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Posts Tagged ‘property’

Why invest and why take out an investment loan?

Peopleâ??s needs for investment are as varied as the investment cars themselves. Some want to own their home outright, pay the kidsâ?? university fees, or take world trips; while others want to begin their own business or retire on a comfortable income.

The reality for most of us is that we wonâ??t be healthy to afford these things on our salary alone (unless youâ??re fortunate enough to be the CEO of a major corporation). The key to successful investment is to leverage, that is, to use an investment loan to improve your capacity and increase your return.

Why invest in property?

Investing in property is the safest way to invest, but we also believe in a diversified portfolio to minimise risk. Similarly, Australians have trusted investment property as their favoured investment car for generations â?? and with good reason.

We discern the cycles, the astounding advantage that appropriate leverage (making capital gains from borrowed funds) offers, the benefits of rent return and taxation relief in servicing those borrowings, and the significant growth achievable over time. It is not uncommon for ordinary investors to accumulate four or more properties over 10 years â?? and the financial flexibility and cash flow outcomes can be exceptional, giving you piece of mind.

Property grants you to leverage. With only $20 000 cash invested (plus around $10 000 upfront costs) it is doable to invest in a $200,000 property, making your earning potential greater.

Can you afford to invest in property?

The question should really be, â??can you afford NOT to investâ?, whether it be in investment property or some other form of investment? While everyone should be investing to give them more options in life, property investment might not be suited to everyone. Most people on a standard remuneration can service an investment loan. After all, the investment loan interest is first met by any rental income you generate. As a general rule there will only be a small shortfall on the interest on your investment loan. Traditionally the investment loan shortfall, as well as other costs relating to your investment property would be met by your individualized income. Many investors however include a capitalising line of credit in their investment loan package so that they can draw on this to meet any shortfall costs as opposed to paying same from their individualized income. Instead, they use as much of their individualized income as possible, not to pay any shortfall interest on the investment loan but to make additional repayments to their home loan. This way their home loan is paid off much more quickly.

With your investment loan you should also remember that negative gearing does deliver some relief to servicing your investment loan on the way through. While most investors will move until the end of the financial year to claim their tax deductible shortfall you can in effect claim the investment loan shortfall on a monthly basis. Check out the ATO website on deductibility of interest on investment loans.

What history can tell you about property

History shows us that all property whether it be investment or owner occupied doubles in value each 7 to 12 years. Each property market is cyclic, that is, it goes through times of fast growth followed by tiny or no growth. When one market eg Sydney is in strong growth, other markets eg Brisbane will be in a tiny or no growth phase. The markets are referred to as being counter cyclic â?? when one is doing well, another is doing not so well.

This means for example that when the Sydneyâ??s growth slows, Melbourneâ??s picks up followed by Brisbane. This is the reason we emphasise the importance of investment property as a mid to long term investment. The key however is to refer the markets with the highest probability of short to medium growth and lowest probability of downside risk. This enables you to build equity faster and therefore add to your investment property portfolio.

It also means that there are always new opportunities for investment property as there are always markets somewhere which are experiencing their growth phase. Choosing investment properties in growth markets assists in developing well-balanced, diversified portfolios.

Property in the future

In the past all property was good investment property, and a lot of people did very well out of it. While those days are gone, there are still exceptional opportunities for investors who comprehend the current market influences such how our population is changing, how family size is changing, how types of employment are changing, and how the economy is changing and what influences it.

So why wait? Research property â?? purchase with your head not your heart â?? be an informed purchaser and most importantly make sure your investment loan is also working for you.

An investment property is becoming a more favourite choice for those seeking to create a revenue stream and also achieve capital growth through the investment property value increasing over time.

This can also be part of a strategic financial plan and should be considered by investors as part of a diversified portfolio. When considering an investment buy you should also source the ideal investment loan structure for you. With any investment your investment loan can make a difference to your return. If you are negatively geared through an investment loan the cost to you of that investment loan can effectively be reduced.

If you buy wisely, once there has been capital growth in the investment property over time there is the option of using this built up equity to move into another investment property, take out another investment loan and thereby continue to further increase your investment portfolio.

Aside from the traditional belief that tax advantages are the key driver for taking out an investment home loan there are many other factors to think about when purchasing an investment property.

Below are some key points for your reference, by using these points as a guide in conjunction with a detailed discussion with your accountant or financial planner you will be in a superior position to ensure your investment buy and investment loan is a financially sound decision for the long term.

In relation to property enquiry therefore, you should consider:

* What is the infrastructure like in the area? Are there enough schools, hospitals, shopping centres, physicians and dentists, freeways or main roads?

* What has the historical capital growth been in the area over the last two decades?

* Is the local council planning to increase housing density or add a new road to increase traffic flow?

* If you are purchasing in a new subdivision, are there more new land blocks and home and land packages planned nearby. New developments can impact on the value of your home as purchasers often like a new home to one that might be 2 or 3 years old in the same area.

* What length of time will the investment be held? And will this tie in with planned infrastructure development which will in turn accelerate capital growth?

There has been current press to recommend that investment and home property values in Sydney have a potential capital growth of 18% over the next 3 years so buying off the plan as an investor might be an captivating option in the current market. If you find a good property development, suitable for investment, which has a completion date in state 2010 – 2011 then you can exchange contracts with either a 10% cash deposit or a deposit bond (as a guide the cost of a deposit bond of around $86500 for state settlement September 2011 will cost you approximately $9000- $9500 (significantly less than the interest you would pay over the period if you borrow $86,500 at current interest rates of 9% p. a). The general feeling is that direct investment into property as opposed to into managed property funds is a superior way to go – you are in control of your investment and refrain the high management fees so often charged by share and property investment funds.

Do some research on the world wide web to see which areas have the greatest potential for capital gains – remember if you are looking for an investment property you should invest with your head not your heart. An investment property needs to be well located to transport and other facilities so that those renting can easily access these services.

When considering which investment loan would suit you ideal take the following into account:

1. Does the investment loan grant you to split it into a number of investment loan accounts. This is a good feature to have in an investment loan because you are positioning yourself for the future – if you use the investment property at a later date to gear into another investment buy then you can split the statement so that the investment loan portion relating to the new buy is clearly identified. This grants you, and your accountant, to easily track the costs associated with the new purchase.

2. If you use your home property (with an existing home loan) as security for the investment loan then it is imperative that you do not mix any home loan debt with your investment loan borrowings. The ATO in Australia requires you to apportion any additional repayments to a loan where the borrowings are “mixed”. You want to apply any additional repayments to your home loan before your investment loan. You are paying your home loan off in after tax dollars – whereas you can deduct the interest you are paying on your investment loan against the income form the investment property.

3. Does the investment loan grant you to capitalise interest? It is always a good intent to include a capitalising feature as a part of your investment loan to protect you against any unexpected costs in relation to the property. It also means that instead of subsidising the investment costs and interest shortfall on your investment loan you can capitalise these and make additional repayments to your non-deductible home loan debt.

4. If you have adequate equity in your home then you might be superior to think about a 100% + costs investment loan for the investment acquisition and use any savings you intended for the investment buy to pay down your home loan debt.

If you think about all these points your investment loan will be working in your favour at all times.

Property investment has always been one of the most common methods of investing capital & can be a lucrative business option and hence many investors think about it an integral part of their diversified portfolio. It is a long term investment for individuals or families to obtain financial security for their present as well as future. However, you should think about some important points while doing property investment. If you are a beginner, you must look for a profitable property investment. The bottom line of property investment is to find an inexpensive property that can establish to be highly lucrative for the future. As time moves on, for example with newer media options of TV and internet, new trends in property investment are appearing. So, always keep yourself informed about upcoming trends in property market with the help of these informative mediums. Prepare your property for resale and then sell the home quickly.

Residential property investment is the investment that can carry low risk and is not like investing in commercial property where investors have to worry about the conditions of businesses. Property investment loans are not as difficult to get as other types of loans and investing in residential properties can give investors a substantial financial boost. Also check out the history of capital growth rate in the area in last at least 15 years. Make sure that property investment is worth the capital benefit. You must also think about the population growth rate of the locality. If you are planning to invest in property, you need to take advice from experts or you can conduct research on the internet, attend seminars, interact with social groups and then read as much as doable regarding this matter to clear up all your investment doubts. Though the whole scenario of investments is always changing, property investment is still a viable means to enhance your financial portfolio. Because, the more you know about market, the superior you will become at finding good property investments.

Wealth Management is classified as an advanced type of financial planning that provides High net worth individuals and families with private banking, estate planning, quality management, legal resources, and investment management, with the goal of sustaining and growing long-term wealth. The main objectives of wealth management are providing families dealing with services in retail banking, legal resources, investment management, and taxation advice goals to sustain and grow long-term wealth. Wealth management often includes further diversifying investments by adding real estate, precious metals, business and other untraditional investments.

Products dealt with in wealth management include stock trading and stocks, investments linked with equity, derivatives and products relating to structured investment, foreign exchange, unit trusts and mutual funds, investments and management of property, etc. Substitute investments with respect to wealth management include art, wine, precious metals, etc. Due to its prime importance, it is advisable to take the help of wealth management company while running a huge enterprise. Because a wealth management company helps in growing long-term wealth for achieving long-term profit as It analyzes your wealth management plans including investments, insurance plans etc, computes the related risks and then it proposes a wealth plan. It might wage many services like portfolio management, investment management, portfolio rebalancing, trust and estate management, private management, tax advice and financing solutions etc.

A wealth management company sometimes also implements some useful financial tools like stocks and stock trading, structure savings products, structured investment products and derivatives, equity linked investments, property management and investment solutions, mutual funds and alternate investment options. These tools wage assistance in making your money grow and wage you long-term investment benefits. Thus, proper wealth management with the help of financial planning can make you acquire very fruitful returns on your investments which will have increasing volume apiece time.

Are you planning to invest in a property? Is managing your property investment adding to woes in your life? Its time you attend a property development course. One of the biggest victims of the last financial meltdown was real estate. It was a global problem where both investors as well as developers were caught off-guard resulting in heavy financial losses. Property development courses are not meant just for the investors but small and large developers have a lot to acquire attending them. If you aren’t yet convinced let us take a look at some of the advantages of attending property development courses:

Know The Industry – It is wise to known an industry well before investing in it. A property development course will help you in the nitty-gritty of the real estate development industry. There is no other industry where the profit dynamics change so fast. What was good two years ago might not hold true anymore. You need to gather expertise to survive through trying times like the last meltdown. Property development courses help you in foreseeing the future trends in the industry.

Safeguard Your Interests – Rules and regulations in real estate industry keep on changing and it is important that you remain abreast to them. Most investors start prey to developers and their agents due to the demand of knowledge about the latest rules and regulations. Property development courses from genuine institutes help investors making sound decisions to keep their property secure and not start for the tall claims prefabricated by the fraud developers and their agents.

Make Sound Investment Decisions – A property development course will help you in making sound investment decisions. There is no actual price or true price of a property; it always depends on your bargaining power by understanding the factors affecting the price. You shouldn’t make decisions based on the grappling value of an agent’s income pitch. Property development courses help you in comparing the pros and cons of investing in a particular property. It is always superior than asking an agent or a developer to do this for you.

Time It Perfect – Timing your investment is the key to earning high return from a property. If you are making a buy at peak price it isn’t expected to give you large short time returns. Property development courses make you perfect the time of investing in a property. A property development course doesn’t merely instruct you investing on a property based on the price but focuses on a lot of other factors such as tax savings, interest rates, energy efficiency of the property, discounts.

Managing Properties – If you are a large investor having multiple properties in your kitty, property development courses become all the more important for you. You need to learn the art of earning profit from apiece and each project and not just settle for cumulative profit. You need to comprehend when to sell off a property at the market peak.

Job Oriented – Property development courses aren’t just meant for investors but these courses help you get lucrative jobs as well. You can make a great career by becoming a professional real estate agent. A property development course will help you in getting a lot of consultancy jobs both from the investors as well as the property developers.

Thank you for reading my article on property development course. I hope this article was informative and beneficial to you. Please visit by website for more information on property development courses.

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Many homeowners make the mistake of thinking re-financing is always a viable choice. This is not always true and homeowners can actually make a significant financial mistake by re-financing at an inopportune time. There are a few classic examples of when re-financing is a mistake. This occurs when the homeowner does not stay in the property long enough to recoup the cost of re-financing and when the homeowner has had a credit score which dropped since the original mortgage loan. Other examples are when the interest rate has not fallen enough to offset the closing costs connected with re-financing.

Recouping the Closing Costs

To determine whether or not re-financing is worthwhile, the homeowner should think about how long they would have to retain the property to recoup the closing costs. This is important especially in the case where the homeowner intends to sell the property in the near future. There are re-financing calculators readily acquirable that advise homeowners how long they will have to retain the property to make re-financing worthwhile. These calculators require input such as the equilibrise of the existing mortgage, the existing interest rate and the new interest rate. The calculator returns results comparing the monthly payments on the old mortgage and the new mortgage and also presents information about the amount of time required for the homeowner to recoup the closing costs.

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