Frequently asked questions
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I thought property investment was only for rich people or those who earn lots?
This is a common misconception. Statistics actually show that over 70% of property investors have average incomes of between $35,000 and $40,000 per annum. They also show that over 90% of all millionaires actually earned their wealth through investing in real estate.
A common saying in financial planning is: "It's not how much you earn that counts, it's what you do with what you earn".
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How can I purchase an Investment Property if I have no deposit?
Of course you have a deposit! Cash is not necessarily the only way to secure a loan. As long as you have equity in your own home or sufficient assets to borrow against, then you should be able to borrow 100% of the property loan including all additional costs.
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How does investing in residential real estate work?
Unlike vehicles or computers or other physical assets that you might purchase, property increases its value every year in a compounding effect. For example, if you purchased a property that was worth $100,000, then in one year it could increase its value by 10% to $110,000. In turn, the next year it could increase its value by 10% again - $110,000 x 10% = $11,000 making the value of the property now $121,000. The property will exponentially increase its value as each year passes.
Remember, you have to make a start somewhere, and it may be a small start and the results might seem insignificant at first, but over time your investment property value and wealth will grow. All you need is good property investment advice, a prudent investment, time and patience.
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What will happen if interest rates rise?
At the moment interest rates are still falling and most experts believe that they will continue to go down well into next year. Whilst no one knows for sure, your lending advisor will have a good feel for what is going to happen with interest rates. You should consult them to discuss loan strategies for your situation for the following reasons:
- Your lending expert would probably advise against entering into a fixed rate loan in the current rate environment as it is likely that interest rates will continue to fall and you would not want to be trapped paying off your loan at a higher interest rate. Your lending expert would probably recommend a variable rate loan to ensure that you take the best possible advantage of the expected drop in interest rates in the future.
- The reverse strategy should be applied when interest rates are going up.
- Before purchasing an investment property, an analysis should be done of your investment to see what tax benefits you will be able to take advantage of in the future.
One benefit of having an investment property is that all interest payable on the investment loan is tax deductable at the highest marginal rate applicable to your situation either as a self employed person or as a PAYG earner. You can claim this deduction as a lump sum at the end of the financial year or through your regular pay cycle. Should you have a variable rate loan and the interest payable on the loan fluctuates, you will be able to claim for tax benefit on the fluctuating interest amount.
You should view investment property as a long term project, and whilst interest rates may rise and fall, this should not be viewed as a reason not to invest. Actually, when interest rates are high, this is generally a great time to secure a well priced investment property.
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Our parents always told us that we shouldn't borrow money – where they wrong?
Not necessarily. Borrowing money for assets that depreciate or lose value (i.e. cars) is not always a wise investment. The Golden Rule when considering going into debt is ensuring that you are borrowing for appreciating asses, or assets that will grow in value, such as property. Debt can be an important tool to eventually building your wealth.
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Why didn't my accountant tell me about investing in property?
Accountants specialize in accounting for money that you already have. They will accurately look after all tax matters once you have provided them with the figures of your accounts. There are a few accounts who do specialize in property. However, generally speaking they are not usually experts in property investment and we should not expect them to have all of the answers.
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I already have an accountant and a financial planner – Why do I need advice from you?
It is excellent that you are already using the services of an accountant and a financial planner. This means that your current wealth is being well looked after. However, what we do is different to both of them. As explained above, your accountant will look after your current funds and ensure that they are all properly accounted for and you are paying the correct amount of tax. Your financial planner will work closely with you in relation to any share portfolio that you may have. On the other hand, we specialize specifically in property investment, mortgage reduction and mortgage elimination. We will work in conjunction to your accountant to achieve this for you.
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Which is a better form of investment, shares or property?
Obviously seeing as we specialize in property, our view is that property is a solid way of investing your money and building wealth. But we do believe that a balance of the two can be a good way of ensuring that your wealth is built and will provide for you during your retirement.
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Financially, I'm not in a position invest at the moment so is there any point in talking to you right now?
Most of our clients feel that they are trapped in a particular financial situation. How would you know otherwise? As property investment experts we are in a position to help all of our clients assess their personal circumstances and see what improvements can be made. You might be surprised at what is possible! Unless you ask, you'll never know.
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I think I could probably do this on my own. What are the benefits of using Brisbane Investment Properties?
If you needed to cut your hair, you could probably do it yourself. But instead, most would go to a hairdresser to make sure it was done properly. People visit specialists for most things: Doctors, Mechanics, Dentists. Why? Because they are fully qualified and accredited in their particular area of expertise and have years of experience. The same can be said of Brisbane Investment Properties. Why wouldn't you want to speak to an expert when securing your financial freedom?
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Shouldn't I just concentrate on paying off my home mortgage?
Paying out your home mortgage is a challenge that many Australians face. Why just do that, when with just a little bit more effort and planning you could develop an effective financial strategy that would ensure you were financially prepared and free to provide for your retirement, your children or grandchildren's education or take a well deserved holiday.
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