desirable that one undertakes education and training in order to raise knowledge and understanding of the subject.

An early discussion with a finance specialist to ascertain the maximum amount that can be raised against one’s property will provide valuable information to the financial planner/share broker.