We answer your questions about property investment and our services.
EKR Property offers an initial 60-minute consultation session for free to help you get started with your property investment journey. This is a 'meet and greet' with a qualified property investment advisor Edward Reavy where he will go through:
1. Who you are, where you are now, your pain points, where you want to go;
2. Edward's credentials and how he is qualified to help you;
3. An explanation of the journey he takes you on, from your goals to property selection, settlement and everything in between; and
4. Next steps to get started & introduction to a team of professionals to assist you if you don't already have the contacts.
After determining your readiness to invest, Edward can strategically source, negotiate and secure an investment property or portfolio on your behalf. And he is there to continually provide support and mentorship, assisting you in managing your portfolio as it grows by number and value over time.
EKR Property runs two service and fee models.
A good investment property is likely to deliver greater returns in the future, not only through capital growth but also in the form of rental returns. When initially building your property portfolio, cash flow will be more important than capital growth. Cash flow keeps you in the market and capital growth gets you out of the market. If you cannot afford to hold the property, you will not benefit from time in the market and the capital growth.In time, as your portfolio grows, you can diversify into different property types, and in different states and locations. This presents the opportunity to accumulate a mix of negatively and positively geared properties, therefore assisting you to purchase, hold and accumulate more wealth over time.
Depending on the age of your properties, we would recommend holding a bigger cash buffer for older properties as they generally have higher maintenance costs. A cash buffer is an essential part of property investing and every investor needs one as part of their investment strategy. We suggest having $5,000-$10,000 per property you hold, as an investment buffer. As well as having a personal buffer that equals your 3-month salary, as a minimum. When investing, it is important to remember that cash flow keeps you in the market, and capital gains gets you out of the market.
You can't guarantee it, but you can do the following to mitigate the risk of vacancy periods:
Doing your research before investing and being financially prepared is vital in reducing the financial risk of rental vacancy periods. We can assist you in making an informed decision when it comes to sourcing, negotiating and securing the right property and introducing you to a proactive property manager.
If you are borrowing money to invest you have to consider the home loan fees. Common fees include loan establishment fee, ongoing (annual) fees, break costs, interest repayments and lenders mortgage insurance if your deposit is less than 20%.Other common costs with buying an investment property are legal/conveyancing fees, stamp duty, pest and building inspection reports and quantity surveyor fees. To learn more about the costs of buying, holding and selling an investment property read our blog on this topic.
When taking out a low deposit loan with most lenders you have to pay a lenders mortgage insurance (LMI) which is generally either a one-off premium or a fee added to your loan amount. This protects the lender in case you can’t meet your mortgage repayments or if you default on your loan.The Australian Tax Office allows you to claim a deduction for borrowing expenses associated with purchasing your property, and this includes LMI. This deduction is generally spread over five years or the term of the loan, whichever is less. That is why it is very common for investors to save at least a 20% deposit before acquiring a property. But if this is not possible, there are other options!
We get this question a lot from clients before referring them to mortgage brokers and accountants. An owner-occupied home loan is a debt that is non-tax-deductible, so in most cases, this type of loan should be held on a principal-and-interest basis, so you can own a bit more of your home with each repayment.When it comes to an investment property, you can claim tax deductions, so it might be best to pay only the interest on this debt until your own home is paid off. This way your deductible debt and your tax deductions remain high and allow you to free up cash to pay down your home loan. When doing this though keep in mind your tax rate, and the fact that interest-only investment loans do attract higher interest rates, so you have to evaluate your options carefully. Please consult your accountant, financial advisor or mortgage broker before making any financial decisions of this nature.
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