What is the best way to make money in today’s property market and why
The reason that many property investors get themselves into financial distress or do not maximise their returns on property investments is that they do not treat their property investment as a business. Three basic rules must be followed:
Use an Expert
The number one rule is to use experts in your team.
Using a property expert to help you buy a superior property can effectivelly get you a “free” property. This is because a superior property growing at an average 10% annually over a cycle compared to a property growing at an average of say 5 % is the 10% growth property will double in value 7 years earlier.
Working with an expert property accountant will advise you on all possible expenses to claim and what is the best name to buy in. As an example using superannuation can allow investors to buy property and claim negative gearing against their income that will later have zero tax on income or capital gains.
It is surprising how many investors ignore or worse miss out on these opportunities.
The number two rule is do not only rely on the market to give your market growth. Manufacture your own equity by buying a property which you can do a renovation on that will add both capital gains and rental benefits.
Create a Safety Net
The third rule is to create a safety net for the unexpected (interest rate increases, loss of tenant, major repairs, loss of job etc) so you do not have to rely on your wages to fund your property expenses. The safety net can come from access to equity to fund the unexpected.
We call this a buffer and must be part of what your finance professional sets up for you.
Director of Chan & Naylor Platinum
For more information call 1300 250 122 or email firstname.lastname@example.org
See Ken Raiss presenting at the National Property & Economic Market Update 2012
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