Before you invest… think about the WHY!
If you’re looking to buy your first investment property, or add to your existing portfolio, it’s important to stop and think about the “WHY”… that is, what’s your motivation. This will help determine your options of suburbs and type of property you should be looking at.
Common motivations and what they mean:
Financial Freedom/Wealth Creation – this means creating income which is additional to your salary/work. In time, this can become your main source of earning, giving you the opportunity to spend your more independently.
Stability/Tangible Investment – unlike shares and some other types of investments, property is a tangible investment. This means it’s something physical that can be touched, which creates a belief of stability, adding to the attraction of property for an investor.
Lifestyle – this is when the property is purchased to improve your current lifestyle by increasing your asset base, but not to generate income. An example is purchasing a holiday house.
Tax Minimization – one of the most popular method of reducing tax is negative gearing created from the ownership of an investment property. This involves leveraging the loss from maintaining the property to offset your total income which results in lower payable tax.
Create a Legacy – when you are looking at property it’s not always just for personal gain, sometimes it can be a great way to create something that you are able to leave to family, friends or charity that will benefit them…this is called creating a legacy.
So, now’s the time to start planning – you’ll need to consider mortgage options, including your purchasing power, loan serviceability and how it all comes together to achieve your “WHY”.
Speak with our Investment Services team about your next steps today.